AS POLITICAL armageddon looms this Super Tuesday, your correspondent is tempted to repeat something she did just before both the Scottish independence referendum and the British general election: an emotional hedge. Alarmed at the prospect of Donald Trump sweeping to victory, what better way to insure against the blow by betting that the worst will happen? Betfair, a betting website, has the odds of a Trump presidential candidacy at 2:7 and presidency at around 3:1. Given your correspondent’s reservations about such outcomes, this insurance seems cheap.
In sport, betting against your favourite team might seem disloyal—but it makes perfect sense, in the same way as it is sensible to buy insurance. With a 1% chance of her house burning down, your correspondent is quite happy to pay someone a fee so that if her economics textbooks are reduced to ash, she will at least get some financial help to rebuild her library. If Mr Trump does falter, the euphoria would dull the pain of lighter pockets. If he wins, then at least your correspondent has some extra funds with which to drown her sorrows. It is this same desire to hedge against risk that...Continue reading
Source: Business and finance http://ift.tt/1nfRHzw
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