The only man in America who has any business earning a living by holding a clipboard

Journalists are morons, that’s a given and doesn’t require an explanation. (If you’re not convinced, here.) And there’s nothing a journalist likes better than a poll.

A poll. Typically, it consists of asking 1000 adults (if that) “Who will you vote for in the presidential election (assuming you’ve self-identified as a ‘likely voter’, however you’d like to define that)?” Yes, we took probability classes and know that a 1000-person sample can give a reasonably accurate assessment of what a population of 130 million will do. However, in this instance a 1000-person sample is useless.

You probably know that the United States doesn’t elect a president just by asking qualified voters to pick somebody. First, we don’t vote for a president; we vote for a 2-person presidential ticket. Second, even that is bounded as we and our fellow Connecticutians, or Vermonters, or Hawai’ians, have our votes tallied separately from those of voters in other states. In other words, we don’t hold a presidential election so much as we hold 50 different elections, each weighed by population and each counted as winner-take-all, after which we tabulate the results.*

Which is a roundabout way (sorry, we’ve been reading a lot of Trent Hamm lately and it rubs off) of saying that a poll result like this:

means nothing. So 47% of Americans say they’ll vote for Obama. This is meaningless for several reasons:

• He’s who they merely claim they’ll vote for.
• 8% of respondents either claim allegiance to someone else or say they won’t vote. Considering that that’s a sample 4 times the size of the difference between the candidates, it invalidates the poll.
• The poll is conducted without respect to the importance of the state (election) that the poll respondent will be voting in. A respondent who says she’s going to vote for Obama has greater impact if she lives in lightly populated swing state Nevada than if she lives in populous, Democrat-friendly California.

Implying that Barack Obama will get 47% of the popular vote means nothing because we don’t elect our head of government by popular vote. As far as we know, no free country of decent size does.

If you want to waste time, read a poll. If you want to learn something, read the betting lines. Once again, oddsmakers come to the rescue and tell us more about our opinions than we ourselves can glean. A number of betting sites (at least those not shut down by the U.S. Department of Justice in the ostensible home of the free) will take your wager on the outcome of the presidential election.

SportingBet.com

Bovada.lv

SBGglobal.eu

On SportingBet, a $222 wager on Obama pays $100. On Bovada, you only need to wager $170 to win that $100, and on SBG Global, a mere $155 will do the job.

Meanwhile, a $100 Romney wager on SportingBet pays $155. On Bovada it’d pay $140, and on SBG Global $150. Thus, Obama is a clear if not overwhelming favorite. If this were the NFL, Obama would be favored by about a field goal. 3 points is the industry standard home field advantage in pro football, at least as far as gambling is concerned. Home field is analogous to incumbency here, kind of. Thus without it, the election would be a tossup of sorts.

When a book takes someone’s bet, they’re polling that person. But rather than the simplistic “Who will you probably vote for?”, the book is asking 2 far more relevant questions:

• Who do you think will win the election? and
• How strongly do you hold that opinion?

Ask several people that brace of questions – even as few as 2 people – and you have a line. The more people who think Obama will win, the less you’ll win if you bet on him. The odds don’t discriminate. Taking bets is far easier, cheaper and more direct than the only other valid method of trying to determine a winner: conducting statistically unbiased polls of sufficient sample size in each of 50 states.

Of course, favorites of Obama’s magnitude lose all the time. Not as often as they win, but as often as the lines would indicate. The median poll above, if translated into a ratio, gives Obama about a 70% chance of winning the election.

And now, onto the Carnival of Wealth. Personal finance blog posts, read, organized and collated for your benefit. Let’s begin:

Free Money Finance shopped around for insurance and discovered that AAA was giving him a better deal than Allstate, State Farm or Costco was willing to.

Is your 401(k) going to save you from a retirement of sponging off your children and working behind the counter at a McDonald’s? John Kiernan at Wallet Blog says don’t be so sure. If you think your 401(k) contributions are a “free” way to earn tax-“free” returns, you’re forgetting that whomever your employer farms its 401(k) management out to has its own interests at heart, not yours. That provider might only sell funds for which it receives a cut, or mete out huge penalties for trying to terminate early.

Liana Arnold at CardHub tells us that a new government agency, the Consumer Financial Protection Bureau, is doing what a government agency does best – fining people and thus justifying its own existence. The CFPB was created because credit borrowers were too dumb/lazy to read the fine print on their agreements. Then again, its latest round of fines hit Capital One, who deserve some punishment for clogging America’s mailboxes. It seems that Capital One was enrolling cardholders in paid services without telling them. If so, Capital One deserves those fines. Still, read the agreement anyway.

This is why Neal Frankle at Wealth Pilgrim is awesome. He can take the same advice that you’ve heard elsewhere, and that should be self-evident, then he digs a little deeper. Sure, you should budget if you’re broke. But what are the actual steps you should take to do it? And yes, there’s such a thing as opportunity cost: Neal is one of the few writers who’ll tell you what you’re missing by squandering your money.

Habeeb at BestDividend-Paying-Mutual-Funds (no, you’re thinking of haboob) writes about Fidelity New Markets Income Fund, a $5.5 billion fund pays a monolithic 5.2% dividend. Is that good? More importantly, is it sustainable? Habeeb analyzes the fund and then some.

There’s an antidote to the poison that infuses the interminable parade of “personal finance” blogs run by young women who alternately curse circumstances for their financial position and then justify their continued bad decisions. That antidote’s name is Paula Pant at Afford-Anything, and she goes down deliciously. This week, Paula asks (and answers) the often rhetorical question, “How Would Your Life Change If You Had Millions?”

Here’s how almost every other personal finance blog would answer it:

• Live simply, not let the money go to my head, pay off debts, give some to charity, buy a house for my parents, start a college fund for my kid, etc., etc., anything but show a little imagination.

Not Paula. She’d continue doing everything that got her to this point (20-something budding real estate tycoon with minimal debt, passive income, and an enviable lifestyle), just on a larger scale.

You mean she’d continue working? Whatever for?

No, she’d delegate. And hire. And leverage. She’d handle the big picture, while letting others do the actual work. She wouldn’t do like those two Canadian simpletons who whittled an $11 million windfall down to $200,000 because they didn’t think they could handle all that money.

You see? This isn’t hard. Money is a tool, not a curse or a temporary fix or the root of all evil. You can use money to build something substantial – which we’re certain Paula will do (is doing) – or you can use it just to put out fires. Read one paragraph of Afford-Anything and you’ll have a better handle on money than if you read the entire archives of some of the high-maintenance whiny dingbats who pollute the internet.

This is a paid post, but it isn’t horrible. It’s about the fine print behind a financial standby notorious for sounding too good to be true, no-medical-exam life insurance. It comes from Boomer & Echo via Glenn Cooke, a life insurance agent from small-town Ontario. Although “Canadian life insurance agent” sounds like the very personification of dullness, Glenn actually has a sense of humor and a decent writing style.

(A post from a guy who runs a blog that sounds like it’d be useful [Money Life & More] but instead just offers more first-person stories about mundane activities. This week, our entrant bought a new smartphone. Seriously, that’s the entire post. He tells us about what features he uses and how while he hasn’t used the camera yet, he probably will when he goes on vacation later this year. So there’s that.)

The submitter is also naïve enough to think he got the phone “free”. Can we put a stop to this already? There still exist people who seem to believe that Sprint, AT&T etc. just give their products away. You can compare it to paying for a new Nissan Sentra without any money down, and calling that a “free” car. Yeah, there’s a monthly payment that will run for several years, but the car itself is free! What a deal! Chinese bankers continue to rub their hands with glee at our ignorance.

Our admiration for Dave at 6400 Personal Finance continues unabated. Here at the CoW we usually summarize each post with a paragraph or so, but Dave’s output is so consistently good that we can’t summarize his posts for fear of leaving something notable out. We’ll use Dave’s own quote instead:

It’s time to take a look at just how much of a debt successful individuals owe to the public in return for using public services……apparently beyond the taxes they already pay and jobs that they create.
If we all use public roads then doesn’t it follow that we should all be rich?

There are a hundred things to like about his submission this week, but after much deliberation we’ll single out his disdain for the semantic crutches of referring to “we” and “the rest of us”, among other descriptors that serve to obfuscate rather than enlighten. “We” didn’t build the interstate highway system, the one that enables the more enterprising among us to amass fortunes transporting goods on it. Our grandparents built it, and only a few of them. “Our” taxes might go to maintain it, but Larry Page’s taxes pave a lot more surface than do yours. And no, “we” didn’t fight a war in Afghanistan. Dave and a few thousand of his fellow soldiers did, while the rest of us stayed stateside and at best, didn’t get in their way.

Iconoclasm prevents us from putting all the good posts at the start of the CoW, instead of interspersing them throughout. PKamp3 at DQYDJ.net has a new party trick, looking at option prices to predict the movement of the S&P 500. You know how you can tell this post is interesting? Only 3 people (as of press time) have commented on it. #generalstupefaction

W at Off Road Finance would be delighted to know that a vice president at PepsiCo told us that he loved reading W’s series entitled “A Speculative Alternative to Investing”. The series concludes this week. In a convoluted market, with financial instruments getting ever more complex, W gives us the recipe for one that he synthesized and is using. But the series doesn’t really conclude, as there’ll be an epilog next week. (Assuming he continues to submit to the CoW.)

Finally, Dividend Growth Investor reminds us that established companies that pay dividends don’t have to plow all their profits back in the business. Because they essentially spend less than they earn (hey, what a novel idea! Wonder if it really works), such companies share the difference by paying back their shareholders.

And that’ll do it. We update the site every day, we’ll do another CoW Monday, and you’ll see us on Investopedia and Yahoo! Finance before then. Aloha.

*Except in the freakish states of Maine and Nebraska. Each congressional district in either state holds a presidential election (2 in Maine, 3 in Nebraska), plus a statewide one that counts twice as much as a congressional district election.