We're not talking about the economists and pundits who were warning about the possible negative effects of Britain pulling out of the EU. Those are merely opinions; the ones who "got it wrong" are the pollsters, media outlets, and even the betting markets, all of which pointed toward a victory for the "In" campaign as voting wound down last night.
Generally speaking, oddsmakers for the purposes of gambling are generally the most accurate source for any sort of voting outcome. Polls are notoriously unreliable due to the lack of a significant sample size and the fickle whims of respondents. (People can't always be relied upon to answer truthfully about which side they voted for!)
By contrast, bookies have a serious financial interest vested in getting the odds correct. When there's money on the line, you can bet—no pun intended—that the people taking wagers are going to try and get as close as possible to the real likelihood of two binary outcomes. In one sense, betting lines are reflections of the amount of money being placed on each side of prediction. Yet, in the end, the bookies are going to set odds that make sense.
Most insiders don't think the Brexit result invalidates the notion that betting odds are usually very accurate; it was just a case of the less likely outcome actually coming to fruition. Still, the fact that the betting markets had "Remain" as a 90% favorite late in the voting seems like a pretty egregious error.
One explanation is that the bookies failed to take notice of number of bets as opposed to the weight of the money. Much larger total sums were placed on "Remain," but the larger number of total bets were placed on "Leave." (For the purposes of oddsmaking, the value of the bets is more important than the number of individual wagers.) Given that so many of the bettors were actively voting in the referendum, however, this was an uncommon case where some importance could have been placed in the actual number of bets.
Confusion, Regret, and Winners & Losers
One undeniable thing about the whole "In" or "Out" campaign is that it grew into a confusing morass of half-truths and tangentially related concerns. As Bloomberg News reporters Rodney Jefferson and Thomas Penny succinctly put it:
"Would Britain be better off forging its own trade agreements? What is sovereignty anyway? Is Turkey really about to join the EU? Do immigrants cost more to public services than they provide in labor?"
Perhaps none of these lingering questions have any definitive answer.
The campaign unfolded in an increasingly vicious and stupefying manner. Oddly, it seems that many "Leave" voters are now regretting their decision today when they began to realize what the implications were.
Now that the vote is over, there's an interesting run-down on who the biggest winners and losers of the Brexit decision will be.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.