The following is a guest post from “David,” who trades on PredictIt as @grassrootsboy. You can submit your picks and guests posts by visiting our Contact Page and emailing Keendawg.
You. A beach. More Modelos than even Keendawg can drink in a week-long bender. Have I got your attention yet?
Great. Let me tell you how to afford all that. It’s a bet so good that there’s only one reason it’s still there: it requires more than a point and click. Strap on your math hats, boys; it’s about to get numerical.
(Just kidding. Keendawg tells me math is boring. For what it’s worth, though, he’s right.)
See this man?
Unless something crazy happens, you’re looking at your next President. Trump’s a 5-point underdog in critical swing states like Pennsylvania, Arizona, and Wisconsin—all of which he won last time around. In this post I’ll be referring to the odds given by the eggheads over at FiveThirtyEight.com, and before you get started on me, just remember that their model beat all the others, and PredictIt itself.
Let’s start. Biden’s a 76% favorite to win this thing on FiveThirtyEight, but only a 59% favorite on PredictIt.
So, we go to the front page, click on Biden’s face, note his price is less than 76c, and hit “Buy”, right?
In this case, Trump is right. Because we’re smarter than that. Let’s shark around a little bit. In fact, let’s go to the Electoral College Margin of Victory market. This also happens to be…
THE CHEAPEST WAY TO BET ON A BIDEN VICTORY
Lots of brackets! Confusing! Which one to pick? Well, others’ confusion is your gain. Find the GOP ones and buy “No” on them all. If possible, be patient and get a good price.
If you do this right, you’ll land in PredictIt Nirvana. That is because you are about to be in linked-market bliss, where you can lock-in the gains of multiple contracts while only risking a fraction of the coin. If you don’t understand how this works, then just try it yourself one day and learn. I guarantee you, that’s easier than trying to get a blog devoted to Modelo-worshipping to explain the math to you.
The important point is, because of this tactic, I managed to lock-in a bet on Biden winning for an average share price of 51c. That’s 7 cents cheaper than the main market on PI.
Just one more thing before you go booking that plane ticket, though… there’s something else in the air. The foul, loathsome musk of FEAR. Yes, that’s right, boys, we should be AFRAID. We might get unlucky! This is our life’s savings at stake! Next month’s rent! (You did max out, didn’t you?)
Enter the Cornhusker State: Nebraska. Specifically, the 2nd Congressional District of Nebraska. This is–
MY PERFECT ELECTION HEDGE
So, in finance, a hedge is a bet we make against our main position, just so that we still get at least some win in case of bad luck. Long story short, I’m looking for an ace move to make just in case Biden loses this election due to an alien invasion or a verifiably terrible “senior moment” at one of the debates. Only, I ain’t fool enough to pour out 44c on Trump directly, so we need to find a favorable state instead, one that fulfills three conditions:
(1) Trump can hardly win the nation without it;
(2) It’s cheaper than 44c;
(3) Bonus points if Trump can also win the state even while losing the election—then we get paid out a second win, for free!
Well, I ran the numbers. Nebraska-2, y’all–Nebraska-2. FiveThirtyEight’s got it at 39/61 against; DecisionDeskHQ has got it at 51/49 in our favor; The Economist doesn’t list it. PredictIt? 36c by my last count, probably because it doesn’t show up on the main page’s map, so no one clicks over to see the pricing.
Nate Silver’s gonna pay us gold, because his numbers tell us only 10% of Trump’s wins don’t include NE-2. Long story short it’s almost impossible for Trump to win the election without winning this Congressional District.
PLEASE TELL ME MORE!!!
NE-2 is R+4 relative to the nation, meaning Trump only loses it when he’s gone beyond 4 points down: enough to kill any candidate.
And who could possibly give Trump the election? White voters in MI, PA, WI, just like they did in 2016.
Well, NE-2 is 82% White, and resisted the Democratic surge in the 2018 midterms. So if even these guys go for Biden, then Trump’s campaign is DEAD. And we profit on the first bet. Not to mention, narrow Biden wins could still get us 2 payouts if Trump takes Nebraska-2 and Biden takes the nation.
The “optimal” ratio to buy is 4 shares of Biden for every 3 of Trump, but if you don’t care, then just mash that “Buy” button and get the same number of both. You’d be paying 51c + 35c, or 86 cents before fees, for what’s pretty much a guaranteed dollar and a decent chance at two.
(1) Buy all GOP NOs on the Electoral College Margin of Victory market
(2) Buy DEM NO on Nebraska-02
Happy trading, boys!
P.S. Colorado below 14c is a decent hedge too, but only removes half the risk instead of 90%, so trade at your own peril.
“David” is a longtime PredictIt whale and man of simple tastes. In his spare time, he likes buying low, selling high, and picking up nickels in front of steamrollers. You can find him working his second-favorite pastime–namely, criticizing folks who buy “Yes” on their guy at 40 instead of “No” on the other guy at 38–at @grassrootsboy on the PredictIt comments sections.”