It’s a comforting fiction in which libertarians love to swaddle themselves — the notion that the market is somehow always spot-on.
The problem is: that notion holds only if there’s a perfect flow of information. In practice, the people who bet on some eventuality are often less well-informed than a North Korean economics textbook. So you get inefficiencies — which is where the margin lies for the savvier or better informed.
Take, for example, Brexit — the calamitious exit of the UK from the European Union, following a 2016 referendum that was hijacked by xenophobes, economic ignoramuses, and a cross-section of poms who badly overestimated their importance to the world.
The market read it completely wrong. Back in June 2016, high-street betting shops — as good a proxy for market prediction as any — had a 90% certainty that Brits would vote to remain in the UK. They were 100% incorrect.
In the aftermath, Ladbrokes’ Matthew Shaddick told the Guardian that he believed it was just one of those cases where an outsider wins, not “a fatal blow to the idea of betting markets as being a useful forecasting tool”.
And yet, just a few months later, punters were again blindsided when they bet that the orange menace, Donald Trump, would get his toupé handed to him in 2016’s US election.
The good news is that the punters may have upped their game. If you’d followed the odds at the betting shops in January, UK Prime Minister Theresa May’s humiliating loss over her Brexit exodus plan would have presented exactly zero surprise.
Before the vote, Sporting Index, the largest sports betting website on the globe, said: “We think that a total of 434 MPs will say no to May’s deal, which would be a heavy blow to the government.”
In the end, they were a lick of varnish away from the eventual toll — and considerably more accurate than a legion of Oxford-educated analysts. In all, 432 MPs voted against May’s plan, with just 202 in favour.
So, if we accept that the betting shops may have got their soothsaying mojo back, what can they tell us about what is likely to happen in 2019?
Well, to continue in the Brexit vein, both Betfair and Ladrokes are telling us it’s now unlikely that the UK will leave the European Union by its 29 March deadline.
Also, odds are 2/5, at the time of going to print, that May will get the heave-ho this year as prime minister, and be replaced by Michael Gove as the head of the Conservative Party. Labour is tipped to win the next election though, which puts the sleazy Jeremy Corbyn in line for 10 Downing Street.
Betfair also has the odds of a new Brexit referendum at 42%. If that happens, it would be something of an unexpected reckoning for rabid, kneejerk populism which, until now, has had a fabulous few years.
No surprise that one of the proponents of Brexit was Trump, who proclaimed the original vote in 2016 “fantastic”.
As the New York Times put it: “Trump and the Brexiteers have ridden a nationalist tide in their countries as well, using a potent anti-immigration message to appeal to mostly white voters who yearn for a more homogeneous society that no longer exists.”
A $1 bet could turn into $150 if Trump decides to convert to Islam. And that $1 would become $500, if he repaints the White House gold
Trump being Trump, his solution was blindingly obtuse and literal: a wall between the US and Mexico. As it stands, the US government has gridlocked and is now unable to pay 800 000 federal workers — all because Trump wants $5-billion for cement and bricks.
The ordeal has cost Trump — bigly. Not only is his unpopularity ranking at 55.2%, but the odds say he’ll have to pack away his glimmering array of naartjie hairpieces and move out of the White House after the 2020 election. Ladbrokes tips the Democrats to win that election with odds of 8/11.
Populist promises, it seems, have crashed onto the jagged rocks of reality.
So, if there’s not much money to be made on Trump’s departure, you could take some really way-out odds on what he’ll do while still in office.
For example, a $1 bet could turn into $150 if Trump decides to convert to Islam. And that $1 would become $500, if he repaints the White House gold.
Leaving aside politics for a second, there are other fascinating forecasts.
Take the name of Prince Harry and Meghan Markle’s first child: the odds-on favourites are Arthur and Alice, followed by Diana and James. And favoured to be the next James Bond, after Daniel Craig, is the Norse god of mischief: Tom Hiddleston.
But perhaps the most intriguing list is entitled: “What will millennials kill in 2019?”
Right at the top, we have landlines (don’t bother telling Telkom — it’s extremely busy due to high call volumes), followed by plastic straws (a mercy killing), and folding maps. Other entries in the top 20 include cursive writing and (fingers crossed they’re right) Facebook.
Now, if only they’d get busy dismantling populism.
Rose is the editor of the Financial Mail. He’s also a savant of obscure 1980s cricket stats and a masterful mimic of the Stellenbosch mafia.
- From the February edition of Wanted 2019.