With Iowa too close to call, there’s no short-term betting mileage in our earlier bet
In order to secure a profit over the long-term – and my US election portfolio has nine months left to run – one needs to switch positions frequently, banking profits where possible, and also accepting a small lose when prudent. These pivots may not reflect my long-term predictions.
That’s precisely why I’ve just taken a 10% loss on the Hillary Clinton trade advised last year.
New bet: Closed Hillary Clinton position for 6 unit loss, laid 54u @ 1.96. Too risky pre-Iowa & can recoup 6u from Sanders position. (1/2)
— Political Gambler (@paulmotty) February 1, 2016
2/2 Even if Clinton does win tonight, odds won't move much, especially if Rubio does well. Sanders could win & shorten significantly.
— Political Gambler (@paulmotty) February 1, 2016
I’m not abandoning my prediction from last summer and still believe she’s the likeliest person to become President in November, but there is very little to gain from holding an expensive position on her in the short-term. When I placed the bet, she was miles ahead of Bernie Sanders in Iowa. That is not the case anymore.
I still think she deserves to be favourite today, but it is undoubtably close. A 3% lead, with 10% still undecided, does not justify a short odds-on bet. I’m not playing the Iowa market for that reason.
Regarding the wider race, consider these two potential market trajectories. If Clinton wins Iowa, but loses New Hampshire as widely expected, her odds will hardly move.
Alternatively if Sanders wins Iowa and New Hampshire, the market will transformed and she will drift markedly. Correctly or not, parallels will be drawn with Obama’s outsider win in 2008.
Remember we also have a risk-free position on Sanders to win 195 units. His campaign is raising fortunes and, with a likely win in New Hampshire around the corner, will remain a contender.
We could immediately recoup the six unit loss on Clinton by selling back some of the Sanders bet. I think it makes more sense to wait, in hope of much shorter odds. If he pulls off an upset tonight, we’ll be in a great position.