Quant election odds update

Quick update to election odds from earlier this week after the final leadership debate:

Australian Federal Election Odds

Both major parties improved odds in seats they were already favoured to win, but there was little major movement elsewhere.

Things still look grim for the Coalition:

  • If every single one of the 21 “Maybe” and “Toss-up” seat falls to the Coalition, they will only have 73 seats, with Labor on 74.
  • If Labor win 2 of the 21 Maybe and Toss-up seats then they will have an outright majority. If they win 1 of the 21 and can convince an independent to be speaker then Labor will have a majority.

As a reminder of the thought process behind the analysis:

I have a working theory that overall betting odds on elections are affected by what people wish would happen as much as what people think will happen. However, my theory is individual seat odds are less likely to be affected by the casual gambler and the betting odds are likely to be dominated by either (a) hardcore gamblers or (b) those with actual “on the ground” insight into what is happening – and both of these are groups I believe can offer insight into likely outcomes.

My next step is to categorise the seats into categories based on odds:

    • Very Likely = $1.17 or better, implying an 85% chance of victory
    • Likely = $1.18-$1.50, implying a 67%-85% chance of victory
    • Maybe = $1.5-1.8, implying a 55%-67% chance of victory
    • Toss-up = any worse odds

    This gives me a better feel for the likelihood of an election outcome – in the past, this methodology has been successful at picking winners or identifying that it was too close to call (for the Gillard hung parliament).  Basically I add up the likely and very likely’s and then look at how the remaining seats would need to fall.

  •  Final thought – while the Warringah odds are close, at pixel time Tony Abbott is level even after the GetUp polls showing a likely loss for the Coalition. Given that Tony is a high-profile polarising figure, I’m guessing that Warringah is also affected by people betting for what they wish would happen – I just don’t know in which direction…

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Damien Klassen is Head of Investments at the Macrobusiness Fund, which is powered by Nucleus Wealth.

The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance. Damien Klassen is an authorised representative of Nucleus Wealth Management, a Corporate Authorised Representative of Integrity Private Wealth Pty Ltd, AFSL 436298.

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Damien Klassen

Damien has a wealth of experience across international equities (Schroders), asset allocation (Wilson HTM) and he helped create one of Australia’s largest independent research firms, Aegis Equities. He lectured for over a decade at the Securities Institute, Finsia and Kaplan and spent many of those years as the external Chair for the subject of Industrial Equity Analysis.
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Comments

  1. It looks like the outcome will be somewhere between a labor minority government and an 88 seat labor majority.

    Far more importantly, what is the Senate going to look like? How likely is labor to implement it’s agenda? On what issues will there be cross bench push back?

    • I think we will find the polls off by about the same as Mr Trump’s and for the same reasons……comfortable win for Labour and a dogs breakfast in the Senate.

      Time the States got together and put Senators in electorates, it is supposed to be a States House not a place for opinion poll results of the latest identity politics fads.

    • PlasterMEMBER

      They’ll die of loneliness similar to the early retiree developments in the Gold Coast in the 1980s.

      Die young or go home?

      Which pill will they take?

  2. Liberals to win, trash the nation as the luddites take over and forever lose their “better economic manager” position

    OR

    Labor to win and trash the nation through massive immigration and a China sell out.

    Pass me the LSD please and a copy of Strauss and Howe’s “The Fourth Turning”

    • Feeling physically unwell at the thought of either getting in. If this is democracy, I want out.

  3. Murdoch’s rant against Shorten’s mum has probably boosted the probability of Shorten becoming PM.

    • That was the biggest free kick that Bill never expected or deserved. He’s probably grinning that he played the sympathy card and got away with it. Still that’s the sort of shite that passes for “news” on Newscorpse.

  4. The recent Vic election with a thumping Labor majority – the scale not predicted by the polls – is entirely possible. Qld will elect pineapple-heads, though the disarray among crazy conservatives may help Labour. WA not happy. NSW set to put up a host of independents.

    In the Senate, nobody knows. A Labor majority most unlikely. Rooting for Cameron Murray in Qld, who would be a breath of fresh air in the big red room. Disillusioned Victorians can vote for ME!

  5. Damien, thank you for taking the time from running the investments to produce this analysis.
    I agree things are looking like a Labor win, only good governments get a 3rd term and by the endless infighting and recycling of prime ministers, the Coalition have ruled themselves out.
    The only question was whether voters would recoil with horror at the ALP’s policies and return to the Coalition with pegs on their noses.
    Shorten seems to have given the Coalition a chance with his raft of big taxing ideas, making this campaign a search for the lesser evil, but the political cycle favours ALP and they would have to mess up really huge to blow it from here.
    The Senate … from the 1980s Stainmaster ad, “Oh Mïster Hart, .what a mess!”

  6. I would add … if ALP can get a working majority in the House, enough to enforce discipline on its wilder characters (a luxury PM Turnbull never enjoyed), can they find enough crossbench to get reasonable legislation passed?