Why are the odds for Brexit so different at the bookies compared to the polls? I mostly think the bookies are a better way of finding out the odds of political issues, because it's people actually putting money where there mouths are. However, could this be the case with Brexit: The payout for Brexit-vote is 2.8 (36% chance)... for Remain 1.55 (64%), while polls are 50:50.. Does this merely reflect the move in financial markets after the vote? So, the move after a Brexit-vote will be significantly more than a Remain-vote... about 2x as much... 10% down vs 5% up? From a trading/investing point of view this makes sense right? Or is it just getting late and I just need to go home and have a beer? Anyway, I've made a poll myself for you guys, see above... (ps... I definately need a beer, since I screwed up the poll... disregard the 'up to 5%' option, I meant up to 3%)
There are multiple issues, as I mentioned on another thread... 1) The mkt is pricing a "status quo swing", similar to the Scottish referendum. This may or may not materialize to such an extent. 2) The bets people place don't reflect their personal views, but rather their views on the outcome of the vote. 3) All votes are equally weighted, while the bets aren't. 4) There's a quanto effect present in the mkt odds. 5) Polls are samples of voting intentions at a specific point in time, while the mkt gives you the implied odds for the future event (spot vs fwd sorta thing).
As Martinghoul says, not really comparing like for like because polls reflect the personal voting intentions of individuals, whereas bookies odds reflect the summation of bets reflecting an expectation of other people's voting intentions, or more accurately, expectation of the majority vote of other people. Additionally:- 6. Background of those participating in polls versus those placing bets with bookies or markets is quite different:- - Polls are an attempt to randomly sample from the population of referendum voters (perhaps with some corrections made by pollsters to remove sampling bias in the sense that certain groups are more likely to participate in polls, e.g. political students, people with lots of time to spend answering questions etc). - Bets placed with a bookie or in financial markets are made by a very small subset of the population, many with vested interests due to employment, etc or holding a consensual view formed by discussions with other like minded people holding similar backgrounds or motivations.
Could be that the bookies know it's likely that the vote will be rigged in favor of staying. The entire EU depends on it.
Really interesting, where's it going to get us in the end... So far all this Brexit stuff looks like a waste of time and money.
will the murder of anti-brexit politician shift the results? http://www.reuters.com/article/us-usa-stocks-idUSKCN0Z21CF the market thinks so for now.
I guess there are a few related factors which shift the odds back towards the Remain side. 1. Some undecided voters may look for a reason to side with the anti-brexit politician (sympathy vote), even if it is not a conscious decision. 2. Momentum has been with the Leave side for the last 1-2 weeks; this throws a spanner in the works...gives Remain side time to stop the current trend and reevaluate their failing strategy. They can avoid serious debates in public for a few days and shift the conversation away from immigration. It's a perfect smokescreen for the Remain side. 3. One of the strategies of the Remain side has been to label brexiteers alongside "far right" politicians such as Farage, Trump and Le Pen, irrespective of that fact that many brexiteers are quite moderate, or even politically on the "far left", e.g. old labour politicians that traditionally saw immigration and EU membership as a threat to jobs and national sovereignty. The suspect himself seems to hold anti immigration, far right tendencies so the Remain side can more easily make the case for associating people on the Leave side as "people of hate, anti immigration, politically on the far right". A lot of ordinary people might not want to be associated with such people, irrespective of the arguments. Farage on the Leave side becomes even more "toxic". The vast majority of new Labour MPs favour staying in the EU, so they can be more persuasive with undecided Labour voters, reminding them that the late MP who was murdered felt so strongly about this issue and was on the opposite side of the debate to Farage. (Similar to 1) 4. Foreign politicians are already linking this incident with the EU referendum vote in an attempt to attempt to influence voters:- - Christine Lagarde, at a press conference for a meeting of finance ministers, said the killing is time for "reflection" about the nature of Britain's referendum debate. - German chancellor Angela Merkel said she did not want to link the dramatic attack with the vote on the EU next week (although by making this comment she just did!) In summary, the Remain side can diffuse the security / terror threat caused by too much immigration by referring to home grown threats and then referencing the murder suspect for the benefit of the gullible public (just in case they've forgotten). The emotional impact of arguments made by the Leave side about the perils of too much or the wrong kind of immigration are then blunted, and so the Remain side can shift the focus back to the threats posed to the economy from leaving the EU (as opposed to the threats posed by immigration from staying in the EU).
I agree that polls/bets likely have different people involved, and therefore based on different ideas. But usually bets reflect true odds.... so polls don't? However... There is a financial link to the outcome through the markets moving. If the odds at betting firms would be 50:50 (more like the polls)... and you expect a bigger move in financial markets when the vote is "Leave"... (say 10% vs 5%) there would be an arbitrage opportunity. Because, you sell and have a risk/reward of 5/10... and hedge buy betting on "Remain". Say you short 100k and bet 7,5k on remain; Result is Leave = +10k - 7.5k = 2.5k profit Result is Remain = -5k + 7.5k = 2.5k profit... So, therefore people are expecting a bigger move on "leave" because the odds are skewed. The betting has essentially become a panic-hedge... but the other way around then what you would normally expect... (more people betting on Leave and therefore far lower payouts).