The gap between polls and punditry has never been greater
In what seems like the most open, uncertain election of all-time; whose judgement should we most trust? Answer that question and there are fortunes to be won predicting the result. If only it were that straightforward!
Right now, all the usual indicators are pointing in different directions. Polls for the Republican Nomination are dominated by non-politicians Donald Trump, Ben Carson and Carly Fiorina. But the reputation of polls has taken a battering and at this early stage, they often prove meaningless.
The media, alternatively, is full of people that share my view, that Trump won’t win. While simultaneously allowing Trump to totally dominate the coverage, thus preventing alternatives from being heard. Scott Walker’s once promising bid has already bitten the dust for that reason. Jeb Bush’s campaign is floundering.
Then there’s the people who are best placed to know – insiders. Here, the consensus view is to totally disregard polls. When National Journal interviewed 82 Republican insiders, only 20% rated an outsider candidate either very or somewhat likely. This compares to the outsider trio scoring over 50% combined in polls and even bigger numbers regarding political experience as a negative.
The biggest player in the last two GOP contests, Mitt Romney, spoke for many when predicting that a mainstream conservative will come through, (although he did include Fiorina in calculations).
Political gamblers are used to wading through such contradictory signals and, in due course, betting money will probably prove the most accurate guide again. Since the inception of Betfair, the favourite with 100 days remaining has won every Presidential election. The record of early, pre-primary favourites, is poor.
Historically, the fundamental weakness of early polls and markets has been a lack of sophistication – a point understood by those clued-up insiders. Early favourites, especially outsiders, tend to fall apart under scrutiny – think Herman Cain. Experienced, well-connected politicians are better-placed to attract the money required to build a nationwide organisation, strong enough to survive a year-long campaign.
That’s the logic, but we are still to see any evidence that the old rules still apply. It’s now two months since the first TV debate and outsiders still dominate the polls. The only politician with momentum, particularly in betting markets, is Marco Rubio. Nevertheless, he’s still only in third place at best, on half Trump’s tally.
Nor are these outsiders likely to disappear soon. Carson recorded outstanding financial figures this week, gaining $20M in mostly small donations during the third quarter. In the Democrat race, Bernie Sanders registered $26M, further fuelling the theory that the US is gearing up for a political earthquake, dumbfounding the political establishment.
My view remains that, while the betting markets will eventually be right, and may well be in the process of identifying the eventual winner in Rubio, the value at the moment lies with Carson and Fiorina. Both have come in considerably since I tipped them at 65 and 60 as trades for the Presidency, but remain under-rated considering their improving numbers.
Carson is in second place behind Trump across the nation, despite starting with little publicity and a small organisation. One poll yesterday even put him 7% ahead. Most significantly, his 45% national approval rating is easily the best of the GOP outsiders. Yet he’s still only rated a 7% chance for the nomination, 2.5% for the Presidency. A low risk trade, offering big returns or a probable opportunity to trade out for a profit when that rating rises.
Likewise, Fiorina has momentum, coming in only 5% behind in the latest New Hampshire survey. She lacks any sort of national campaign machine, but I expect the money is arriving fast. Again, she’s a cheap bet at 8% for the Nomination, 3% for the Presidency. Stick with this pair. Without an imminent scandal or implosion, they must trade shorter.