Analyst Chris Ciovacco writes that pollsters — and the financial markets — have been very wrong in their election predictions throughout recent history.
1980: Reagan vs. Carter
With Gallup being the lead industry dog, polling was a different animal in 1980. Gallup failed to project what turned out to be a wide margin of victory by Ronald Reagan. From NewRepublic.com:
The legend of Reagan’s epic comeback is largely the result of anomalous Gallup polling, which even showed a Carter advantage over the final month of the campaign. But if RealClearPolitics or Pollster.com had existed in 1980, the conventional wisdom would have been a little different. In fact, Reagan held a lead from mid-September onward and had a two or three point lead heading into the debates. Private polling conducted for the Reagan and Carter campaigns showed the same thing. Reagan’s 10 point victory is a precedent for sweeping undecided voters, but it isn’t a model for a come-from-behind victory.
The final 1980 returns from RealClearPolitics below show the outcome fell into landslide territory.
2012: Obama vs. Romney “Too Close To Call”
Scouring the internet for the latest poll numbers should be done with a gigantic grain of salt. The text below comes from a November 2, 2012 USAToday story “Presidential Race Too Close To Call”:
Only two days left — and, no, no one knows what’s going to happen. President Obama and Mitt Romney are scrambling for last-minute votes on Sunday and Monday in what could turn out to be a historically close presidential election — maybe not a rerun of the 2000 George-W.-Bush-Al Gore battle, but very close nonetheless. How close, you ask? The average of polls compiled by the RealClearPolitics website gives Obama a lead of 0.2% in the popular vote — 47.4% to 47.2%. That would leave 5.4% undecided. In terms of the Electoral College — which will decide the race — RealClearPolitics now lists 11 states as toss-ups, totaling 146 electoral votes.
The final 2012 tally from RealClearPolitics below shows us the actual outcome could not be accurately described using any term even remotely related to “close”.
Brexit: Were Forecasts Helpful?
Heading into the Brexit referendum, forecasts were heavily favoring a “stay in the European Union” outcome, while market forecasters were predicting catastrophic reactions in the financial markets if the final outcome put a W in the leave column. Both sets of forecasts were inaccurate; voters picked “leave” and after a short negative reaction, the financial markets rallied sharply.
What Are The Markets Telling Us A Few Days Before The Election?
Prior to the Brexit vote, the financial markets were not set up for long-term gloom and doom. What can we learn a few days before voters head to the polls in the United States? You can decide for yourself after watching this week’s stock market video.
2016: A “Tight” Race
The headlines in the present day include, “New Battleground Polls Show Tight Race As Trump Makes Gains” and “National Polls: Tight race, Clinton Hanging On”. Time will tell in both the electoral college and financial markets.
The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) closed at $178.71 per share on Friday, down $0.40 (-0.22%). Year-to-date, the only ETF that tracks the Dow Jones has gained 2.71%.
This article is brought to you courtesy of Ciovacco Capital.