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Can Shares Really Predict Who Is Going To Be The Next US President?



On the news, the radio, social media and in the latest polls no one seems to be able or confident enough to make a prediction on the outcome of the upcoming US presidential elections.


At the start of the year many people would have laughed at the prospect of Donald Trump even being selected to represent the Republicans but now everyone is unsure of what might happen. Regardless of where you live in the world the outcome of this election is bound to impact on your life. As with any of the markets, it is impossible to be 100% correct every time that you make a prediction of what could happen in the future and what effect this may have on your investments. (We like to keep up to date with changes in the market at IG.com.) Despite this uncertainty with the general public the markets believe that they can predict the next US president.


Online prediction markets – There are a range of online prediction markets that suggest that Hillary Clinton is destined to win and they even suggest that it won’t be a close race -despite what the polls might say. In this market, however, the stock is special. For each stock you own the market pays $1 if an event comes true. If it doesn’t you won’t get a cent. The price the stock trade for is the prediction. So for example, if Clinton is running for the election, her stock is trading at 70 cents, the market’s prediction is that she will win the election with the probability of 70%.


Investors – Another indicator as to who the markets are looking at as their winner is to find out who is contributing to the nominees’ campaign. Wall Street-related firms are the big contributors to the Clinton campaign. According to OpenSecrets they have contributed over $21 million dollars to her total $159 million dollars that she has raised. This figure is significantly higher than the amount of contributions that Trump has managed to accumulate. The markets are known for not liking uncertainty and many consider Trump to be a huge risk whereas with Clinton they almost know what they are going to get.


Watch the markets – Lots of things can change between now and the November elections but keeping a very close eye on the markets could well hold the key to predicting the next president of the United States. The markets have, in the past, correctly predicted the president so we’ll need to look closely for changes. Over the years if the markets rise or stay the same this suggested that the current party would remain in the White House - but if they fall then it is more likely that a change is about to happen. The idea behind this is supported by the notion that if things are going well then why change and, similarly, if the country is facing difficulties then they are likely to want to change.