WEBVTT - 26: How To Make Money By Betting On The U.K.’s Big Referendum 0:00:00.160 --> 0:00:02.320 But knowledge to work and grow your business with c 0:00:02.520 --> 0:00:06.680 i T from transportation to healthcare to manufacturing. C i 0:00:06.760 --> 0:00:10.520 T offers commercial lending, leasing, and treasury management services for 0:00:10.600 --> 0:00:13.480 small and middle market businesses. Learn more at c i 0:00:13.560 --> 0:00:28.200 T dot com put Knowledge to Work. Hello and welcome 0:00:28.240 --> 0:00:31.440 to another edition of the Odd LODs podcast. I'm Joe 0:00:31.440 --> 0:00:34.920 wis Andthal, Managing editor at Bloomberg Markets, and I'm Tracy Alloway, 0:00:34.960 --> 0:00:38.280 Executive editor at Bloomberg Markets. So Tracy, on our last 0:00:38.320 --> 0:00:41.480 episode we talked a little bit about politics, and this 0:00:41.520 --> 0:00:45.680 episode is about another political event that's coming up, the 0:00:45.800 --> 0:00:50.159 upcoming Brexit vote. Brexit, of course, refers to this possibility 0:00:50.600 --> 0:00:54.360 that on June three, when the UK holds its referendum, 0:00:54.400 --> 0:00:57.440 that people might vote to leave the EU. And while 0:00:57.480 --> 0:01:01.240 the expectation and the polls suggest that probably the UK 0:01:01.440 --> 0:01:03.880 is going to stay in the EU, there is a 0:01:03.920 --> 0:01:08.960 significant enough debate and doubt about this question that there's 0:01:09.080 --> 0:01:11.319 a lot of excitement going into this vote. Have you've 0:01:11.319 --> 0:01:14.319 been paying much attention to it, you know, obviously I'm 0:01:14.319 --> 0:01:16.880 in market, so there's lots of people talking about the 0:01:16.920 --> 0:01:21.440 potential impact on the financial system, on currencies, on the 0:01:21.560 --> 0:01:25.560 unity of the EU, I also used to live in 0:01:25.600 --> 0:01:28.760 the UK for about ten years, so I do take 0:01:28.800 --> 0:01:30.920 a personal interest in this. So that's a long way 0:01:30.920 --> 0:01:33.920 of saying yes, yeah, I'm really I'm really fascinated by 0:01:33.920 --> 0:01:36.600 the story, and I just like, I just love votes, Like, 0:01:36.640 --> 0:01:38.600 even if I don't have much of a stake in it, 0:01:38.680 --> 0:01:41.280 anytime I hear of some big votes somewhere, it's like, oh, Philip, 0:01:41.280 --> 0:01:44.600 your relationship. Scottish referendum. I just love the tension of 0:01:44.640 --> 0:01:47.000 them because there's all this build up and then bam, 0:01:47.000 --> 0:01:51.200 it's over in a second. So it's very exciting. Um 0:01:51.240 --> 0:01:54.920 today we're going to talk kind of about this bregsit referendum, 0:01:54.920 --> 0:01:57.800 but we're going to talk about it at a unique angle, 0:01:57.840 --> 0:02:01.160 which is the gambling side of it. So people are 0:02:01.200 --> 0:02:04.200 betting on whether or not Brexit will take place, right 0:02:04.240 --> 0:02:06.560 So unlike you know in the US, we have this 0:02:06.600 --> 0:02:09.320 sort of weird relationship with gambling where a lot of 0:02:09.320 --> 0:02:12.840 people like to bet on things, but it's also heavily restricted. 0:02:13.080 --> 0:02:16.600 There only select locations or select states and select things 0:02:16.639 --> 0:02:19.960 you're allowed to bet on. In the UK, they just 0:02:20.120 --> 0:02:22.880 love to bet on everything and it's wide out in 0:02:22.919 --> 0:02:28.080 the open. So obviously the soccer teams. They're openly advertised 0:02:28.080 --> 0:02:29.680 that you can bet on them. It's just much more 0:02:29.760 --> 0:02:34.119 part of the culture, including betting on political outcomes. Right, 0:02:34.240 --> 0:02:37.240 So I remember this from personal experience. You could go 0:02:37.280 --> 0:02:39.840 to the bookies. You could bet on all sorts of 0:02:39.880 --> 0:02:42.400 sports games. Obviously I did it for the World Cup 0:02:42.440 --> 0:02:44.600 in two thousand and six. I remember you could bet 0:02:44.600 --> 0:02:47.320 on more esoteric things like like you could bet on 0:02:47.440 --> 0:02:49.680 who the next Pope is going to be, right they 0:02:49.720 --> 0:02:51.760 said odds for stuff like that, or whether or not 0:02:51.880 --> 0:02:54.040 Harry Potter is going to die at the end of 0:02:54.080 --> 0:02:57.200 the Harry Potter series. All sorts of things. And so 0:02:57.240 --> 0:03:00.920 of course you can bet on political outcome ms in 0:03:01.000 --> 0:03:02.840 the UK they've been doing it for a long time. 0:03:02.960 --> 0:03:07.200 And today we're going to talk about the expert in 0:03:07.280 --> 0:03:11.200 political betting. His name is Mike Smithson, a former politician. 0:03:11.560 --> 0:03:14.840 He now runs the website political betting dot com and 0:03:14.880 --> 0:03:17.480 he wrote a book specifically about how to make money 0:03:17.800 --> 0:03:21.640 betting on politics. Interesting, so has he used his political 0:03:21.680 --> 0:03:26.400 experience to become an experience on betting on politics? I 0:03:26.440 --> 0:03:28.480 guess we're going to find out, and I hope we 0:03:28.520 --> 0:03:31.639 get some tips on how we can make money getting 0:03:31.639 --> 0:03:34.120 on politics in the future. What are the tricks to 0:03:34.240 --> 0:03:46.960 use to beat the system? All right, Mike Smithson, you're 0:03:47.040 --> 0:03:50.200 the editor of Political betting dot Com. Thank you very 0:03:50.280 --> 0:03:52.280 much for joining us. They liked it to be on 0:03:52.320 --> 0:03:55.800 the program. Thanks Mike. Uh So, Mike, tell us about 0:03:55.840 --> 0:03:59.520 the gambling market in the UK and the upcoming Brexit referendum. 0:03:59.560 --> 0:04:03.520 How much money are people betting on this? On this event? 0:04:04.240 --> 0:04:08.120 This has been the biggest political betting event of all 0:04:08.200 --> 0:04:11.880 time that I've I've certainly been doing this for about 0:04:11.880 --> 0:04:16.200 fifteen years and we're getting on the betting exchanges, which 0:04:16.240 --> 0:04:20.080 operates where where buyers and sellers come together. We've been 0:04:20.080 --> 0:04:23.320 getting up to a million pounds a day being traded. 0:04:23.720 --> 0:04:27.120 And that's extraordinary for this to be happening eight weeks 0:04:27.120 --> 0:04:29.279 out because the election, of course takes place eight weeks 0:04:29.320 --> 0:04:33.279 eight weeks today. And simply it's not it's it's taken 0:04:33.320 --> 0:04:38.000 everybody by surprise this year's scale. Generally speaking with with elections, 0:04:38.040 --> 0:04:42.240 you nobody really pays any attention on the betting markets 0:04:42.200 --> 0:04:45.240 still in about four or five days beforehand, so this 0:04:45.360 --> 0:04:49.320 is absolutely massive. Is it popular in terms of betting? 0:04:49.360 --> 0:04:52.719 Because it's basically a binary outcome, it's either yes or no. 0:04:52.880 --> 0:04:55.160 Does that make it easier to bet on or place odds? 0:04:55.200 --> 0:04:58.279 And someone, oh, yes, it's It makes it much much 0:04:58.320 --> 0:05:01.440 simpler because you know, there there is. It gets compared 0:05:01.480 --> 0:05:04.640 with a general election in the UK, which are quite complicated, 0:05:04.960 --> 0:05:07.560 where it's much harder to work out the tours might 0:05:07.600 --> 0:05:10.200 be they won the last election on thirty six point 0:05:10.320 --> 0:05:13.280 nine percent of the vote, so that was not so obvious. 0:05:13.279 --> 0:05:16.680 Wherever something like this, it is blindingly obvious from the 0:05:16.720 --> 0:05:19.920 polling which way it's going, and it's and people adjust 0:05:19.960 --> 0:05:23.000 their bets accordingly, and there's a massive amount of polling 0:05:23.040 --> 0:05:25.800 analysis goes on and people every new poll that comes out, 0:05:26.200 --> 0:05:28.680 people try to look and seek to undermine it or 0:05:28.680 --> 0:05:31.400 seek to does it reinforce their positions and so on, 0:05:32.080 --> 0:05:34.600 and it's it's it is. It is a fascinating period. 0:05:34.720 --> 0:05:36.960 All right. Let's back up a minute, because to an 0:05:36.960 --> 0:05:41.360 American audience, the idea that politics is a big thing 0:05:41.480 --> 0:05:45.719 where people openly bed and openly tracked the gambling odds 0:05:45.839 --> 0:05:48.600 is a weird thing. What's the history of political betting 0:05:48.960 --> 0:05:51.880 in the UK? How did political events come to be 0:05:52.000 --> 0:05:56.080 this thing that professional bookmakers and gamblers took interest in 0:05:57.040 --> 0:05:59.680 a fact it goes back for century a couple of 0:05:59.680 --> 0:06:03.160 century is that a better used to be illegal except 0:06:03.200 --> 0:06:07.880 on race courses, but you would have a certain bookmakers 0:06:08.000 --> 0:06:11.120 were able to operate this again that in the nineteenth 0:06:11.120 --> 0:06:14.720 century were able to operate credit accounts, and what would 0:06:14.720 --> 0:06:17.960 happen is that within the sort of London clubs people 0:06:18.000 --> 0:06:20.719 would be placing pets and that would be that would 0:06:20.720 --> 0:06:23.240 be sort of legal. But the big thing that where 0:06:23.240 --> 0:06:27.600 it took off was in ninety one when betting betting 0:06:27.640 --> 0:06:31.599 over the counter in shops, betting for virtually everybody was 0:06:31.640 --> 0:06:35.080 made legal and since then it is exploded. And of 0:06:35.080 --> 0:06:39.080 course what people love doing is matching their own predictions 0:06:39.120 --> 0:06:42.160 of an outcome by putting their money on and risking 0:06:42.320 --> 0:06:45.400 risking their cash on it. Joe was telling me earlier 0:06:45.440 --> 0:06:48.880 in the segment that you actually used to be in politics. 0:06:48.920 --> 0:06:52.240 You were with the Liberal Democrats. Can you maybe make 0:06:52.279 --> 0:06:55.200 the connection between being in politics and then going on 0:06:55.600 --> 0:06:59.840 to actually become an expert on political betting? Oh? Yes, 0:06:59.880 --> 0:07:03.480 I think you understand the dynamics of elections a lot more. 0:07:03.960 --> 0:07:07.000 You understand the sorts of people who votes. So for instance, 0:07:07.040 --> 0:07:09.960 at the moment that The critical thing is turn out. 0:07:10.320 --> 0:07:13.080 We don't know clearly how many people are going to 0:07:13.120 --> 0:07:17.400 turn out, but we do know that from my experience 0:07:17.400 --> 0:07:19.320 on the ground and I just stop being in politics 0:07:19.920 --> 0:07:23.840 twenty years ago, is that people who voted in previous 0:07:23.840 --> 0:07:26.480 elections are the ones that most likely to vote in 0:07:26.560 --> 0:07:29.560 future elections. And if you've got a history of never voting, 0:07:29.600 --> 0:07:31.560 then the chances are you're not you're going to be 0:07:31.760 --> 0:07:34.800 less likely to vote in the coming election. So all 0:07:34.840 --> 0:07:38.120 the polling analysis is really based on that's that's that 0:07:38.280 --> 0:07:42.200 sort of that sort of thing. Generally speaking, UK pollsters asked, 0:07:42.280 --> 0:07:43.960 you know, could you rate on a scale of one 0:07:44.000 --> 0:07:46.360 to tend whether whether or not you're likely to vote 0:07:46.440 --> 0:07:49.960 or not? And there are And what we're finding is 0:07:50.040 --> 0:07:53.559 that a lot more people who are saying they're voted 0:07:53.680 --> 0:07:57.760 they want to vote leave I'll say, are saying that. 0:07:57.800 --> 0:08:01.360 But if you then analyze the back ground where they 0:08:01.440 --> 0:08:04.280 come from, are you their socio economic groups, you discover 0:08:04.600 --> 0:08:07.000 that they are the most least likely to vote it 0:08:07.040 --> 0:08:09.320 to vote in elections. So you've got to sort of 0:08:09.360 --> 0:08:13.880 balance that down. And that's that's where a debate with 0:08:14.040 --> 0:08:16.520 people like me, where it comes down to what's the 0:08:16.560 --> 0:08:20.800 turn it going to be so from your expert analysis 0:08:20.840 --> 0:08:23.320 and having watched these things so far, where do you 0:08:23.400 --> 0:08:26.400 stand based on the polling and what you read into 0:08:26.400 --> 0:08:28.400 the polling? See Mike. This is the point at which 0:08:28.480 --> 0:08:32.080 Joe asked you for betting toes um Well and and 0:08:32.080 --> 0:08:35.079 and yeah and how do so? What do you see 0:08:35.120 --> 0:08:38.640 as the likely outcome of the Brexit referendum? And be 0:08:39.559 --> 0:08:42.960 do does your assessment match up with the current adds? Well? 0:08:43.000 --> 0:08:45.440 First of all, as my own gambling is, I tend 0:08:45.480 --> 0:08:48.720 to bet on betting, So if I think that there 0:08:48.760 --> 0:08:51.640 will be a move towards leaving the betting, then I 0:08:51.679 --> 0:08:53.319 will get on there so I'll be able to get 0:08:53.320 --> 0:08:55.679 out of that position later. So it's not it's not 0:08:55.760 --> 0:08:59.079 just a complete simple thing betting on an overall outcome. 0:08:59.400 --> 0:09:04.199 But my reading at the moment is that probably we're 0:09:04.240 --> 0:09:07.240 going to vote to stay in the in the European Union, 0:09:08.280 --> 0:09:11.960 but I wouldn't be totally totally certain of that, and 0:09:12.040 --> 0:09:16.439 currently the markets make it about a probability, which I 0:09:16.480 --> 0:09:19.119 think is about right. So you mentioned something very important 0:09:19.160 --> 0:09:21.319 that's different from how most people in the US think 0:09:21.360 --> 0:09:24.680 of betting, which is that when you place a bet 0:09:24.760 --> 0:09:28.000 on leave or stay. These you have a tradeable asset, 0:09:28.080 --> 0:09:29.640 so it's not just that you have to hold on 0:09:29.720 --> 0:09:31.760 to it and wait till the outcome. But if the 0:09:31.800 --> 0:09:34.720 odds move nicely in the favor of your bed before 0:09:34.760 --> 0:09:37.240 then you can lay it off and take a profit 0:09:37.360 --> 0:09:39.960 before the ultimate results. So it's really much more like 0:09:40.040 --> 0:09:43.160 a trading than just a pure buy a ticket and 0:09:43.200 --> 0:09:47.120 then wait until the outcome. That's precisely and as a 0:09:47.160 --> 0:09:51.560 result of modern betting systems and certainly online systems, those 0:09:51.640 --> 0:09:54.880 complexitis can be handled and handled very well. And that's 0:09:54.920 --> 0:09:57.280 that's one reason that one of the things really given 0:09:57.280 --> 0:10:01.400 a boost to a political betting, that the ability to 0:10:01.400 --> 0:10:03.960 to be able to take a view one day, make 0:10:04.040 --> 0:10:06.880 a profit three or four days later, and then perhaps 0:10:06.960 --> 0:10:09.360 bet the other side of the week after. Now you 0:10:09.440 --> 0:10:14.640 mentioned the extraordinary um, the extraordinary monetary volume of Brexit 0:10:15.000 --> 0:10:18.080 vetting betting on this referendum, and of course there are 0:10:18.080 --> 0:10:24.600 a large economic ramifications, financial ramifications, ramifications for sterling the 0:10:24.640 --> 0:10:28.600 currency specifically, is there much hedging going on, so people 0:10:28.600 --> 0:10:32.400 are trying to hedge a certain position in the currency 0:10:32.520 --> 0:10:36.760 market with a binary bet and somehow exploit an opportunity 0:10:37.280 --> 0:10:40.920 a discrepancy between the two. I think that there is 0:10:40.960 --> 0:10:43.359 that going on at the moment, and I think increasingly 0:10:43.440 --> 0:10:46.680 that that that will take place. I mean, to my mind, 0:10:46.720 --> 0:10:49.559 one of the best indicators it actually the value of 0:10:49.600 --> 0:10:51.400 the pound against the dollar and the value of the 0:10:51.440 --> 0:10:54.880 pound against the your bow. And if there is a 0:10:54.960 --> 0:10:59.240 confidence that they that that we will vote for remain, 0:10:59.640 --> 0:11:02.760 then seems to increase the increase the value. And I certainly, 0:11:02.960 --> 0:11:05.400 in terms of my own tracking, I watch I watch 0:11:05.440 --> 0:11:08.599 those Curvency screens as well as I watch other screens. 0:11:08.640 --> 0:11:11.520 So I have a sort of existential question, which is, 0:11:11.920 --> 0:11:15.840 you know, it's all very fun and interesting to watch 0:11:16.760 --> 0:11:20.760 the Brexit betting, and we're seeing lots of money exchanging 0:11:20.840 --> 0:11:25.360 hands based on this referendum, But is there any social 0:11:25.520 --> 0:11:30.840 value to political betting because people often people often characterize 0:11:30.880 --> 0:11:33.600 the stock market as sometimes a bit of a casino. 0:11:33.679 --> 0:11:37.400 People are essentially gambling on the likelihood of companies succeeding 0:11:37.520 --> 0:11:39.440 or not. But at least you can say that the 0:11:39.480 --> 0:11:44.720 stock market is diverting money into actual capital, whereas this 0:11:45.360 --> 0:11:49.280 is pure, pure bedding. Yes, um, I don't think there's 0:11:49.280 --> 0:11:52.520 any social value at all. I think it's just providing 0:11:52.960 --> 0:11:56.120 a means whereby people can bet back up their own 0:11:56.120 --> 0:12:01.240 opinion by risking their own cash and wear their amounts. Yeah, 0:12:02.200 --> 0:12:06.080 I can't see any social facular at all. Thank you, Mike. 0:12:06.240 --> 0:12:08.320 We'll be right back with you. But first a quick 0:12:08.360 --> 0:12:15.960 word from a sponsor, but knowledge to work and grow 0:12:16.000 --> 0:12:19.640 your business with c i T from transportation to healthcare 0:12:19.679 --> 0:12:23.240 to manufacturing. C i T offers commercial lending, leasing, and 0:12:23.280 --> 0:12:27.240 treasury management services for small and middle market businesses. Learn 0:12:27.280 --> 0:12:30.160 more at c i T dot com put knowledge to Work. 0:12:40.320 --> 0:12:43.720 We're back with Mike Smithson, uh, the editor of Political 0:12:43.840 --> 0:12:47.840 Betting dot com. So we've talked about this upcoming referendum 0:12:47.840 --> 0:12:50.319 and what the odds are saying. Do you have any 0:12:51.000 --> 0:12:54.720 great examples of the markets having gotten it totally wrong 0:12:54.760 --> 0:12:58.480 in the past, or uh, something in history that really 0:12:58.520 --> 0:13:01.640 struck you as a particular the important or pivotal moment 0:13:01.760 --> 0:13:06.240 for political betting in the UK. Yes, Certainly to the 0:13:06.320 --> 0:13:10.840 last UK general election in two thousand and fifteen, none 0:13:10.880 --> 0:13:13.840 of the all the markets pointed to. Perhaps the tour 0:13:14.000 --> 0:13:16.920 is the Conservatives certainly winning most seats in the House 0:13:16.960 --> 0:13:20.320 of Commons, but it was very much a long shot 0:13:20.400 --> 0:13:23.680 that they that that Cameron could win an overall majority, 0:13:23.880 --> 0:13:26.480 which of course he did. And in fact, even even 0:13:26.679 --> 0:13:29.040 when the results were coming in, when the exit polls 0:13:29.040 --> 0:13:33.760 were coming in, you could still get an overall majority. 0:13:33.840 --> 0:13:36.200 Was just rated as a ten percent chance, and it 0:13:36.240 --> 0:13:38.640 took a lot more results to coming before it turned 0:13:38.640 --> 0:13:41.679 and people realize that, in fact the Conservatives were going 0:13:41.720 --> 0:13:43.840 to win a majority. That was just that was just 0:13:43.920 --> 0:13:47.439 a year ago. So this this, this, this does happen. 0:13:47.679 --> 0:13:52.040 We also know that that people with an interest of 0:13:52.120 --> 0:13:55.720 trying to influence betting prices in order to create a 0:13:55.800 --> 0:14:00.280 sense of momentum. We saw that with the two uson 0:14:00.280 --> 0:14:05.200 and twelve the White House race. When the old Irish 0:14:05.600 --> 0:14:08.520 Exchange in Trade, which I don't think it exists any longer, 0:14:09.000 --> 0:14:11.280 where where where the the the amount of money that 0:14:11.360 --> 0:14:14.320 was going on Romney was simply out of keeping what 0:14:14.360 --> 0:14:16.680 the polls were saying, and was also out of keeping. 0:14:16.679 --> 0:14:21.040 We watched what the London based exchange were showing and 0:14:21.080 --> 0:14:23.880 there was a quite a large arbitration opportunity. If you 0:14:23.920 --> 0:14:25.560 wanted to get involved in that. It was just going 0:14:25.600 --> 0:14:29.640 to ask how big is that cross exchange arbitrage of 0:14:29.720 --> 0:14:35.000 different contracts and different trading platforms. That's certainly, it's certainly possible, 0:14:35.120 --> 0:14:38.680 it's certainly there, but you've got to act extremely quickly 0:14:38.880 --> 0:14:42.160 in order because deefinitely speaking, a good position like that 0:14:42.200 --> 0:14:45.280 won't last very long. Though we we we did get 0:14:45.720 --> 0:14:49.200 some quite extraordinary betting moves on this on the referendum 0:14:49.360 --> 0:14:52.360 about last week or the week before last, when the 0:14:52.400 --> 0:14:55.960 contrary to where the poles were going, the the leavers 0:14:56.080 --> 0:14:59.000 the leaf the leavers were seeing a huge amount of 0:14:59.000 --> 0:15:03.400 money going on them, and then then that sort of ceased, 0:15:03.400 --> 0:15:07.240 and of course in order to if the if you're 0:15:07.280 --> 0:15:11.240 putting forward a bet that's offering value to the other 0:15:11.560 --> 0:15:14.480 the other side that's greater than that perhaps it should be, 0:15:14.720 --> 0:15:16.880 then people obviously just sweep it up. It's just a 0:15:16.960 --> 0:15:21.680 normal market operating well. So, speaking of discrepancies across betting platforms, 0:15:21.720 --> 0:15:25.640 how do the bookies actually make their odds for things 0:15:25.680 --> 0:15:28.520 that are often not that clear cut? We're talking about 0:15:28.560 --> 0:15:31.920 a wide variety of outcomes, right, Well, there are two 0:15:31.920 --> 0:15:35.440 sorts of bookmakers in certainly in the UK there were 0:15:35.440 --> 0:15:38.880 those which have an exchange which actually seek to bring back, 0:15:39.200 --> 0:15:42.120 bring forward to people who want to make a bet together. 0:15:42.200 --> 0:15:47.280 It's all super fast and operated online. Uh and that 0:15:47.400 --> 0:15:49.880 that that's that's one thing where the other sorts of 0:15:49.880 --> 0:15:52.680 where you've got traditional bookmakers who work out and try 0:15:52.720 --> 0:15:55.080 to thick work out what the odds are. They will 0:15:55.120 --> 0:15:58.160 put odds up, but they will see if if if 0:15:58.160 --> 0:16:00.200 they've if they've got it's wrong, they'll find a lot 0:16:00.240 --> 0:16:03.000 of people coming onto them if or they'll find that 0:16:03.040 --> 0:16:05.920 nobody's interested in the prices they're offering. So it's in 0:16:05.960 --> 0:16:07.800 fact it's working in the same way so that the 0:16:08.120 --> 0:16:11.440 odds will eventually work out in terms of what what 0:16:11.440 --> 0:16:14.000 what the market is wanting. So one of the things 0:16:14.000 --> 0:16:16.720 that always comes up when we discuss these kinds of markets, 0:16:16.720 --> 0:16:19.960 they're always people who say all they do is track 0:16:20.040 --> 0:16:23.480 conventional wisdom. They don't have any sort of particular They 0:16:23.480 --> 0:16:26.640 don't offer us any particular insight. Others say, are the 0:16:26.680 --> 0:16:29.800 markets are the clearest signal we have? Where do you 0:16:29.840 --> 0:16:32.520 come down on this? Do markets do they usually get 0:16:32.560 --> 0:16:35.960 it right? Are they what is their track record as 0:16:36.000 --> 0:16:39.200 being a tool to forecast what's actually going to happen? 0:16:39.440 --> 0:16:42.200 I think the best example of that were in two 0:16:42.200 --> 0:16:45.880 thousand and fourteen September we had the refermendum in Scotland 0:16:46.200 --> 0:16:51.400 on Scotland going for independence, and about ten days before that, 0:16:52.160 --> 0:16:55.360 suddenly we have polls which were showing that the vote 0:16:55.360 --> 0:16:59.600 would be for independence. Remember that, And what was interesting 0:16:59.720 --> 0:17:02.480 is that the betting markets hardly turned on that, but 0:17:02.800 --> 0:17:07.439 hardly any movement, and and and I think that that 0:17:07.760 --> 0:17:10.200 represented that there was a different view being taken by 0:17:10.240 --> 0:17:13.520 gamblers compared with what the polls were showing people. So 0:17:13.600 --> 0:17:16.159 the pundits were losing their heads, but the gamblers stayed 0:17:16.160 --> 0:17:19.000 cool and got it right, I think, so, yes, I know, 0:17:19.160 --> 0:17:21.600 I remember on that one I was I tried to 0:17:22.160 --> 0:17:24.480 I saw that pole. I thought, well, everybody's going to 0:17:24.520 --> 0:17:28.920 be wanting to bet on Scottish such as getting independence. 0:17:29.520 --> 0:17:32.639 And unfortunately the market didn't move and never had a 0:17:32.720 --> 0:17:35.720 chance to take advantage of Alright, so we just have 0:17:35.920 --> 0:17:38.720 a few minutes left. So let's say someone wants to 0:17:38.760 --> 0:17:42.720 get into political betting. Obviously it would take a long 0:17:42.800 --> 0:17:45.960 time for anyone to match your years of experience and 0:17:46.000 --> 0:17:49.000 watching markets. But give us a few tips as a 0:17:49.000 --> 0:17:52.800 as a pro in this area. What are some things 0:17:52.880 --> 0:17:55.400 that people can do to improve their chances of success 0:17:55.480 --> 0:17:59.520 in these markets. The most important thing is to disregard 0:17:59.760 --> 0:18:04.000 your own what your own desires are, and it's very 0:18:04.080 --> 0:18:07.640 easy to think I want to I want Barack Obama 0:18:07.680 --> 0:18:10.880 to win, I want Donald Trump to win. You've got 0:18:10.920 --> 0:18:14.640 to disregard that completely, and that is that is quite challenging, 0:18:14.640 --> 0:18:18.760 because that the chances are. You will then interpret all 0:18:18.800 --> 0:18:21.200 the evidence in line with what your what what your 0:18:21.200 --> 0:18:24.080 desires are. That's the most important thing, and a lot 0:18:24.119 --> 0:18:27.720 of people find that very difficult to do. Uh. Secondly, 0:18:27.760 --> 0:18:31.160 you've really got to be watching for value. It's when 0:18:31.720 --> 0:18:34.480 something comes up and you think, wow, that's a that's 0:18:34.480 --> 0:18:37.639 a good price. You think something's ten percent chance, and 0:18:37.680 --> 0:18:39.720 you find that the bets of the pricing on it 0:18:39.760 --> 0:18:42.760 is only making it a five chance, then you've got 0:18:42.800 --> 0:18:46.080 a value bet. And that's that that happened. That happens 0:18:46.119 --> 0:18:50.320 all the time. Um So it's it's it's looking at it, 0:18:50.600 --> 0:18:54.040 making your own objective assessment of what you think that 0:18:54.080 --> 0:18:57.880 the chances of this event happening, and then looking at 0:18:57.880 --> 0:19:00.680 the betting price. And if if your assessment it's better 0:19:00.760 --> 0:19:02.720 them the price that you can get from the bookies, 0:19:02.760 --> 0:19:04.760 then you you obviously bet. If it's not, then you 0:19:04.840 --> 0:19:08.560 don't any anything else. We're just about out of time. 0:19:08.600 --> 0:19:14.520 One last tip for people, UM, be careful. That's probably 0:19:14.520 --> 0:19:17.960 the best advice, isn't it? All right? Mike Smithson and 0:19:18.000 --> 0:19:20.680 thank you so much. This is a fascinating topic and 0:19:20.760 --> 0:19:24.680 a fascinating lens through which we can watch the Breggsit 0:19:24.760 --> 0:19:28.120 vote over the coming weeks. Really appreciate you sharing your 0:19:28.160 --> 0:19:39.959 experience on this topic with us. So, Tracy, are you 0:19:40.040 --> 0:19:44.040 going to place a wager on the upcoming breggs A referendum? Uh? 0:19:44.480 --> 0:19:49.399 You know, I don't feel a lot of well, I 0:19:49.400 --> 0:19:52.439 don't feel much of an urge to put my money 0:19:52.520 --> 0:19:54.840 where my mind is. I did think it was interesting 0:19:54.840 --> 0:19:59.639 that Mike brought up this idea that one of the 0:19:59.680 --> 0:20:01.879 things people have to watch out for the most is 0:20:01.920 --> 0:20:05.000 to avoid sort of confirmation bias and the idea that 0:20:05.119 --> 0:20:07.600 they want to put money on the people that they 0:20:07.680 --> 0:20:10.600 want to see in power. Yeah. I also am fascinated 0:20:10.600 --> 0:20:13.960 by how big this particular market has gotten. And I mean, 0:20:14.000 --> 0:20:16.200 there's no way to know for sure, but it does 0:20:16.280 --> 0:20:19.320 seem to make sense that for people who have a 0:20:19.400 --> 0:20:23.199 significant financial stake in the outcome of this referendum, that 0:20:23.320 --> 0:20:26.480 the size and liquidity of this market not for huge players, 0:20:26.520 --> 0:20:29.560 but for smaller players, you might want to place a 0:20:29.600 --> 0:20:33.240 wager to sort of head your exposure to a brexit. Right. 0:20:33.280 --> 0:20:36.080 I do like the idea that there's a secondary market, 0:20:36.160 --> 0:20:40.280 there's all this arbitrage going on. It's really financialized. Actually, yeah, no, 0:20:40.400 --> 0:20:42.000 that's really cool, and that's one of the things that 0:20:42.080 --> 0:20:46.000 just generally seems cooler about betting in the UK versus Vegas. 0:20:46.400 --> 0:20:49.119 In the in Vegas, obviously you place a bed at 0:20:49.119 --> 0:20:50.600 a sports book and then you walk away and you 0:20:50.640 --> 0:20:52.840 see the outcome. But it seems so much more fun 0:20:53.200 --> 0:20:55.439 if you could then have this very liquid market to 0:20:55.520 --> 0:21:00.600 trade that ticket, to arbitrage across multiple trading player forums, 0:21:00.600 --> 0:21:05.040 to invest, to make a bet with the expectation that 0:21:05.080 --> 0:21:07.120 you're not going to win, but that at some point 0:21:07.119 --> 0:21:08.919 the odds will move in your favor and then you 0:21:08.920 --> 0:21:11.399 can sell it to all kinds of It just seems 0:21:11.480 --> 0:21:13.639 very fun to me, right, And I know I asked 0:21:13.680 --> 0:21:17.200 if there was a social value to this kind of speculation, 0:21:17.520 --> 0:21:20.560 and Mike was pretty upfront saying no, not really, it's 0:21:20.600 --> 0:21:24.080 basically pure gambling. But I do like the idea that 0:21:24.119 --> 0:21:26.840 he brought up about how this can have a predictive 0:21:26.920 --> 0:21:31.280 value and sometimes it does indicate things better than some 0:21:31.359 --> 0:21:34.439 other more traditional indicators. And of course I think if 0:21:34.440 --> 0:21:36.879 you looked at a lot of Wall Street products and 0:21:36.920 --> 0:21:39.719 ask the social value question, you would have just as 0:21:39.720 --> 0:21:42.280 hard of a time coming up with very true, telling answer. 0:21:42.280 --> 0:21:44.960 All right, well that is this edition of odd LODs. 0:21:45.040 --> 0:21:47.920 Thank you very much for listening. I'm Joe Wisn't though 0:21:47.960 --> 0:21:51.119 you can find me on Twitter at the Stalwart, and 0:21:51.160 --> 0:21:54.480 I'm Tracy Alloway. I'm on Twitter at Tracy Alloway. Thanks 0:21:54.520 --> 0:22:07.120 for listening. Put knowledge to work and grow your business 0:22:07.119 --> 0:22:11.199 with c i T. From transportation to healthcare to manufacturing. 0:22:11.400 --> 0:22:14.800 C i T offers commercial lending, leasing, and treasury management 0:22:14.840 --> 0:22:18.159 services for small and middle market businesses. Learn more at 0:22:18.200 --> 0:22:20.680 c i T dot com. Put Knowledge to Work.