There is no shortage of people in this world who consider themselves to be authorities on politics. From across the world and all sections of the political spectrum, people will happily tell you that an event will or will not happen, and they’ll be able to justify their statements with reference to what they consider to be incontrovertible facts. And the more and more you hear from political commentators, the more the whole sphere feels like a sport with teams, star players and winners and losers.
If you happen to be good at analysing political news and movements, then it can become even more like a sport, with the opportunity to put your money where your mouth is and potentially benefit financially. There are two ways of doing this. The first, which has been the fashionable way to do it for some time, is to invest in the markets. This is based on the idea that we know which way the markets will move if a certain event happens. The alternative, which has become increasingly popular in recent years, is political betting.
Should you invest, or bet if you think you can predict elections?
There are very few major bookmakers without a section in their sportsbook for political betting. From the smaller sportsbooks in different countries to the best casino in Ontario, any bookie that will take bets on sports will usually have some betting markets. You may find that in some cases, these sportsbooks only offer odds on US elections, with maybe some opportunities to bet on UK markets and the domestic elections of the bookmakers’ country of origin. Better sportsbooks will offer more markets for more esoteric contests including the Brazilian presidential election or parliamentary elections across Europe.
If you know your stuff, you can make some money betting on politics. Even up until the night of the 2016 US Presidential Election, the odds on Donald Trump winning were astronomically long for what was a two-horse race. In a contest that was always going to come down to swing states, that was a rare misstep by the bookmakers – and one which was exploited by a lot of bettors.
If you have a feeling you know how an election is going to go, you may benefit more from making timely market investments, but you need to know how to time them. Stocks tend to sell off before an election, as a change or even potential change of government creates uncertainty. This will then level out over the following year – but if you think the incumbent will surprise everyone by winning another election, you can take advantage of a buyer’s market ahead of the voting and see returns sooner.
Go with what you’re comfortable with
In truth, the time of a major election is probably not the best moment to start your trading career, as the days and weeks around the contest are anything but stable. Similarly, if you’re more used to trading you might find the betting markets to be a little too binary to realise a real profit without a significant stake. You can certainly make money from your political knowledge both by trading and by betting if you make smart choices, but it’s a good idea to test the waters with more straightforward markets first.