“There are lies, damned lies, and statistics,” the bromide goes.
But statistics don’t have to be manipulated to mislead you; all you have to do is misinterpret them.
So it is with Trump Media stock, ticker symbol DJT, which has exploded upwards a week before the 2024 election as (amateur?) stock traders bet on a Trump victory.
If Trump wins, and a friendly Congress enacts his policies, his plans to slash corporate taxes could “boost earnings and stock values,” Yahoo Finance says (here). Fine, as far as that goes. But let’s be clear about something: Trump Media doesn’t have any earnings, it’s strictly a day-trading meme stock, not an investment based on business fundamentals.
And if it’s a bet on Trump winning the election, that suggests the people pushing DJT higher don’t know how to read statistics, because they’re gambling on changing betting odds, not improving voter polls.
Trump’s polls aren’t improving; he’s still stuck within their margin of error (MOE). Only the bookie odds have risen, from 50-50 to 63-36 in recent weeks, while the polls still show a tossup race. As Yahoo Finance observed,
“Traders seem to be taking their cues from Trump’s rising odds in betting markets. But betting odds are completely different from polls, which show a dead heat. Betting markets show a probability of winning, which is different from the marginal lead in a poll.”
A Citigroup analyst weighed in:
“’Investors are almost uniformly expecting a Trump victory,’ Citi explained in an Oct. 28 analysis. ‘Political analysts, on the other hand, still see the race as very tough, and biased to Trump, but close enough to 50-50.’”
There’s a good chance some amateur traders think Trump is leading Harris, 63% to 36%. I don’t know who will win the election, but purely based on the garbage-in-garbage-out principle, I go with the political analysts, not the bookmakers.
I do know that buying the stock of a money-losing company on the premise that one candidate or the other will win an election every polling expert says is tied is pure gambling. At best, it’s nothing more than a coin flip. Actually less, because there’s no guarantee the stock will go up further even if Trump wins.
But what this really suggests to me is that the Trump enthusiasts day-trading Trump Media stock don’t the difference between betting odds and polls. That’s not good. If Trump does win, someone like that could end up in charge of economic statistics. That’s worse.