Is now the moment to bet on Brown?

Is now the moment to bet on Brown?

gordon price 1109.jpg

    Does the latest price of 0.62/1 offer good value?

The chart above shows the odds on Gordon Brown succeeding from just after the General Election until this afternoon. As can be seen in the immediate aftermath of May 5th 2005 there was a very high expectancy that the Chancellor would move into No 10 within a very short period and there was no real suggestion that anybody else could pose a challenge.

At the time I argued that prices of 0.23/1 were probably not good value because you did not know when the transition would take place and you could, conceivably, be locking up your cash for years. Before the past week the biggest event to impact on the betting was the arrival of David Cameron in December and for a time the Brown price eased to 0.5/1.

Last week, as soon as it became clear that a 2007 departure for Blair was now a certainty the first reaction of the markets was to bet on Brown. The price moved to 0.38/1. Since then there has been a considerable easing to this afternoon’s 0.62/1.

For those not too familiar with the way betting works a price of 0.38/1 means that your profit on a winning bet of £100 would be £38. This afternoon you could get potential winnings of £62 for the same stake level.

For those who are convinced that Brown is a certainty these latest prices are starting to look attractive. The question is will it ease beyond this level or will there be a tightening? What Gordon needs is a period of relative quiet and one or two good polls. If that happened then today’s price could look good value. My instinct is that the Brown price will go beyond 0.62/1.

  • In the past I have converted betting odds into an implied probability of success so that a price tightening sees the graph move upwards. This chart is on the prices themselves so a tightening would mean the line would go downwards. Which is best? I would be grateful for your views.

  • Mike Smithson

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