The people who bet money on their ability to predict political events are bullish on Mitt Romney. Every week or so I check the political futures market to see what the people who believe they know more than the average bettor who believes they know more than average bettor are thinking. (Got that?) Since February I’ve been tracking the relationship between the price of the candidates’ political futures with their average poll numbers. That relationship, which for fun I’m calling the Evans Political Bull-Bear Indicator, shows the bettors’ optimism about the candidate’s growth potential. When bettors put more money on a candidate than his poll numbers warrant, they’re communicating their confidence in the candidate’s future poll numbers, his upside. Scores above 1 indicate the market’s bullishness in the candidate’s future, scores below 1 indicate a bearish outlook. At some point, most likely next February, the futures for one candidate from each party will trade in the high 90s, the rest will hover near zero. The leading candidates’ Evans Political Bull-Bear Indicators will be around 2 (political futures will trade near 100, polling will be around 40-55%).
Among the candidates included in national polling surveys, Mitt Romney has consistently had the highest Evans Political Bull-Bear Indicator. On the Democratic side, bettors have been and currently are most bullish about Hillary.
This last week was also the first time I’ve seen Mitt place second among bettors. Giuliani’s been the leading candidate since last December. McCain was number two for the first months, then Thompson replaced him there when McCain’s campaign fell apart. Confidence in Thompson has faded over the past few weeks from a stable price in the mid-30s during June and July to his current price below 20. During that same stretch Romney’s price has gone from the high teens to the high 20s.
|2007-08-20||Evans Bull-Bear Indicator||Polling Average||Political Futures Price|
|2007-02-28||Evans Bull-Bear Indicator||Polling Average||Political Futures Price|
Sources: Polling Averages from RealClearPolitics.com, Political Futures Prices from InTrade.com.