Four Profitable Longshots

September 4, 2007

If you like long-shot bets you’ll love these tips

One of the most consistent themes in the academic literature on betting is that, with traditional bookies at least, the value doesn’t usually lie with the longer odds. There is also the unromatic truth that longer odds bets require better risk management – while odds of 500/1 on an event that should have odds of 99/1 may be good value, you will still lose money 99% of the time.

However, if you are prepared to take a cold hard look at the field one can still find pockets of value. The following (no particular order) are the four best longshots (5% or less):

1. John McCain to win the GOP nomination. McCain’s chance of winning the nomination may be radically diminished from where they were during the start of the summer but he still has the potential to climb back into contention. While he may not realise that he has to get rid of Rick Davis and move back to the centre (without backsliding on Iraq) until it is too late, it is not inconceivable that the recent plunge in polls could persuade him to resurrect the old McCain and stop apologising for the last eight years of his political life. We should also be aware that neither Giuliani nor Thompson are exactly overwhelming candidates, while Romney is toxic to the general electorate. Chances of McCain winning the nomination are 15% while the Intrade price is 4.3-4.5.

2. Colin Powell to win the GOP nomination. If I were a Republican consultant who came from the ‘realist’ wing of the GOP I would be seriously considering starting a campaign to draft Powell. Whether you agree or disagree with his policies, Powell is one of the only Republicans to retain genuine cross party appeal. Although he has been insanely reluctant to enter politics, Barack Obama’s acceptance has demonstated that his fears about an assasination attempt by racists are pretty much unfounded. Probably of Powell winning the nomination is 2%, price on Intrade.com is 0-0.1.

3. Third Party Victory – Although I think that a putative Bloomberg candidacy would be little more than a ‘mid-life crisis in search of a campaign’ (and he has all but ruled himself out in any case) I believe that a McCain/Lieberman ticket remains a strong possibility. An independant candidacy would give McCain room to move to the centre and drop his support for a flat tax/national sales tax). At the same time he would be free to take on Michelle Malkin, Ann Coulter and Lou Dobbs over immigration. The mechanics of it is another post on its own but sufice to say that the chances of a third party victory are about 7% while the price on Intrade.com is 2.1-2.5.

4. Mark Warner to win the Democratic nomination – With the audacity of hype’s campaign imploding and John Edwards and Bill Richardson going nowhere there is room for a candidate who appeals to the South. Warner has the experience, the centrism and the charisma. He might have withdrawn from the race and be more interested in the Senate but that still doesn’t justify the prices that are on offer. Warner’s chances are about 2% while the price on Intrade.com is 0-0.2.


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