TrimTabs Money Blog

By Dan Dorfman

Dorfman And Dollars
Dan Dorfman follows the dollars and sense of the markets 

If someone bigger and stronger than you repeatedly punches you in the face, bloodies your nose and keeps knocking you to the ground, maybe it’s best to stop fighting, write it off as a losing battle, and go away to live and fight another day.

This same, sound strategy might well apply to the bitter presidential race in which two lagging White House candidates, Newt Gingrich and Ron Paul, have had their political noses repeatedly bloodied. Yet, each is vowing to stay in the race until the very end.

However, the end could be sooner than later — especially for Newt — say some political observers who believe the two candidates are rapidly evolving into embarrassing also-rans in their ongoing and obviously futile efforts to muster sufficient support to capture the G.O.P. nomination. A Gingrich exit, it’s widely felt, would be especially beneficial for Rick Santorum, who, it’s said, would pick up many of his supporters.

The likely end of the trail for Newt and Ron is also mirrored in the latest revised and sharply rising losing odds being placed on them by London’s William Hill, one of the world’s largest bookmakers, many of whose big-money political bettors are viewed as the globe’s smartest such gamblers.

What makes it all so newsworthy is that these Hill bettors, by the nature of their wagers, boast an uncanny knack for ferreting out winning and losing U.S. presidential candidates. In effect, they’re currently suggesting it’s time for Newt and Ron move on–that they have as much chance of winning the nomination and the White House as there is of a full scale revival of the rotary telephone. This is clearly evident from the bookmaker’s most recently altered odds, in some cases quite dramatic, versus those of a mere month ago.

For example, Newt’s chances a month ago of winning the nomination were quoted at 8 to 1(meaning you put up $1 to win $8 for a total return of $9). He is now at 20 to 1. In the same period, his odds of winning the presidency itself have gone from 40 to 1 to 50 to 1.

Ron’s presidential ambitions have also been downgraded by Hill’s bettors over the past month. He was quoted a month ago at 22 to 1 to win the nomination. He’s now at 28 to 1. On the presidency, he’s ballooned from 25 to 1 to 66 to 1 in just about four weeks.

In contrast, Rick Santorum, who recently turned in his version of the political four-minute mile by sweeping three states in a single day, Minnesota, Missouri and Colorado, and is presently the leader in Michigan, is getting a strong second look from Hill bettors.

Indicative of this, his odds over the past month on winning the nomination–based on stepped-up betting on him–have improved from 20 to 1 to 10 to 3 (meaning you put up $3 to win $10 for a total return of $13). The odds also have greatly improved for Santorum to take up residence in the White House. They have gone from 33 to 1 to 16 to 1.

Still, Hill betters overwhelmingly favor Romney at odds of 1 to 5 to win the nomination even though he is losing momentum in the polls. He has also attracted some hefty Wall Street wagers, including one I recently reported on for $210,000, on the belief he will surely be the G.O.P. standard bearer.

Meanwhile, the odds on the widely anticipated final duelists for the presidency suggest an extremely close race, what with the favorite, Barack Obama, being quoted at 8 to 15 (meaning you put up $15 to win $8 for a total return of $23). Romney, the runner-up, sports odds of 11 to 8.

Hill is also taking bets on the potential Republican vice-presidential nominee. Here, Marco Rubio is the top choice at 5 to 2, followed by Santorum at 8 to 1.

Given Santorum’s recent string of victories, I revisited a top official of a New York buyout firm who confirmed to me in a mid-January election piece I did that he had bet $210,000 with some friends that Romney would win both the G.O.P. nomination and the presidency. “You must be nervous,” I said. He assured me not, reasoning Obama’s mishandling of the economy, continued high unemployment, rising gas prices and a dismal housing picture meant the almost certain election of a new President. Further, he points out, “thinning wallets do not instill confidence in incumbent presidents.”

He minimizes Santorum’s presidential run, contending he is likely to be pretty bloodied in super PACs sponsored by groups favoring Romney. Such attack ads have already gotten under way, with one criticizing the former Pennsylvania Senator for voting to let convicted felons go.

Larry Schwarzwalder, the treasurer of Tishman Realty & Construction, takes a different tack on the election outcome. He believes none of the Republican candidates has a shot of unseating Obama. He’s convinced voters, in reaction to a peppier economy, will give the President another four years. And hopefully, he adds, “he’ll get it right this time.” He also thinks the Republicans will suffer badly from the lack of a strong, viable candidate who can beat Obama.