History Tells Us Polls And Anticipated Market Reactions Can Be Way, Way Off

This post contains the weekly CCM stock market video.

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.

After you click play, use the button in the lower-right corner of the video player to view in full-screen mode. Hit Esc to exit full-screen mode.



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.