[Politics] Oh, yeah, and just one other thing.

There's a saying on the internet that "information wants to be free". It suggests that information - especially confidential information - is like a caged animal or a dammed stream and wants nothing more than to find a way out of it's confines to it's natural free state on the internet. It's usually used to justify confidential information being leaked resulting in a breach of national security and a few deaths.
There's a similar saying in the financial markets which is "the market always knows before you do". What this means is that you will never be first with any piece of news which might be price-sensitive to the markets. By the time you've seen it on the news it's already been digested, bought or sold, and you'll always be playing catch up.

In other words, for all the ways it gets dressed up, information gets leaked. For all that the latest takeover bid is classified, somewhere along the line someone will have seen a chance to make a few bob and taken a position along the way. There's a notorious example of this from about 2013 when the US markets reacted to an announcement from the Federal reserve faster than the speed of light. In other words, there was a leak but someone worked very hard to make it look like there hadn't been.

Anyway, on polling day last Thursday I got to thinking. Seven years ago now I ran this piece on political betting and how it was a better predictor of election outcomes than polling because there was actual money on the line and people are more honest when it comes to their own hard cash then when they can conveniently lie to a pollster. However, there's another market truism, and it says that when everyone is doing something then it becomes worthless - and it struck me as the voting went on and the opinion polls and betting odds remained resolutely uncertain that everyone was looking at the odds now because everyone knows to look at the odds, so as a predictive tool it's not much use.

So I sat and watched the FTSE as the afternoon progressed as I was sure the markets would prove a reliable bellweather of which way things were going to go, and, sure enough, as things went on about mid-afternoon I PM'ed raggedyman and said "The money reckons the coalition has got it*" as the FTSE had risen resolutely for several hours.

But here's where it gets interesting. You see, a day or two after the election, I was reading an article about how exit polling works and one of the things it said was that whilst exit polls are not released before the stations close in order to prevent a rush one way or another, the pollsters will start getting their first real indication of which way the wind is blowing at about 11am, three hours after the booths open.

Or, in other words, there would be people who had a good idea of who was winning by late morning, and information like that is useful information. Markets dislike uncertainty and sell it, but a likely Conservative victory would cause the markets to rally as soon as they knew. In fact, it might result in a stock market which looks uncannily like this:



So there you have it. The market knew before you did, as the evidence suggests exit poll data made its way to the city long before it was released to the general public, or you.

And if the money knew, then you can bet senior Conservative, Labour and LibDem figures did too. Did anyone notice if Ed Miliband began to look increasingly unhappy as they day went on?

*Yes, I know. I'm not perfect, okay? At least I've honestly reported what I said.