Submitted by Salil Mehta via Statistical Ideas blog,
Antagonism isn't perpetualIf you recently glanced at the polls and the election markets, then you would be forgiven to believe that a landslide election is looming. It's likely not, and the spreads have the potential to revert in surprising ways between now and Election Day. The drumbeat of negative news against Donald Trump may not cause further damage. We've discussed numerously, starting on October 11 and October 12, that Hillary Clinton's runaway spread would revert (here, here, here, here).
Of course that's a stand taken against a popular headwind, but also an opportunity to make money on an election bet that is mispriced. For example, when we wrote the reversion article, the betfair ask that Mr. Trump's popular vote could remain in the 40's% was only priced at 1:6 odds. Nate Silver's 538 site also reflected this, as shown below. But we -and other academic statisticians- knew that this was faux election probability, and advised thousands to remain vigilant against planned mainstream misinformation.