Is this why the Tory spreads continue to advance?

The New Year PB “Balance of Money” Index based on the average prices on the spread betting markets suggests that Cameron’s Tories will win the next general election with an overall majority of 28 seats.

The Index is so called because it reflects the collective views of punters based on how much they are prepared to risk on the number of seats the parties will get in the coming contest. These are then traded like stocks and shares.

As has been observed here several times in the past few weeks there has been almost no support for Labour from punters even though the party’s polling position has been transformed. A number of theories have been put forward including the dumbest – that Tory backers are betting with their hearts and not with their heads.

Well I think I’ve found the answer – in the run up to the November 2007 election that never was money was piled on Labour and against the Tories in the expectation that Brown was on course for a certain victory a few weeks later. Many of those trades – some at Labour seat totals at 336 or more – still exist and the punters involved face serious losses. I know one gambler with a paper loss of £10,000 and such people appear reluctant to increase their exposure on Labour even though things for the party look a bit better.

In fact whenever there has been a price move to Labour in recent weeks it has not lasted very long because some of those who were so committed from September 2007 have taken the opportunity to close down parts of their positions at losses.

All this stems from the extraordinary turbulence that we have seen in the polls – something that hasn’t been experienced since spread betting started on politics nearly twenty years ago.

My betting? After doing quite nicely on the spreads during the spring and summer of 2008 I am completely out of the markets. I don’t think there is any value on the Tories and it will take another polling upheaval before Labour backers regain their confidence.

Exactly a year ago today when the polls were about the same as they are now the Sporting Index spreads were: CON 292-298: LAB 272-278: LD 47-50.