Bury Me In Chicago

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Bury Me In Chicago

“If Candidate X wins the Democratic Party nomination for President, stocks will fall by Y amount” is something we’ve been reading more often of late. We tend to discount such statements pretty heavily, but since several of the prognosticators have good investment track records we can’t dismiss their predictions entirely.

That makes handicapping both the Democratic race and the general election a relevant exercise. We do that by tracking data from Predictit.org, a small-money wagering site with a focus on politically oriented outcomes, as well as Google Trends search volume data. Here are 2 currently live contracts from Predictit with 90-day charts as well as 1 chart with the Google data:

#1: Odds for the 2020 Democratic candidate for President:

What we see in that chart:

  • Elizabeth Warren’s odds (light blue line) have fallen from a high of 52% in early October to 26 – 27% today.
  • Joe Biden’s odds (dark blue) are stable over the last month but slightly lower than August/September.
  • Pete Buttigieg and Bernie Sanders (3rd and 4th in terms of Predictit odds) have both seen improvements in their odds by 6-8 points apiece, essentially taking share from Warren.

Bottom line: Predictit users have gone from thinking Warren had a strong lead to giving much more of an even chance to all 4 major contestants.

#2: Which party will win the 2020 Presidential general election?

What we see in that chart:

  • The current odds slightly favor a Democratic win next year, at 54% versus 47% for Republicans.
  • The odds of a Democratic candidate winning peaked in early October, right at the same time as Warren saw her best odds.
  • Now, the odds are exactly where they were 90 days ago.

Bottom line: we see these odds as indicating that the 2020 US Presidential race is essentially a coin flip just now. For what it’s worth, that is our baseline assumption as well. As much as President Trump may be a divisive figure in some circles, we do not yet know who the Democratic challenger will be. Until that becomes clearer, 50/50 sounds right to us.

#3: How are the major Democratic candidates doing in terms of garnering Google search volume interest over the last 90 days?

What we see in that chart:

  • Warren (blue line) is still in the lead, but her November Google search volume average (45) is lower than that of early October (50).
  • Sanders (red line) – not Biden (yellow line) – is in second place, although his search volumes are lower than the 90-day average.
  • Buttigieg (green line) is seeing more Google search interest, but is far behind the rest of the field.

The bottom line to all this: it is still far too early to determine either who the Democrats will pick or how the 2020 election will go. That’s likely why Michael Bloomberg and possibly others may still throw their hat into this ring. And why making any investment decisions based on assumed political outcomes is still very premature.


Predictit: https://www.predictit.org/