Is it time to go long on Obama in Iowa?

November 21, 2007

Is the market momentum behind the Illinois Senator justified?


Ever since Hillary Clinton turned in a poor performance in a debate in late October people have been looking for an excuse to believe that the contest for the Democratic nomination is still wide open. Although I believe that Hillary has her weaknesses, she is easily the most credible (and electable) of the current crop of Democrat candidates. The fact that a CBS poll has her behind Obama for the first time (though still within the margin of error) has meant that the price on Barack Obama winning the Iowa primary has risen, going above its fifty day moving average to its current price, with the last trade at 35.0. Does this mean that now is a good time to buy into the Senator from Illinois, either as a momentum play or a value bet?

There are several reasons why this is not the case. Barack Obama has not answered the central charge of his opponents – why should an someone with no foreign policy experience, only four years in national politics and demonstrable immaturity be put in the White House in a time of unprecedented international turmoil? Obama answer, that he has lived in Muslim countries, is risible and risks sounding a lot like the answer that Michael Foot gave about the foreign policy implications of a victory in 1983. After all, the ‘Cook County Project’ in 2004 was one of the key factors, that produced a Bush victory in that state. There is also the unanswerable criticisms that while Obama may alienate voters less than Senator Clinton, her campaigning and organisation skills make a victory, even if it a close one, more likely.

Finally, it is important to remember that the Iowa contests is a caucus rather than a primary. As such it depends upon the ability to get people to devote an hour of their time on a cold January evening. As Howard Dean found out, candidates who have a disproportionate amount of their support from the very young, such as Senator Obama, will fare less well. According to the 2004 exit polls, only 17% of voters were aged 17-29 while 41% were between the ages of 44-65. Indeed, according to the last Rasmussen poll, Obama is in third place among those aged 50-64 and over 65. Contrary to belief, Hillary’s support is more committed to her than Obama’s is, with an eleven point gap between Clinton and Obama when only people certain to vote for her are counted. There is also the possibility that anti-Clinton votes might go to Edwards instead. All of this makes the Obama Iowa contract overpriced.



  1. […] post by thepoliticaltipster This was written by . Posted on Wednesday, November 21, 2007, at 9:04 am. Filed under […]

  2. why should an someone with no foreign policy experience?
    Because Obama gets it


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