Markets are “very convinced” that Donald Trump will win the US presidential election, according to billionaire investor Stanley Druckenmiller, who says you “can see it in the bank stocks”, in cryptocurrency movements and in the soaring stock price of Truth Social, Trump’s social media company.
Truth Social’s stock price may not be the best indicator, given it is a meme stock prone to wild swings, but Druckenmiller is probably right in saying markets increasingly envisage a Trump victory. Prediction market Polymarket indicates Trump has a 62 per cent chance of victory.
[ US election polls: Kamala Harris holds 46%-43% lead over Donald Trump, poll showsOpens in new window ]
There have been allegations of potential manipulation on Polymarket to favour Trump, but this seems unlikely, given other betting markets offer similar odds. Nevertheless, investors shouldn’t assume a Trump victory is inevitable. Many observers point to how Trump outperformed polls in both 2016 and 2020, but 2024 may be different.
Polling expert Nate Silver notes Trump’s previous outperformance was linked to non-response bias – that is, Trump supporters being less likely to respond to polls, thus skewing the data. Pollsters have attempted to correct for this problem with “increasingly aggressive” techniques, says Silver, and may even be overdoing it.
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[ Global markets dip as investors eye US electionOpens in new window ]
A poll surprise that underestimates Kamala Harris’s performance “isn’t necessarily less likely” than one for Trump, with Silver saying it “remains basically a 50/50 race”.
Analysts like Silver often get grief for emphasising the unpredictability and closeness of the race. Many people don’t like uncertainty, but investors would be wise to embrace the unknown rather than betting on what lies ahead.
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