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Do the markets know something we don’t?

January 3, 2008

Huckabee and Obama surge on the exchanges but is it a bubble?

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Although the polls tell us that it is going to be close in the case of the Democrats (and a lot of things can still happen in the Republican contest) there is a general belief in the betting exchanges that Barack Obama and Mike Huckabee are overwhelming favourites. It is important to realise that bettors are just as clueless as the rest of us and that if a price seems out of line that it is more likely to be an emotional reaction rather than the ‘wisdom of crowds’ or some insider knowledge. Although my projections suggest a confortable victory for Huckabee funny things can happen in the hothouse atmosphere of the caucuses. Even if Obama has secured some ‘agreements’ about second preferences the race will be very close.

My predictions are still with Romney and Huckabee having a 50% chance each and Clinton having a 40% chance, Obama only having a 35% chance and Edwards having a 25$ chance.

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