Financial Betting–Post Election Financial Market Performance Results
–Financial markets freak out on election night then shrug off the Trump victory.
– Business as usual on Wall Street and around the world the next day with strong gains.
– The predicted ‘Trump financial meltdown’ was as off base as the pre-election polls
First of all, I want to apologize for not getting these up sooner. I didn’t really realize how little sleep I’d had over the past couple of weeks until the day after the election. I emailed the ‘suits’ that run this site and told them that I was going to take a nap for a couple of hours. That was right after dinner on Wednesday. I woke up on Thursday afternoon 25 hours later. I got some food and sat down to read and fell asleep again.
Anyway, I’m now well rested and refreshed and there’s a ton of odds in the pipeline. I’ve already posted ‘opening numbers’ for the 2020 Presidential Election and that’s been getting a lot of attention. Go check it out:
2020 PRESIDENTIAL ELECTION FUTURES ODDS
THE FINANCIAL WORLD FREAKS OVER TRUMP AND THEN SHRUGS IT OFF
I had a premise that the reaction of the financial markets to the election would be very atypical. Historically, the stock market goes up when a Republican wins and down when a Democrat wins. Or at least that’s the mythical narrative but there’s one problem–it’s no longer true to the extent that it’s *ever* been true. This is more of a stereotype based on Depression Era politics than anything based in reality with as little empirical validation as my suspicion that the Monopoly board game’s mascot ‘Mr. Monopoly‘ is a tax cheat. The premise is that the Republican candidate is typically more favorable to ‘big business’ than the Democratic candidate. But we’re not talking Herbert Hoover, FDR and the ‘Grapes of Wrath’ here. The US political system has changed and today’s digital economy would be unrecognizable to Depression era businessmen. Both parties are bought and paid for by various special interests intent on a futile hope that they can preserve the status quo and stave off innovative disruption through regulatory capture. This year the Democratic candidate Hillary Clinton was the preferred choice and financial beneficiary of the big Wall Street firms. The pre-election narrative was that the financial markets were all but guaranteed of a Clinton victory and they had no contingency plan for a Trump win. For that reason, the thinking was that the markets would not really react to a Hillary win since it had already been ‘priced in’.
There was also a narrative that if Trump won the financial world would fall apart with global implications. Spoiler alert–Trump won. When it became apparent that Trump would not only be competitive but was likely going to win the world financial markets freaked out in a downright insane and laughable fashion. You don’t have to be Gordon Gecko to know that you should always have a ‘contingency plan’. In a scenario where there’s only two realistic outcomes (Trump wins, Hillary wins) it’s inexcusable to not have a ‘Plan B’. Yet the consensus opinion among financial industry observers–the ones that *weren’t* freaking out along with the big Wall Street firms–was exactly that. Wall Street gurus with decades of experience that get paid millions of dollars to manage billions of dollars in assets didn’t have a plan for a Trump win other than completely lose their grip on reality. Their level of hysteria was such that I’m frankly surprised that no one soiled himself on live TV.
On Tuesday evening the international stock futures started to plummet. At one point the Dow Jones Industrial Average futures were down over -700 points with similar drops in just about every equities market in the US and around the world. Gold started to trend upward as did Bitcoin–the oldest form of monetary exchange in the world as well as the newest were considered ‘safe havens’ in the presumably inevitable worldwide economic collapse.
Some of this was obviously basic ‘CYA’ thinking while others saw a potential opportunity. I already hold a fair amount of Bitcoin and I threw just about all of my liquid assets into the cryptocurrency as it started to slowly climb upward. I really didn’t buy in to the whole ‘worldwide economic armageddon’ thing but thought that this might be a similar situation to Brexit with uncertainty generating a strong upward move for some nice profits.
GROWN MEN ACTING LIKE EMOTIONALLY UNSTABLE BABIES
There were some calculated positions being set but they represented only a small fraction of the futures markets. The rest was panic–sheer delusional and hysterical panic. What you think of Trump isn’t the point here–I don’t particularly like the guy but he’s no more or no less loathsome than Hillary ‘Wipe the Email Server with a Cloth’ Clinton. My hunch was that the markets would drop a bit if Trump won simply because they were assessing the new reality and adjusting to it. What I didn’t expect was that highly paid and experienced grown men–men that had lived through the many transformative events of the past couple of decades including the *legit* 2009 meltdown of the world economy–were losing their mind that a somewhat obnoxious and loud mouthed real estate developer, casino owner and realty TV show host had beaten the candidate that the finance, investment and banking industries had considered a lock.
I wish I could remember names but I was trying to watch about six different financial news networks from the US and Europe at the same time. There were a lot of familiar faces giving their reaction and ‘analysis’ of the Trump win. Instead of a mix of views on how market dynamics might change and how to best invest under a new administration these experts–many of whom I’ve listened to in the past and held in high regard for their knowledge and insight–were coming completely unglued. Their reaction would have been appropriate had Godzilla been rampaging through Tokyo at that hour leaving the Tokyo Stock Exchange in ruins but not for an unexpected outcome in a Presidential election. They all shared a similar vision of gloom and doom. The equity market futures as well as the US dollar would continue to plummet throughout the night. The bleeding would continue when the markets opened on Wednesday and the DJIA, NASDAQ and S&P would shed a double digit percentage of its value. This would send shockwaves around the world with every other economy–particularly in Europe and Asia–feeling significant collateral damage. Gold prices would surge, Bitcoin would rocket past the $1000 dollar mark. This carnage would continue for weeks, maybe months. At least that was their guess–many admitted they had no clue what the endgame would be. This wasn’t an isolated extremist position. Some variation on this theme quickly became a common refrain.
Or….maybe not. Bitcoin and gold went up some but nothing unprecedented and started to slowly give up those gains before the end of the night. As of this writing the BTC price is a whopping 6 dollars higher ($716) from where I bought it prior to the election ($710). The market futures started to move off of their lows which many (myself included) attributed to good old fashioned ‘fire sale’ buying. As financial writers all over the globe started hitting ‘publish’ on their own apocalyptic visions of the near future the US stock markets opened. As everyone held their breath it was…business as usual. There was a slight drop at the open before prices recovered. Actually, they did more than ‘recover’. The DJIA closed up 150 points on Wednesday and would go on to have its best week since 2011. Interestingly, the European financial media had a much more measured view just as they did with their election coverage. This is likely a result of not trying to milk the situation for higher ratings.
CHICKEN LITTLE SAYS ‘BOOYA!! THE SKY IS FALLING!!
So what happened? The reaction of the markets wasn’t a surprise nor was the quick return to normalcy. Financial markets are very good about adjusting to constantly changing external circumstances. The immediate ‘freakout’ of investors wasn’t a surprise either. The thing that markets hate more than anything else is uncertainty. That plus the ‘rookie mistake’ of not having a contingency plan in place for an unexpected outcome set the futures spiralling downward. Once markets worldwide assimilated the Trump victory it quickly returned to ‘business as usual’. There’s still some hysterics out there and a bumper crop of tortured ‘why the markets recovered so quickly’ articles that are completely unnecessary. The explanation is ‘Econ 101’. In every market there are sellers and buyers. There are investors bullish on the future and those who are pessimistic. And there are always opportunity seekers–like Rodney Dangerfield said in ‘Caddyshack’: “Everybody’s buying? Then sell! sell! sell! What’s that? Everybody is selling? Then buy! buy! buy!.”
The insane and hysterical response of the majority of the US financial media is inexcusable. Once again, your opinion of Trump–or for that matter their personal opinion of Trump–isn’t the point. These people as a group should have known better. They’ve got the theoretical understanding and the experience of observing how the markets react to all manner of situations good and bad. This wasn’t the spoiled millennials unable to process the reality that everyone doesn’t agree with them and protesting in the street because they’ve grown up being able to pitch a fit and get their way. These aren’t late night infomercial scam artists trying to sell a ‘financial strategy against the New World Order’. These are purported experts that should have been able to keep their oars in the water professionally during an unusual–but far from ‘worst case scenario’–situation. They did a reasonably good job staying calm during the 2009 financial crisis when no one knew how things would shake out and how the world economic system would fare. They didn’t just ‘buy in’ to the anti-Trump hype and hysteria. They were instrumental in exacerbating it and perpetuating it.
Anyway, here’s the results of our post election financial betting props:
POST ELECTION FINANCIAL MARKET PERFORMANCE BETTING ODDS
BITCOIN PRICES
The USD price of Bitcoin (BTC) at Coinbase on 11/10/16 at 12:01 AM Eastern will be?
Over $710: -125 WIN
Under $710: +105
The USD price of Bitcoin (BTC) at Coinbase on 11/10/16 at 12:01 AM Eastern will be?
Over $700: -150 WIN
Under $700: +130
The USD price of Bitcoin (BTC) at Coinbase on 11/10/16 at 12:01 AM Eastern will be?
Over $650: -300 WIN
Under $650: +225
The USD price of Bitcoin (BTC) at Coinbase on 11/10/16 at 12:01 AM Eastern will be?
Over $750: +130
Under $750: -150 WIN
The USD price of Bitcoin (BTC) at Coinbase on 11/10/16 at 12:01 AM Eastern will be?
Over $800: +225
Under $800: -300WIN
The USD price of Bitcoin (BTC) at Coinbase on 11/10/16 at 12:01 AM Eastern will be?
Over $850: +425
Under $850: -550WIN
The USD price of Bitcoin (BTC) at Coinbase on 11/10/16 at 12:01 AM Eastern will be?
Over $1000: +1200
Under $1000: -1500WIN
GOLD PRICES
The USD price per ounce of gold at GoldPrice on 11/10/16 at 12:01 AM Eastern will be?
Over $1300: -175
Under $1300: +145WIN
The USD price per ounce of gold at GoldPrice on 11/10/16 at 12:01 AM Eastern will be?
Over $1350: -110
Under $1350: +110WIN
The USD price per ounce of gold at GoldPrice on 11/10/16 at 12:01 AM Eastern will be?
Over $1275: -225WIN
Under $1275: +170
The USD price per ounce of gold at GoldPrice on 11/10/16 at 12:01 AM Eastern will be?
Over $1250: -250WIN
Under $1250: +210
The USD price per ounce of gold at GoldPrice on 11/10/16 at 12:01 AM Eastern will be?
Over $1200: -450 WIN
Under $1200: +325
US STOCK EXCHANGES
The Dow Jones Industrial Average (DJIA) close on 11/9/16 will be?
Over 17,000: -150 WIN
Under 17,000: +120
The Dow Jones Industrial Average (DJIA) close on 11/9/16 will be?
Over 17,500: -110 WIN
Under 17,500: -110
The Dow Jones Industrial Average (DJIA) close on 11/9/16 will be?
Over 18,000: +150 WIN
Under 18,000: -190
The NASDAQ Composite Index (^IXIC) close on 11/9/16 will be?
Over 5000: -135 WIN
Under 5000: +115
The NASDAQ Composite Index (^IXIC) close on 11/9/16 will be?
Over 5500: +135
Under 5500: -155 WIN
The NASDAQ Composite Index (^IXIC) close on 11/9/16 will be?
Over 4750: -175 WIN
Under 4750: +145
The NASDAQ Composite Index (^IXIC) close on 11/9/16 will be?
Over 4500: -250 WIN
Under 4500: +210
The NASDAQ Composite Index (^IXIC) close on 11/9/16 will be?
Over 6000: +300
Under 6000: -450 WIN
The S&P 500 (^GSPC) close on 11/9/16 will be?
Over 2000: -150 WIN
Under 2000: +120
The S&P 500 (^GSPC) close on 11/9/16 will be?
Over 2100: -110 WIN
Under 2100: +110
The S&P 500 (^GSPC) close on 11/9/16 will be?
Over 2200: +150
Under 2200: -180 WIN
INDIVIDUAL STOCK PRICES
Google (NASDAQ:GOOG–Alphabet Inc, Class C) closing stock price on 11/9/16 will be?
Over 765: -150 WIN
Under 765: +120
Exxon-Mobile (NYSE:XOM) closing stock price on 11/9/16 will be?
Over 82.50: -150 WIN
Under 82.50: +120
Apple (NASDAQ:APPL) closing stock price on 11/9/16 will be?
Over 108.50: -150 WIN
Under 108.50: +120
Facebook (NASDAQ:FB) closing stock price on 11/9/16 will be?
Over 121.50: -125 WIN
Under 121.50: +105
Tesla Motors (NASDAQ:TSLA) closing stock price on 11/9/16 will be?
Over 190: -120 WIN
Under 190: +100