Predicting Trading Insights

This article discusses the effectiveness of prediction markets in forecasting events, notably highlighting Polymarket's surprisingly low Brier score of 0.0581, which indicates its predictions are significantly more accurate than random guessing. The Brier score penalizes overconfidence, contrasting high scores for inaccurate high-probability predictions with low scores for less confident forecasts that miss. The content cautions against the bias of judging decisions solely based on outcomes, referencing Daniel Kahneman and poker strategy insights from Annie Duke to emphasize the importance of process over results. The rise in prediction market activity suggests they are evolving into continuous resources for forecasting, as seen in high activity preceding events like Jerome Powell's press conference. The article also critiques the potential shift to 24/7 equity trading, arguing it may lead to worse pricing due to decreased liquidity at non-peak times. Ultimately, it underscores the behavioral finance perspective in trading and decision-making.

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