The Other Winner of the US Election

Nov 10, 2012

- By Asad Dossani, Author, The Lucrative Derivative Report

Asad Dossani
This week, Barack Obama was re-elected as US President in an election that turned out not to be very close. This was by no means a landslide, but it was a clear victory for Obama, and his margin was comfortable. While Obama was the main winner of the election, there was another: The Number Crunchers.

Over the last few months, numerous polls took place and all the pundits gave their view on the likely winner of the election. Most of the TV news analysts said the race was too close to call, that whomever won would win by a razor thin margin, and that it really was just a toss up.

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    Another set of analysts used a different method to forecast the outcome. Using statistical analysis of all the different polls that had been done, and looking at them state by state, they predicted that Obama was very likely to win. The most well known is Nate Silver who predicted a 90% chance of an Obama victory based on all the numbers.

    In the end, it turned out that the statisticians were correct, and the TV pundits were wrong. This was especially so on the conservative news channels, where the majority of analysts were predicting a Romney landslide. Most of the analysts were really telling the audience what they wanted to hear, and what was likely to be most entertaining, rather than looking at the facts.

    There is a really important lesson here that is a direct parallel to the financial markets. Financial analysts on TV and the financial press in general are notorious for getting their calls wrong. In fact, most are primarily interested in selling news.

    They overblow the likelihood of crises taking place so that more people will listen. It has little to do with actual facts. Remember a year ago when everyone was saying that the financial world would implode due to the Eurozone crisis

    When it comes to investing, it is a good idea to stick to the facts, and not worry about what he mainstream media is saying. The media has a particular view, and there's no evidence to suggest that they made good calls in the long run. The relatively comfortable margin of victory in the US election has reaffirmed this.

  • is a financial analyst and columnist. He actively trades his own and others' funds, investing primarily in currency, commodity, and stock index derivative products. Prior to this, he worked at Deutsche Bank as an analyst in the FX derivatives team. He is a graduate of the London School of Economics. Asad is a keen observer of macroeconomic trends and their effects on global financial markets. He is deeply passionate about educating investors, and encouraging individuals to take part in and profit from financial markets. To put it colloquially, he wishes to take Wall Street products and turn them into Main Street profits!

    Disclaimer: The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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