DNC Pre-Season Week 1: Outlook for Early Primaries and Lessons Learned

One of my favorite activities is telling you monsters that I am a genius. However, to be a real genius, you need to get specific. And the specific source of my genius is that I am 100 percent the LeBron James of knowing exactly where we are in the political cycle.

This is the opposite of people who call themselves “experts.” “Experts” have no sense of the big picture because their job is to shill stories on CNN and Fox News about how the thing they are going to tell you about after the commercial break is going to change the world forever– but first, a message from our sponsors. I don’t need to sell ad space to Tampax or Bud Light due to the fact that this blog is fully funded by your generous Patreon contributions ($3 and counting) and the absolute bank robbery I committed last week thanks to Kamala Harris and Elizabeth Warren’s presidential campaigns.

Because of this, I can focus on the facts and not gaslight you with boneheaded opinions. So now that we agree that this blog has more gold in it than Fort Knox, let’s get to the point: Where are we in this presidential campaign and is there a chance to make money?

The answer is that we have just finished the first week of the NFL pre-season now that the Miami debates are over. In week one, we got to see which candidates have been hitting the weight room during the off-season (Sen. Kamala Harris, Sen. Elizabeth Warren, and Sen. Cory Booker); and who has been skipping leg day (Joe Biden, YouTube Star Beto O’Rourke, and Sen. Amy Klobuchar). We got to see which rookie players have a shot in the big leagues (Mayor Pete Buttigieg, Mayor Julian Castro, Rep. Tulsi Gabbard, and Mayor Bill de Blasio); and which ones need to improve massively or else get stuck playing in the state government D-league (Sen. Michael Bennet, Gov. John Hickenlooper). And finally, we got to see which pols need to start thinking about a career in reality TV, because this pro ball thing is just not happening (Andrew Yang, Marianne Williamson, John DeLaney).

But I would caution you about reading into the pre-season too much. Yes, it is absolutely critical for mid and low-tier candidates to perform well if they want to make the DNC roster, but if you are a starter like Joe Biden or Elizabeth Warren, your mentality is just not to make a mistake that gets you injured and sets your campaign back by months. I think that this is why Biden kept the kid gloves on while Sen. Harris absolutely savaged him over the issue of busing, which is actually one of the least popular policies in American history; and why Sen. Elizabeth Warren was happy to sit back and let second-stringers like Julian Castro and Cory Booker yap constantly while she played field position football.

What about the alpha?

Well, the downside of the Miami debate is that it has leveled the PredictIt playing field. After watching 20 candidates on stage together, most people have a pretty good idea of what they are betting on now. Finding a chance to buy a great candidate for cheap and selling him/her at market value is basically over.

These prices are not perfect, but they’re close to it and I think squeezing any more value out is going to be tough. This is not going to change anytime soon, given that the Democratic Party’s next pre-season debate is scheduled for July 30 in Detroit, where Donald Trump scored an absolutely clutch road win last November to seal his White House victory. Maybe the odds on candidates will get distorted between now and then, but the second these debates happen, they will re-set to about what they are now. This pattern will continue as long as we are still in a 20 candidate debate format — which means, until September. So it is time to move-on from a trading strategy that depends on inefficient pricing among Democratic candidates. But let’s remember what we learned, because it’s going to come in handy once the regular season starts in Iowa and New Hampshire this January:

PRICING

Before the debates I told you that I thought the price ceiling for A-list candidates was around 20 cents and for B-list candidates (and fake news candidates like Andrew Yang) it was 13 cents. We are settling near that equilibrium again, except that Sen. Kamala Harris has been promoted to A-list and Sen. Bernie Sanders has been demoted to B-list. I think that you can probably bump these margins up to 22 cents and 15 cents now, which is maybe traders writing-off loser betas at the bottom of the bracket and pulling their value up to the big dawgs.

CHEAP BUYS

The only major arbitrage opportunities I smell are:

Bernie Sanders’ mothballs. He is old AF, trading near 15 cents, and I have no clue how he is going to explain himself to young, woke millennials who think that “The Great Depression” was the time in 9th grade that their mom took away their iPhone. That said, I can see Sanders yo-yoing beteween 15 and 20 cents because basically no one has a clue if he is a frontrunner or not.

Sen. Kamala Harris’s rocket fumes. She exploded after the last debate to a 25 cent valuation — the highest of any candidate right now. This spaceship is coming down to earth.

TRADING MASSIVE LOSER UNDERDOG CANDIDATES FOR A PUMP-AND-DUMP

One of our amazing readers DM’ed and asked me:

“I know this sounds really f*cking crazy, but what do you think about scooping up some [Marianne] Williamson? I’ve been seeing a lot of weirdly positive facebook posts about her recently and 1c sounds super cheap.”

Based on my experience, the only idea worse than buying YES shares on Marianne Williamson is actually being Marianne Williamson. I bought some shares on total loser candidate Sen. Michael Bennet (D-CO) thinking that he could bro out and win some praise, but he basically just looked like an idiot next to the real pros.

That said, it was surprisingly easy to unload my position and I dumped all my Bennet shares for par in about 12 hours. This is proof that a large number of PredictIt traders are actually just farm animals with wifi. It is also proof that there is still a marketplace for people sharking around for underdog candidates that might pump. This will absolutely continue as long as the DNC is doing 20 candidate debates. But when they stop doing that in September, shares of Williamson-type candidates are going to be a bigger waste of dough than Denver Broncos QB Joe Flacco’s $120 million contract.

This is obviously a terrible situation that you want to avoid.

DO YOU HAVE ANY MORE GENIUS THOUGHTS?

Maybe. I am going to watch some tape of Gov. Steve Bullock. He is the only real candidate who wasn’t at Miami, which means he is the only real candidate that traders don’t have a firm impression of and could potentially pump in the future. There are two reasons to be optimistic about this: (1) Gov. Bullock could definitely play Dennis Quaid’s character in Any Given Sunday;