Introducing Aaron Bell’s BrandIndex Top Tips

Introducing Aaron Bell’s BrandIndex Top Tips

IG 26 jan.jpg

    This week: Sell Johnson & Blair

The new weekly markets on Politicians’ Popularity offered by IG Index give us the chance to pit our wits with their market-makers on a regular basis. Mike has kindly given me the opportunity to share some analysis and tips each week; hopefully these will provoke some debate and also be profitable in the long run – we shall see!

A few posters have commented on the unpredictability of the results – opinion polls naturally have a margin of error and this gets reflected in the published figures. This volatility is something we have to live with, but its effects should be neutral in the long run – it will turn some bets that should have been winners into losers and vice versa. Indeed, if IG over-react to an unusual week, then we can even use the volatility to our advantage by betting that things will return to normal next week. The tricky part is, of course, deciding whether a jump in the data is “unusual” or whether it actually reflects underlying shifts in opinion.

    A good general rule would be to try to bet on the more high-profile politicians. This is because swings in their ratings (whether through natural variance or through events) will tend to be larger and so IG’s “cut” of 0.5 doesn’t represent such a large proportion of the likely range of possible results.

It’s also important to remember that not all of those filling in the somewhat monotonous BrandIndex surveys share our interest in the fortunes of politicians – indeed many of them may not have heard of some of the more minor figures, or they may not know to which party they belong. I strongly suspect that quite a few respondents simply negative every politician: Lansley, Willetts & Clegg, the three most anonymous, all have very similar ratings consisting of about 2% positive and 13-14% negative.

This helps to explain one of the more surprising facts that emerges from analysis of the data – politicians of all parties tend to move in the same direction each week. For example this week the Labour politicians are up from 75.2 to 76.1, the Conservatives up from 89.6 to 91.1 and the Lib Dems up from 81.4 to 83.2. This can be explained by two theories – firstly natural variance may lead YouGov’s sample to include more or fewer people who are sympathetic towards politics in general, and secondly political news may have a “plague on all your houses” effect – party funding stories could well be a classic example of this.

So, down to business.
Last week’s ratings were unusually high and I would expect a general fall. In light of Ruth Turner’s arrest it seems sensible to focus on Labour politicians; all the more so since IG have already priced in sizable falls for Cameron & Hague (as well as Gordon Brown, whose unexpectedly high rating gave me a losing bet last week).

Jack Straw seems a bit high at 73.3 – 73.8 but until the last two weeks he hadn’t been below 74 so this is one best swerved. We profited on a John Reid buy last week and IG are predicting a further rise from 73.2 to 75.0 – 75.5 – this might be overdoing it a bit but also I think one best avoided – Reid’s average ratings before the latest scandal were around 79 – 81 and he could be on his way back towards these levels since he seems to have defused the situation fairly well.

My two selections for this week are therefore as follows:

  • Alan Johnson Form 84 – 83 – 84 – 82.9 – 84 – 82 – 83 – 83 – 84.9
    Sell 2pts @ 83.8
  • Given that Johnson hasn’t previously been above 84 (though YouGov have rounded their data in the past) this seems a fairly safe sell, despite his rating of 84.9 this week. His negative rating of 18.8 this week is abnormally low in the absence of much news – in every previous week he has been in a narrow 20-21% band.

  • Tony Blair Form 61 – 63 – 61 – 65.9 – 66 – 61 – 65 – 60.9 – 60.7
    Sell 1pt @ 61.3
  • Blair was one of the few politicians to fall this week despite the overall positive trend, though this is partly because he had such a poor week previously. However I can see him falling again after the latest cash-for-honours developments and even if he recovers a bit there’s still some wriggle-room between his rating this week and IG’s sell quote. In light of the bigger risk to the upside, however, smaller stakes are advised.

    Last Week’s Results

    Gordon Brown Sell 2pts @ 68.5 Make-up 68.8 Loss of 0.6pts

    John Reid Buy 1pt @ 69.8 Make-up 73.2 Profit of 3.4pts

    Boris Johnson Sell 0.5pts @ 94.0 Make-up 92.3 Profit of 0.85 pts

    Running Total P/L: +3.65pts

    NB A point (“pt”) is simply a way of rating the strength of a bet without divulging the stakes involved – roughly speaking a 1pt bet should be a normal-sized bet for you whether that’s £1, £10 or £1000!

    Aaron Bell is a former politics student who works in the Trading department of bet365. The views expressed are his own and not those of bet365.

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