💰 5 Fact Friday: How To Bet On The Ballot, Profitably

MARKETS
1. Betting On The Ballot, Profitably 🎲

With Election Day around the corner, betting markets and polling data are in a heated debate that’s almost as intense as the actual race.

Polls

1. 538: Trump +2
2. New York Times: Tie
3. CNN/SSRS: Tie

Prediction Markets

1. Polymarket: Trump +28
2. Kalshi: Trump +18
3. PredictIt: Trump +11

As you can see, the latest polls call it a coin flip, but prediction markets are leaning toward Trump taking the win. So, why the discrepancy? Let’s break it down.

First off, polls and prediction markets don’t measure the same thing.

Polls are snapshots—they attempt to reflect public opinion at a moment in time.

But their accuracy depends on how well the sample (usually 1,000-2,000 people) represents the entire population, which is why polls come with a 2-3% margin of error. Minimizing sample bias is key.

Prediction markets, on the other hand, aim to forecast outcomes.

By Election Day, these markets will settle at either 100% or 0%, no matter what the polling numbers say. While polls may suggest the country is split 51/49, prediction markets won’t hover in the middle—they’ll decisively choose one candidate (the winner).

This is why, as we approach the finish line, prediction markets will move in a specific direction and diverge from polls.

Critics argue prediction markets can be manipulated to shape public perception. However, any benefit of doing so would be temporary. Manipulation is self-correcting.

There’s simply too much money on the line for investors to ignore a “mispriced” candidate.

For instance, if the prediction markets show a 65/35 split, but you believe the race is truly 50/50, it’s logical to buy the underdog. With a 50% chance of losing your 35 cent investment and a 50% chance of turning a 65 cent profit, you have a positive expected value.

But that’s not the only way to profit from prediction markets. There’s also cross-platform arbitrage, for now.

With prediction markets out of sync, taking opposite sides on different sites can almost guarantee a profit.

At present, you can buy a Harris win on Polymarket for 36 cents and a Trump win on PredictIt for 57 cents. This means you’ll pay 93 cents to make $1—regardless of the winner.

That’s a 7.5% return in one week!

You know what they say: “Small minds talk about people, average minds discuss events, but great minds discuss ideas generate returns.”

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ECONOMY
2. The Market Vs. The Fed: Round Two 🎬

Big news is on the way next week, and it’s not just about the election—it’s the Fed’s decision on interest rates.

On Thursday at 2 p.m., the Federal Reserve will announce whether it’s hitting the rate-cut button. Markets are betting on a 0.25% cut, with a 95% chance priced in. Only 5% expect the Fed to hold off.

Why the call for another cut?

The latest economic data shows a slowdown. GDP grew 2.8% in Q3, missing the 3.2% forecast and slipping from Q2’s 3.0%. And let’s be real—this growth is propped up by record-breaking government spending, which contributed 0.6% to GDP.

Meanwhile, the labor market is cooling off. Job openings dropped to 7.44 million in September (down from 7.86 million in August), reaching the lowest point since early 2021.

But inflation is the sticking point.

Core CPI has held above 3% for 41 months straight, a streak we haven’t seen since the early ‘90s. This ongoing inflation is why the Fed’s walking a tightrope: they’re trying to ease up rates without fueling another inflation flare-up.

The last rate cut didn’t go as planned, though.

Instead of nudging bond yields and mortgage rates down, the market rejected the move, sending both rates up. The message? The market sees rate cuts as inflationary.

But policy changes take months to ripple through. So the Fed is focused more on where the economy will be in 6-12 months than where it stands today.

If the cut goes through, we’ll see if the market finally gives it a green light—or pushes back, yet again.

STOCKS
3. Magnificent 7 Earnings Recap 🚀

Big Tech earnings rolled in hot this week, with AI, cloud growth, and new product launches stealing the spotlight.

Most of the Magnificent 7 beat expectations on both revenue and earnings, but ballooning capital expenditures are raising eyebrows. It’s practically a miracle Nvidia is down this week.

Alphabet ($GOOG)

Alphabet delivered strong results, with $88.3B in revenue (+15% YoY) and a 34% jump in net income, sending shares up 6%. Google Cloud led the charge with 35% growth, supported by surging AI investments—up 62% year-over-year.

Ad revenue also ticked up, with search growing 12% and YouTube driving $8.9B in ad sales. CEO Sundar Pichai credited AI’s “virtuous cycle”: better recommendations keep users engaged longer, which helps to further improve recommendations.

Meta ($META)

Meta beat on revenue and crushed earnings expectations, with sales up 19% to $40.6B and earnings soaring 35%. Despite raising 2024 capital expenditure forecasts, Meta guided total expenses down, reinforcing Zuck’s continued focus on efficiency. However, user growth missed expectations, and shares slipped 3% after hours.

Microsoft ($MSFT)

Microsoft topped revenue and earnings estimates, with sales up 16% and profits rising 11%. Yet shares dipped 4% after a softer Q4 forecast.

Azure cloud revenue grew 33%, but supply constraints remain a bottleneck. CFO Amy Hood noted high ongoing demand, though even Microsoft’s heavy AI investments can’t keep up with growth.

Amazon ($AMZN)

Amazon’s Q3 results impressed, with revenue climbing to $158.9B and earnings per share hitting $1.43, beating estimates and sending shares up nearly 5% after hours.

Online store revenue jumped to $61.4B, a welcome bounce-back after last quarter's miss. Amazon Web Services (AWS) grew 19% to $27.5B, while capital expenditures surged to $22.6B—nearly doubling—as Amazon invests heavily in AI and cloud infrastructure.

Apple ($AAPL)

Apple posted Q4 revenue of $94.9B and earnings per share of $0.97, but shares fell 2% after a one-time tax charge affected the bottom line. Without the charge, earnings would have been $1.64, easily topping estimates.

iPhone sales hit $46.2B, boosted by Apple's new "Apple Intelligence" platform, which analysts hope could spark a future upgrade cycle. Meanwhile, Services revenue came in below expectations at $24.9B and revenue from China missed forecasts by 5%.

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INVESTING
4. A New Ticket To Private Markets 🎟️

Private market investments are usually locked behind a velvet rope for the rich—but a new bill could change that.

Right now, you need $1 million in net assets or a $200K salary to qualify as an “accredited investor.” Lawmakers want to add a new option: passing an exam that proves you know your way around financial risks.

Think of it like getting a driver’s license for investing. Ace the test, and you get a ticket into private markets, even if you don’t have deep pockets.

This exam would likely cover the big stuff:

• Types of securities

• Corporate governance

• Liquidity risks

It’s a door-opener for people who are financially savvy but don’t meet the current wealth thresholds.

But here’s the catch—just because you can doesn’t mean you should.

Private investments are risky, opaque, and harder to sell if things go south. Plus, many private markets follow a power law—meaning you need to make many risky bets in order to land one big win.

Without the capital cushion, these newly qualified accredited investors may find themselves worse off than if they’d stuck to public markets. So while this pathway might expand access, it’s best approached with caution. A lot of caution.

STOCKS
5. Guess Today’s Mystery Stock 🕵️‍♂️

Can you name this stock? Here are five clues about a company that’s looking to snap back into favor with investors:

1. This app, popular with Gen Z and millennials, is known for disappearing messages and quirky augmented reality (AR) filters.

2. In Q3, daily active users held steady at 443 million. However, revenue climbed 15% year-over-year to $1.37 billion—thanks in part to its new premium subscription service.

3. The platform competes for ad dollars against giants like TikTok and Meta, but only generates ~30% as much revenue per user.

4. Investors often criticize its aggressive use of stock compensation. Since the company isn’t profitable, it uses stock to pay employees, diluting shareholders.

5. To counter some of that dilution, the company recently approved a $500 million stock buyback plan. Meanwhile, the 34-year-old billionaire CEO has plans to sell $88 million in shares over the next 18 months.

Got a guess? Tap here to reveal the answer → 

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