I was recently asked how we could make Daily Speculations a better prediction market, and Mr. Andres the questioner, pointed out that we tend to be bullish. As I have said many times, we base this on the 10,000-fold returns that have been experienced over the last century so this is not without strong foundation.

This question started me thinking about the importance of asking the right questions, and I had the following hasty thoughts which may have a little value:

I think I know how I could make the site much worse and in the process make it a much better prediction market — by asking the wrong questions. That is the most important part of proper speculation. The other way I could make the group worse is to encourage ideas that have a bearish bias.

I could encourage the dissemination of useless information — the kind that every one else reads. Also, I could feature the predictions of people whos views are completely random or have a negative correlation with the future, (everything they say seems so reasonable and it would make us all lean in their tending to be wrong direction).

Another way would be for me to encourage those who have positions to unload their views on us with the view that they could encourage us to go their way and add to the ability of them to get out better . This would really be bad because it would increase friction.

I'll have to think of some other ways to make this site a much better prediction market by making it much worse than it is, and I'd appreciate any ideas.

Vince Fulco adds:

Vic's comments remind me of a quote I read early in my career that has kept me in good stead. As I recall, the book Money Masters by John Train has an interview with the investor extraordinaire Larry Tisch. In it, he discusses the shortsightedness of the average investor and observes that "no one thinks of straw boaters in wintertime …" I've taken that phrase to heart as a constant reminder to be cognizant of the issues du jour, but it is the rare one that has not already been absorbed into market prices. 

Vincent Andres writes: 

Here are some clarifications to avoid misunderstanding due to my imprecise vocabulary (and for which I apologize):

  1. I wasn't asking how we could make Daily Speculations a better prediction market. Rather, "Could Daily Speculations make a good prediction market?" "Make" was too literal a translation from French. My meaning was "be" or "constitute," and absolutely not "become." I did not at all mean "how to make", precisely because of all the reasons mentioned by the Chair. There are zillions financial forums over the Internet which would be very good candidates. It is unnecessary to touch one of the very rare intelligence-based ones.
  2. I have always been, I am now, and will always be an optimist. It's the least one can do to thank life. So, when I speak about "noticeable bull/optimistic bias," it's in no way a critique, since I share this bias.
  3. Even if a bias is a good one, a bias remains a bias. I did just notice that Daily Speculations, being biased, is probably not a good random sample.

How do you say "comme à la prunelle de ses yeux" in English?





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