Do these results seem a legitimate fair value of the true POTUS outcome? Fama clearly would say yes, but curious on other perspectives. For those who believe this to not be a reasonable reflection of the true fair, then why aren’t more people betting against it?
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Based on the most helpful WSO content, here are some insights regarding betting odds and market predictions:
Market Bias and Big Bets:
Market Misjudgment:
Polling vs. Betting Odds:
Investor Sentiment:
Market Reactions:
In summary, while Fama might argue that betting odds reflect fair value, the actual market behavior and investor biases can lead to discrepancies. The reluctance to bet against these odds could stem from the influence of large investors and the inherent uncertainties in political outcomes.
Sources: https://www.wallstreetoasis.com/forum/investing/the-trump-effect-on-markets-a-financial-not-a-political-analysis?customgpt=1, How will the results of the election affect Wall Street and the overall economy?, Reflections from year 4 as an equity analyst, Lack of trading and market thoughts/opinions on this site, Unrest in the Middle Kingdom, and Anti-info in the Melting Pot | The Daily Peel | 11/29/22
Its not a very efficient market if that's what you're asking. Polymarket finally identified the individual responsible for placing large Trump bets (some French finance guy) that moved the market on 45mm in bets. Compare it to the other websites and you'll see the probabilities are closer to even last i checked.
4 accounts have been linked to huge bets that Trump will win and are responsible for most of the market skew from close to 50+ now to 60+.
To answer your question: why aren’t people selling / fading the move?
It’s a simple answer: liquidity. The $20 million necessary to shift the market back to more reasonable odds is greater than the aggregate amount that people have and are willing to bet with on Polymarket to fade this move.
But if there are say only 100k betters who collectively bet $200, that’s all that’s required to move it back in line.
Besides there’s big market makers who bet on this too. And $20m is chump change for them
Exactly. Don’t let the midwits above or wordcels at WSJ influence you. If the odds were truly skewed there would be whales and arbitrage funds jumping in to take advantage of the mispricing and it would quickly move back in line. All of the prediction markets, e.g. predictIt (which limits bet sizing), betfair, Interactive Broekrs, etc. have the race at 57%+ for Trump, which still means it’s somewhat close and it’s anyone’s race, but soylent Dems are clearly coping right now.
Clearly there aren't 100k betters willing to bet $200 then. For market makers, I imagine they don't think it's a great trade to buy Harris when there are whales betting for Trump that will continue to push Trump odds up to the election.
Well even ignoring Poly, all the other betting markets favor Trump as well generally by ~60% vs Kamala at ~40%. Odds are continuing to tilt given Kamala is worse & worse the more exposure she gets to interviews
I wouldn't take them as gospel by any means. There's some French trader who put over $30m in the last few weeks on Trump to win which no doubt moved the betting market in a huge way. That's not to say I think his odds are bad, but I just see these as overly biased / easily manipulated to an extent.
He was 100% correct. Insane trade lol
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