How Did the Betting Markets Predict Trump’s Election Win?

The betting markets saw Donald Trump’s election victory coming. In fact, people were pretty sure of the outcome from the very first odds — and it didn’t rely on ‘predictive analytics’ to reach that conclusion. In fact, many traders used tools that are built into the platforms to give them an edge. Here is how the betting markets did predict Trump’s win, and what you can learn from them.

Trump’s Victory Wasn’t a Complete Surprise

Odds makers had established that Trump was the favorite to win the presidency long before the election even took place. And it wasn’t just the betting markets that saw this outcome coming. One popular TV show made a big deal of how they could see Trump winning based on the polls. In fact, the majority of people who voted for Trump did so because they felt like he was the only one who could ‘make America great again’.

But, of course, not everything the betting markets predicted about Trump’s election was correct. For example, they thought he would have a hard time getting support from women voters — and he did end up getting fewer votes from women than any other candidate in American history. However, the more interesting question is: could they have predicted Trump’s victory based on existing trends?

Short-Term Trends Predicted Trump’s Victory

If you look at the economic indicators for the year before the election, it’s clear that things were on the rise. The S&P 500, for example, had hit a record high just days before the election. And businesses were also reporting greater earnings, partially because of the optimism surrounding Trump’s election. The short-term trends in business and the economy could have easily predicted Trump’s win.

Long-Term Trends Also Predicted Trump’s Victory

Economic indicators can change multiple times before the end of a calendar year — and sometimes they can predict political events. Many people forget how the stock market in the late ‘70s predicted Bill Clinton’s election in ‘92 and George W. Bush’s re-election in ‘00. By looking at the long-term trends in the economy and the stock market, one can predict the outcome of an election (at least most of the time).

For example, consider the following:

  • Consumer confidence is a good indicator of how people are feeling about the economy.
  • The number of people applying for unemployment benefits is an indicator of how confident they are that there will be a job for them.
  • Home prices reflect how much buyers are willing to pay for homes.
  • And most importantly, the performance of the major stock market indexes in the last year can predict the outcome of an election.

If you believe these indicators, then it’s pretty obvious that the economy was doing well and investors were optimistic. And that, in turn, could mean that the markets were predicting a Trump victory. Of course, it’s always possible that something could have changed between now and then that would cause the trends to become neutral or even negative. But, based on what we know so far, it’s pretty clear that the trends were pretty positive in the last year — and that’s a good omen for Trump.

The bottom line is that the economy and the stock market were doing well before the election, and they were looking at that as a positive indicator of the outcome. In fact, during the last year of Obama’s presidency, analysts were saying that the economy was in good shape despite all the political uncertainty around Trump’s candidacy.

In general, indicators such as these can give you a good idea of whether or not an event will happen. That is particularly useful in politics since elections can be highly unpredictable.

What To Watch Next

Of course, Trump’s presidency will, itself, be an indicator of whether or not the short-term trends predicted his victory. That will depend on whether or not he is successful in reviving the economy. If he is, then we could see more indicators like these as part of the ‘Trump phenomenon’. If he fails, then we may see more caution in future.

If you’re looking for quick wins as part of your investment portfolio, then you can find solid short-term investment ideas in the stock market or real estate. And if you’re looking for something more long-term, then you can find some good ideas in the bond market. Just remember: timing is everything — and you’ll never know if you don’t try. In the meantime, be happy that the betting markets saw things your way. Maybe they’re right about more than they’re ‘wrong’ about. Maybe all you need is a little optimism to get you through the next four years.