It is obviously not at all my intention to turn this into a political debate. I just couldn’t help but take a betting lesson from the speculative frenzy around Barack Obama’s running mate this week. As I write this the announcement has not been made, though it seems to have leaked that it will be Evan Bayh (the leak came from a company that was printing Obama-Bayh bumper stickers. Did no one see that coming? Seems a bit inevitable). That’s not of interest to me. Instead, what caught my eye was the news this morning that Rep. Chet Edwards had made the short list and was one of the few (three or four) potential candidates that had had his background checked.
Why would a Canadian guy care about a congressman from Texas? Well, I’m a bit of a geek. That’s not the point, though. The point is that I had never heard of him. The more I looked around, the more it seemed like no one else had. There was some strong support for him in Texas, Nancy Pelosi likes him a lot, and he has a solid resume, but he was not on the VP radar at all.
The Point? I do have one. Sports books were offering futures on the vice presidential nominees for weeks. The Democratic ones had been taken down in the last couple of days, but I could still find the last prices offered by several different books. Each book had several different potential candidates – from the favorites like Bayh and Joseph Biden to the longest of longshots. On not one list, though, did I find the name Chet Edwards. No one had set a price for this guy. That means that no one had given him a chance. Yet some how he became one of the four finalists. If you had just relied on the futures to shape your opinions you would have never known that this was possible.
I have a habit of using futures to get a sense of a situation. By seeing the odds that bookmakers set for different situations I get a quick sense of about how things should play out. BY watching the price moves of those futures I get a good sense of how the public is reacting and what they are thinking. What I learned from watching this situation today, though, is that the futures should only be used as a rough guide. They can’t replace your own work. Sports books mostly do a pretty solid job of setting prices, but they aren’t perfect, and they have a lot to cover, so sometimes they don’t provide a complete picture. We can allow ourselves to get lazy and trust the odds more than we should. This situation is a good, painless reminder that that’s not always a good idea.