"Betting on election plays" - the power of rumours and market movement

In today's article by The Edge Daily, titled "Betting on election plays", it states the following: "But closer to home, another acronym — GE13, the 13th general election — may well shape up to be a more exciting catalyst for investors on the local bourse......Indeed, the election play is expected to be one of the main investment stories this year and analysts are already betting on which stocks will ride on the theme."

It goes on further to state the following : "...market rallied in periods prior to previous GEs, with gains of at least 9% in the two months before polling day during the 1999 and 2004 elections."

This is a very interesting fact. If one can already prove to the market of such statistics, under efficient market hypothesis, such phenomena should not be seen again as the market players would have acted on the information already.

The only explanation is the most obvious: Market players, especially the retail players have very short memories. The advantage will always be to institutional investors. They will always act first and gain the bulk of the profits as retail players starts to catch up with the trading strategy.

In a nut shell: institutional investors will use the GE13 as an opportunity to milk the retail investors.