Collectively these were known as the “Trump trades”, which included the likes of the US dollar, bond yields, crypto, big tech stocks, private prison stocks and of course, Donald Trump Media Group, which rose 300 per cent from early October to election day.
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Further signals also came from hedge funds, which in early September began building short positions, whereby you profit from a falling share price, in renewable energy companies, expecting them to suffer under the coming Trump White House.
The most well known of the prediction markets, Polymarket, never had Trump below 50 per cent odds, and had him well ahead of Harris while the polls showed a tie.
I found myself among those convinced by these market indicators, so, after observing these trends, I placed a modest wager on Trump in early October, much to the ridicule of my non-financial market savvy friends and family.
While my bet proved correct, it pales in comparison to some of the “yuge” wagers now coming to light.
Julian Petroulas, a 32-year-old Australian entrepreneur placed a $1 million stake on a Trump win, while the now famous “Trump Whale”, known only as “Theo”, pocketed US$85 million, according to The Wall Street Journal.
Also seeing an opportunity to tap punters’ desire to wager is broker Robinhood, which became the first mainstream investing platform to offer contracts to bet on the election.
No doubt more will follow in the future, and I suspect it won’t just be betting on elections, but sports and other popular cultural events too. Further blurring the line between investing and gambling.
For example, you can already place bets on “highest grossing moving of 2024”, “Taylor Swift to get engaged in 2024″ and “the next James Bond actor”.
We are now supposedly six months out from the federal election and the bookies already have the Coalition favourites to win.
So while Australian politicians begin searching for lessons from Trump’s victory, the phenomenon of the “Trump trade” raises the question – could there be a “Peter Dutton deal” or some “Albo arbitrage” ahead of our election?
“Nuclear is a platform that the Coalition is running on and thus there’s the potential boost to the uranium sector should a pro-nuclear party that supports a local uranium industry come to power,” speculates Scutt.
Australian miners, including those owned by Gina Rinehart, a close friend of the opposition leader, as well as oil, gas and coal stocks could also stand to benefit from a Coalition government that would favour cutting red tape, taxes, and is pro-environmental deregulation.
“Dutton has previously talked up the Coalition’s defence spending relative to Labor, so we are assuming more contacts for shipbuilders and engineering companies over the next few years should the Coalition win,” adds Geoff Wilson of Wilson Asset Management.
Rinehart with former Liberal Party vice president Teena McQueen (left), and Nigel Farage, the leader of the conservative UK Reform party, at Trump’s election watch party.
On the other hand, monopolistic companies such as the big supermarkets and airlines could be disadvantaged should competition policy become a party platform.
“You could also potentially see a strengthening in the Aussie dollar should the market believe that the Coalition will rein in spending, take some of the heat out of the economy, and pave the way for the RBA to cut rates,” adds Scutt.
We are now supposedly six months out from the federal election and the bookies already have the Coalition favourites to win, while Jim Chalmers is favourite as the next Labor leader – the existence of such a market says everything.
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What we can be sure of is that going forward financial markets, and in particular prediction markets, not polling, will play a much greater role in predicting the outcome of elections.
One of the first lessons you must learn as a trader is “the market is never wrong” and now this mantra extends outside of finance to elections as well, and it means I will be watching markets much more closely for any signs of an Aussie Trump trade.
Meanwhile, my thanks go to Trump – for making my bank account great again.
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