We discuss\u2026<\/p>\n
Why some issues \u2014 like Romanian elections, the NYC mayoral race, or Zelenskyy\u2019s outfit choices \u2014 can attract hundreds of millions of dollars in trading volume,<\/p>\n
Systematic biases in prediction markets, including why they overestimate the likelihood of a Taiwan contingency,<\/p>\n
What happens to prediction markets in the absence of insider trading regulations,<\/p>\n
Why prediction markets are still a solo endeavor, and what a profit-maximizing team of traders would look like,<\/p>\n
Bonus: How betting markets backfired on Romanian nationalists, what AI can teach you about betting, and other insights on winning from one of Domer\u2019s contemporaries.<\/p>\n
Listen now on iTunes<\/a>, Spotify<\/a> or your favorite podcast app<\/a>.<\/p>\n This episode is brought to you by ElevenLabs<\/a>. I\u2019ve been on the hunt for years for the perfect reader app that puts AI audio at the center of its design. Over the past few months, the ElevenReader app <\/a>has earned a spot on my iPhone’s home screen and now gets about 30 minutes of use every day. I plow through articles using Eleven Reader\u2019s beautiful voices and love having Richard Feynman read me AI news stories \u2014 as well as, you know, Matilda every once in a while, too.<\/p>\n I\u2019m also a power user of its bookmark feature, which the ElevenReader team added after I requested it on Twitter. ChinaTalk\u2019s newsletter content even comes preloaded in the feed.<\/p>\n Check out the ElevenReader app if you\u2019re looking for the best mobile reader on the market. Oh, and by the way \u2014 if you ever need to transcribe anything, ElevenLabs\u2019 Scribe model<\/a> has transformed our workflow for getting transcripts out to you on the newsletter. It\u2019s crossed the threshold from \u201c95% good\u201d to \u201c99.5% amazing,\u201d saving our production team hours every week. Check it out the next time you need something transcribed.<\/p>\n Jordan Schneider: Let\u2019s start with the basics. How do these markets work, and how are they different from buying Apple stock or betting on a sports game?<\/p>\n Domer: It\u2019s somewhat similar to betting on a sports game. The most popular market by far is predicting who will win the US presidential election. This happens every four years, and it\u2019s not just Americans who are interested \u2014 people around the world like to participate.<\/p>\n The system works on a 0 to 100 scale that assigns odds. For instance, in the 2016 Hillary versus Trump race, Trump had about 30% odds to win going into election day. If you wanted to bet on Trump, you might bet $3. If he loses, your bet goes to zero. If he wins, it goes up to 100, so you\u2019d get $10 back.<\/p>\n It\u2019s basically a binary outcome \u2014 you either win zero or you win 100, depending on whether your prediction comes to fruition.<\/p>\n Jordan Schneider: For context, we now have eight figures being bet on the outcome of the New York City mayoral election. We have $200 million of volume traded on whether Zelenskyy will wear a suit before July. These markets are extremely liquid, with millions or tens of millions of dollars in volume. We reached billions during the presidential election, but even niche topics like a Romanian mayoral election saw $6 million in total volume traded.<\/p>\n This is no longer a niche phenomenon. Dismissing these numbers as lacking proper price discovery compared to the trading volume of NVIDIA or Apple isn\u2019t necessarily accurate. How have you seen the relative efficiency of these markets change as they\u2019ve grown larger and more popular?<\/p>\n Domer: They\u2019ve grown tremendously since I started. When I first began, a $10,000 bet made you a big whale. Now you\u2019re just a small fish in the ocean. As they\u2019ve gotten bigger, they\u2019ve also expanded significantly in scope.<\/p>\n When I started, there were basically two major markets: who would win the presidential election, and who would win Best Picture at the Oscars. Now it\u2019s become this widespread phenomenon that encompasses many countries, numerous races, economic predictions \u2014 like what the Fed will do. The breadth of topics and the level of participant interest have exploded.<\/p>\n Jordan Schneider: I\u2019m curious about the professional approach to this. How would you describe your process? Let\u2019s pick something more esoteric than a presidential election \u2014 maybe you could walk through the Pope example or another market you\u2019ve been analyzing. What does it take to develop an edge in these topics?<\/p>\n Domer: At the basic level, succeeding in these markets requires two things. First, you need to be a curious person who\u2019s eager to learn. Second, you need to enjoy following the news and staying current with daily developments in various stories.<\/p>\n Take the Pope example. Papal conclaves only happen every 10 to 15 years. These aren\u2019t areas where people maintain expertise \u2014 you have to dig into archives to understand what happened last time and read stories from 15 years ago about how these events unfold. You need to train yourself to examine all the contours of an event.<\/p>\n When a pope passes away and they\u2019re selecting a new one, everyone interested in betting starts at the same point. You\u2019re competing against perhaps a thousand other people, all beginning from the same starting line. Success comes down to whether you can research faster, better, and more accurately than your competitors. That\u2019s essentially what my job entails.<\/p>\n Jordan Schneider: What\u2019s interesting, as you\u2019ve mentioned in past podcasts, is that even with niche topics like a Romanian election or Israeli politics, the betting pool isn\u2019t dominated by Romanians or Israelis reading local news sources. Even when there are locals involved, the center of gravity consists of international observers. The local knowledge advantage isn\u2019t as pronounced as you might expect.<\/p>\n Domer: That\u2019s mostly accurate. The center of any election market will be people who aren\u2019t necessarily subject matter experts. However, it will attract a minority of people who live in the region or are directly impacted by the event. This brings in additional interest and new participants, though that doesn\u2019t necessarily mean they\u2019re more informed.<\/p>\n Being closer to an event might actually create bias. If you have a personal interest, you might bet on someone you\u2019re rooting for, whereas as an American, I\u2019ve never heard of this candidate, so I don\u2019t have a rooting interest. Various factors come into play regarding whether someone directly impacted by an event will participate and how that affects their judgment.<\/p>\n Jordan Schneider: Let\u2019s discuss the social utility argument for these markets. Having accurate betting lines on the Knicks and whether they\u2019ll win on any given Tuesday night \u2014 providing a price discovery function for that \u2014 doesn\u2019t seem particularly beneficial for the world. But it\u2019s very different when you\u2019re talking about whether wars will start or end, elections, and similar events. As prediction markets have grown in prominence and sophistication, how has your thinking evolved about their broader utility?<\/p>\n Domer: That\u2019s an excellent question. Consider a world where prediction markets don\u2019t exist at all. If you\u2019re trying to figure out whether there\u2019s going to be a recession this year, you\u2019ll typically rely on pundits to inform that decision. The world of punditry doesn\u2019t reward you for being right, nor does it punish you for being wrong. It revolves around entertainment \u2014 is this pundit convincing? Is he entertaining? Is he saying interesting things? That\u2019s the nature of punditry. It\u2019s not necessarily punishing you for being wrong or rewarding you for being right.<\/p>\n Prediction markets are essentially the next level of punditry. They\u2019re not a perfect solution \u2014 if Polymarket says the chance of a recession is 25%, that doesn\u2019t mean we have the definitive answer. Nobody came down from heaven and declared it\u2019s 25%. We have no idea. But it\u2019s a more advanced form of punditry where you are punished if you\u2019re wrong and rewarded if you\u2019re right. It\u2019s punditry with skin in the game.<\/p>\n Obviously, prediction markets encompass more important topics than sports games, though that\u2019s not to say betting on sports isn\u2019t fun or important for people who are interested in it. It\u2019s just a different facet of predicting outcomes.<\/p>\n Jordan Schneider: As you start to see news stories about prediction markets and politicians feeding off those stories \u2014 particularly with Vivek Ramaswamy over the past few months, as his number crept up from 1% to 5% to 10% \u2014 this became a tangible way for him to demonstrate his momentum. Are you seeing more of these feedback loops where prediction markets manifest in reality, which then manifest back in prediction markets?<\/p>\n Domer: It\u2019s a fascinating question because it raises the possibility of the tail wagging the dog. If this happens, it could become a self-fulfilling prophecy where someone with deep pockets goes onto one of these markets and bets themselves up. Then they can say, \u201cI have momentum. Here\u2019s proof. Someone\u2019s betting on me. My price is going up.”<\/p>\n There\u2019s a perfect example from 2012 during the GOP nomination, which was essentially a clown car with multiple candidates going up and down \u2014 Herman Cain, Mitt Romney (who ultimately got the nomination), Rick Perry, and others. Every week brought a new frontrunner \u2014 Newt Gingrich, and so on. Interestingly, during the summer, someone on InTrade<\/p>\n was buying massive amounts of Donald Trump contracts \u2014 ridiculous amounts, way above where the market should have been. I was thinking to myself, \u201cThis might literally be Donald Trump or one of his associates.\u201d Back then, the market wasn\u2019t as liquid, so maybe the person was spending $50,000 on this, which is significant but essentially functions as a commercial. Was this guy preparing to run and trying to boost himself? I thought it was an interesting case study.<\/p>\n Going back to your question about whether the tail wags the dog \u2014 yes, I think there are interesting feedback loops. The other factor is market liquidity. Sometimes these markets have more liquidity than the event\u2019s apparent importance would suggest, like the Zelensky wearing a suit market.<\/p>\n Jordan Schneider: What\u2019s interesting is the story from the 2024 election about the \u201cFrench whale\u201d who was buying up Trump contracts, basically driving the price up five or six points for only $25 million. In the context of a presidential election, that\u2019s equivalent to a handful of ads, which might win you a few votes. Instead, it created an entire news cycle about someone knowing something others don\u2019t, and voters tend to vote for winners.<\/p>\n This dynamic seems very affordable, especially in something like a New York City Democratic primary, where it would cost only $50,000 to $100,000 to get Brad Lander\u2019s name on the map as having momentum. I\u2019m surprised it isn\u2019t happening more frequently. I guess we\u2019ll reach that world eventually. Maybe these markets just need to be liquid enough for someone to make enough money on the other side to buy it back down.<\/p>\n Domer: You mentioned the French whale \u2014 I was actually one of the people who helped break that story. One really interesting aspect was that people would DM me their guesses about who it was. The number one guess by far when the story first broke was that it was probably Elon Musk, because he had started a super PAC and has enormous wealth. To him, this would be a drop in the bucket. It made total sense that one of the benefactors would be the one doing this, rather than some true believer who had been investigating and conducting polling.<\/p>\n Jordan Schneider: What\u2019s interesting is that the narrative reinforcement cycle seems most relevant for elections. But there are markets where it\u2019s basically one person making a decision \u2014 will Trump bomb Iran? Will Netanyahu bomb Iran? Will Hamas and Israel make a peace deal? Will Zelensky wear a suit? The momentum behind these predictions is unlikely to influence outcomes, or maybe it does. Perhaps we\u2019ll reach a point where these numbers become so prominent that a president will feel they\u2019re letting people down if they don\u2019t do what the markets expect, which could become self-reinforcing and factor into their calculations.<\/p>\n Domer: That\u2019s a fascinating and relevant question, and I\u2019m not sure I have a good answer. It\u2019s something I grapple with \u2014 whether the markets could theoretically get too big for the actual events they\u2019re trying to predict.<\/p>\n Jordan Schneider: The other issue is there\u2019s no SEC oversight \u2014 no insider trading regulations. There are plenty of people who know whether many of these things will happen. No one knows who\u2019s going to win a presidential election, but there are many markets involving specific decisions where insiders exist. If I\u2019m some random person in Iran working in the IRGC and this is my one opportunity to make $10 million because I know whether we\u2019re going to attack America back, why not? How do you think about the insider trading dynamic, and has it manifested at all?<\/p>\n Domer: What\u2019s interesting is that I\u2019ve been doing this for such a long time, and from the beginning, people\u2019s first reaction to big swings is, \u201cOh, some insider is betting on this market.\u201d 99.9% of the time it has nothing to do with an insider. It\u2019s a true believer or somebody who clicked the button by accident or similar.<\/p>\n But lately, with the markets getting so big, I\u2019m becoming more suspicious. There were a few markets recently asking what Israel would do, and these accounts that were newly created and funded with $100,000 or so came in. They only bet on this one market \u2014 Israel\u2019s going to do XYZ. It happens, and then they withdraw. This behavior seems exactly like what an insider would do. As the markets become bigger, my initial assumption that 99.9% of the time it\u2019s never an insider starts to break down given how much money is involved.<\/p>\n Jordan Schneider: It\u2019s interesting because specifically on international relations, there are DOJ indictments showing how much money people make when they\u2019re caught spying. If you\u2019re a really good spy selling secrets, you probably make a few million dollars. Once these markets are big enough where you can make $10 million in an afternoon through crypto with no one knowing, or you can convince yourself you won\u2019t get caught, this creates a new dynamic.<\/p>\n Not many national security establishments or intelligence agencies have processed this yet: why sell my secrets to the Chinese when I can tell the world 24 hours or even three hours before something happens by making a bet on it, then retiring six months later and moving to Bermuda?<\/p>\n Domer: You\u2019re exactly right. It\u2019s untraceable. But I do think the arc of these markets is toward regulation. This might not be a 20-year problem, but it could be a problem over the next few years as we figure out regulations.<\/p>\n Jordan Schneider: What would that look like? Would you have to trade with a driver\u2019s license? That would probably solve some of those issues, right?<\/p>\n Domer: It could. This is a fraud issue not only with crypto, but trading in general regarding the depth to which you examine your customers and their funds. If you\u2019re going to put up markets sensitive to national security and trade in a country where those national security issues are very important, then the arc of these markets seems to be toward disclosure rather than obfuscating what\u2019s actually happening.<\/p>\n Jordan Schneider: What\u2019s your take on the broader ethics and where you would draw the line? We already have markets that are pretty close to death markets \u2014 asking when a leader will lose power. It\u2019s not phrased literally that way for smart legal purposes, but where would you draw the line on what\u2019s not acceptable to trade on?<\/p>\n Domer: It\u2019s a hard question. If you think about a straight war market \u2014 will Russia and Ukraine get into a war \u2014 and you rewind four years, this was a really important question. People should know the answer to this. We should be trying to figure out what the answer is, and prediction markets are really good at figuring this stuff out.<\/p>\n I see both sides of the argument because it does feel distasteful. Obviously, it\u2019s not just economic impacts or world impacts, but people on an individual level are going to be hugely impacted, possibly in negative ways. In that aspect, it feels unseemly. But to me, the importance of the event overtakes the unseemliness because we\u2019re answering questions that need to be answered. We need to assign a probability to some of this stuff to an extent.<\/p>\n Jordan Schneider: One class of questions that makes me really uncomfortable \u2014 and it doesn\u2019t really exist on Polymarket yet, but occasionally shows up on Manifold \u2014 are these very personal ones about people who aren\u2019t celebrities. If you\u2019re in high school and you can make a betting market on whether this couple will break up, that seems problematic. It\u2019s similar to how no one\u2019s allowed to bet on high school sports, and you can\u2019t do prop bets on college athletes. You don\u2019t need to expose anonymous individuals to this stuff.<\/p>\n Then you have this sci-fi arc where a lot of those Biden markets were kind of like Biden death markets. The assassination connection to some of these feels unseemly, but having some sense of the probability that Putin will succeed in assassinating Zelensky is useful. But then you have horrible incentives where someone bets on it and commits an assassination. There are enough crazy people out there, right?<\/p>\n Domer: It\u2019s definitely something we need to grapple with. I\u2019m not sure I have the answer. I do agree that not everything necessarily deserves a market, and where we draw the line between what gets a market and what doesn\u2019t requires careful consideration.<\/p>\n Jordan Schneider: As you trade and see these markets move, I\u2019m curious about the balance between slow versus fast thinking. On one hand, you mentioned the Pope earlier \u2014 how you want to understand how past conclaves played out and get the backgrounds of all the different players. But once news starts happening, these markets can move very quickly. It seems there\u2019s a lot of money made and lost in responding to breaking news and processing it correctly. How do you think about that conceptual difference, and how has the speed of these markets changed over time?<\/p>\n Domer: It used to be that if you read some tweet and logged into the market, it might take minutes for that tweet to be fully incorporated. By tweet, I mean some breaking news event, which is usually encapsulated in a quick tweet. But if you look at what\u2019s happening recently \u2014 in the past few months \u2014 if you take more than three seconds to react, you\u2019re glacially slow. The speed of these markets adapting to news has become so much faster than it used to be.<\/p>\n You have to be very careful and quick in how you react to things. But then the second-order effect is that once the quick reaction has happened, you need to think slower about it. You need to figure out whether this actually makes sense, because sometimes the initial move isn\u2019t necessarily correct.<\/p>\n Jordan Schneider: Is there algorithmic trading like there is on public financial markets, or is it just more people who click faster?<\/p>\n Domer: Someone at a VC firm was actually asking me about this the other day because they\u2019re looking into it. I know at least two people have tried it, and there wasn\u2019t much success. I know in one instance \u2014 because I invested in this guy, and he now works for an AI company \u2014 it didn\u2019t work out for us, but it worked out for him.<\/p>\n It hasn\u2019t been successful yet that I know of. Who knows? Maybe there are people with secret Polymarket accounts using AI agents, but it\u2019s coming.<\/p>\n Jordan Schneider: It\u2019s interesting because we\u2019re now very much in a world where AI processes quarterly reports and listens to earnings conference calls in real time. It does it faster and probably better than the analyst sitting there. But the fact that this hasn\u2019t come to Polymarket yet is partially a function of there being less money to be made. Maybe there\u2019s also something about these markets being much more idiosyncratic than comparing this quarter\u2019s Walmart returns to last quarter\u2019s.<\/p>\n Domer: There\u2019s a very strong qualitative element to it, not necessarily quantitative. Not that AI is amazing at quantitative analysis yet either, but there are idiosyncrasies, intricacies, and little things in the rules that may alter a market one way or another. AI isn\u2019t quite at that level yet.<\/p>\n Jordan Schneider: Are there teams trading yet? Is it still mostly an individual game?<\/p>\n Domer: At the high level, yes, it\u2019s individual. I know teams have been created around the presidential election because there\u2019s a lot of information out there and you need to get it very quickly. Teams were created for the US presidential election. I was on a team for that in the previous two elections.<\/p>\n But most of the time, I describe it as being r\u014dnin \u2014 we\u2019re individual samurai going about our lives. We talk to a lot of the other r\u014dnin, but we are not necessarily coordinating with them.<\/p>\n Jordan Schneider: This is the financial parallel of hedge funds, right? Now you have entire \u2014 almost all of the most successful hedge funds have dozens, if not hundreds, if not even a thousand-person research teams. Can you talk me through an example of a market you traded where you felt like if you could duplicate yourself and had more research, you could get more of an edge? Is it wider coverage where you think there\u2019s more alpha? What could a 10-person outfit potentially do in this space?<\/p>\n Domer: People have approached me about forming a team, so I know a little about it. Where you would really want to focus is making sure everybody has different strengths. If I were building a 10-person team, I would want somebody really strong on politics, somebody really strong on foreign politics, somebody really strong on quantitative things and statistical modeling. Then I would probably want to duplicate each of those people so there are two people doing the same things.<\/p>\n The other thing about prediction markets that doesn\u2019t get much focus compared to financial markets is that prediction markets are 24\/7. The news doesn\u2019t sleep. If you\u2019re trading financial markets, you can safely get your eight hours of sleep. You could theoretically do that and not miss any news whatsoever, but in prediction markets, sleep is the enemy. It\u2019s very dangerous to sleep. If you\u2019re building a team, you would probably want redundancies and widespread expertise in many different areas.<\/p>\n Jordan Schneider: You said you talk to a lot of other people in this space. Give us a little anthropology \u2014 who are these folks who make up the majority of trading in the market?<\/p>\n Domer: I come from a poker background, and a poker player is probably a good benchmark to think about these players. It\u2019s mostly young men who like taking risk, who are good at math, good at analyzing things, and interested in the world. That describes 95% of people using prediction markets.<\/p>\n Jordan Schneider: That\u2019s interesting because poker is about getting better at this very closed system, right? There\u2019s an aspect of reading human beings, but every new market you explore, you\u2019re learning something novel \u2014 about a new country or situation or politician or something about the economy. There\u2019s a different type of curiosity between someone who wants to memorize all the openings in chess or all the hands and ratios in poker versus someone willing to play in such an open-ended space as political prediction markets.<\/p>\n Domer: A poker player or chess player is very math-focused and very good at pattern recognition, which includes reading the opponent and reading patterns. That\u2019s an element of prediction markets. But to your point, the other element is creative thinking and being able to pivot from one topic to another that may be very disparate and may not be related at all, but you can notice similarities and quickly come up to speed on a new topic. It\u2019s not only the chess or poker element, but also creative thinking.<\/p>\n Jordan Schneider: Another thing is that there\u2019s not a lot of emotional valence and connection that you have with any given poker hand, aside from your personal investment in it, as opposed to a war starting or a presidential election. I\u2019m curious how you and other folks have trained \u2014 or maybe anesthetized is not the nicest word \u2014 but how you divorce yourself from the actual developments in order to be a more clinical analyst of this stuff.<\/p>\n Domer: I was nodding nonstop to that question because it absolutely applies. You have to divorce yourself because I\u2019m a person who reads the news. I watch a lot of news. I follow the news. I\u2019m well aware of the world. I talk with other people. I talk with my spouse, and I have very strong opinions. You have to leave those opinions at the door, which is very hard to do.<\/p>\n If you\u2019re trying to predict something that you want to happen, maybe limit yourself to only a couple hundred bucks and not really try to make a living betting on things that you want to happen or betting against things that you don\u2019t want to happen. You have to both put it at the door and self-limit yourself \u2014 not get too involved in something that you want or don\u2019t want to happen.<\/p>\n Jordan Schneider: Speaking of a topic people have strong feelings about, a lot of politics in these markets involves modeling the thought process of Donald Trump. What are the mental models of his decision-making that you\u2019ve found most helpful over the years?<\/p>\n Domer: The big-level view of Trump is that he\u2019s very chaotic, and chaos is great for prediction markets. If you just have a president like Biden, Biden didn\u2019t fire a single cabinet secretary. The only cabinet secretary that left was going to become the commissioner of the NHL. If you have this very boring presidency versus this very chaotic presidency, obviously the chaotic presidency is going to be much more conducive to predicting what\u2019s going to happen next and people following what\u2019s going to happen next.<\/p>\n But the interesting thing about Trump is he\u2019s changed between his first presidency and his second presidency. In his first presidency, he was firing people all the time. He probably had three cabinet secretaries fired within six months. Left and right, there was controversy after controversy. This time, he\u2019s weathering through it.<\/p>\n The interesting model of this presidency is he\u2019s moved to an Elon Musk type of over-promise, under-deliver, especially on trade deals. He\u2019s constantly threatening to \u201cwhack this country,\u201d but when it comes down to it, he pulls back. It\u2019s interesting not only trying to get into the mind of Trump, but also how Trump has changed from one presidency to the next. He\u2019s gotten less chaotic in some ways, but more chaotic in others, particularly in how he\u2019s dealing with economic policy. It\u2019s very hard for a company to plan if they think there\u2019s going to be tariffs one day and no tariffs the next day. It\u2019s a very different type of chaos in this second Trump presidency.<\/p>\n Jordan Schneider: How have you applied the reality television framework in the past?<\/p>\n Domer: Somebody smarter than me said a long time ago that if you want to figure out who Trump is going to pick for something, print out pictures of everyone he\u2019s considering. Go up to a random person and ask, \u201cWho would you cast for a TV show if you were casting a Supreme Court justice?\u201d The person they point to is probably who he\u2019s going to pick because he\u2019s casting his show.<\/p>\n That\u2019s how I think about Trump \u2014 a lot of what he\u2019s doing is focused on presentation. He\u2019s the star of a TV show and that\u2019s how he treats much of what he\u2019s doing, not only personnel decisions (are they good on TV?), but also policy. Does this sound strong? Do I look strong? A lot of what he\u2019s doing is entertainment-focused, and that\u2019s obviously his background as well. He\u2019s been a showman since the 80s when he took over from his father. I think that\u2019s a very strong core tenet of Trump \u2014 the entertainer, somebody who\u2019s trying to keep people engaged with what he\u2019s doing, a marketer.<\/p>\n Jordan Schneider: What are your heuristics for separating fact from fiction \u2014 dealing with fake news?<\/p>\n Domer: What do you mean by that?<\/p>\n Jordan Schneider: What you have to do as someone who works in prediction markets is essentially high-stakes news literacy with money on the line. You have this mental model of what you think is happening, and then there are new data points that you have to process and react to. At the same time, you\u2019re watching these markets move as other people react and process them. Are there news literacy heuristics that you think are broadly useful as a citizen? Or maybe category errors that you\u2019ve seen these markets make over time, where they overread or underread into specific types of new data points?<\/p>\n Domer: That\u2019s a really interesting question. There are two facets that come to mind. Number one is fake news. One of the markets recently is whether Elon Musk will form his own party. He\u2019s made this big announcement with a lot of fanfare, but whether he actually does the paperwork is TBD \u2014 that\u2019s what the market is about.<\/p>\n Recently there was this filing with the FEC pretending to be the American Party. It wasn\u2019t actually true, but someone new to prediction markets might see this FEC filing, which looks very official. It\u2019s on the FEC website. Somebody actually filled it out and put Elon Musk\u2019s name on it. They\u2019re going to see that and think, \u201cOh, the market\u2019s over. He formed it. Yes. Easy money, free money.\u201d But somebody who\u2019s been doing this a long time knows that people make fake FEC filings all the time.<\/p>\n It comes from experience and being able to distill fact from fiction. If you\u2019ve been doing it a long time, you\u2019re definitely on the lookout for fake news because it happens all the time. Actually, it\u2019s increased in frequency lately, especially with people trying to create fake news in order to profit from it, whether in financial markets or prediction markets.<\/p>\n The second part of your question that struck me was knowing which reporters to trust. This is very important, especially if you\u2019re predicting American politics, because there are dozens of reporters covering Congress, the presidency, etc. A lot of the focus is on day-to-day drama: Is this bill going to pass? This person just said this, that\u2019s happening. You have to be very careful about who you trust.<\/p>\n The longer you\u2019re doing it, the more you learn. For instance, the Punchbowl guys \u2014 people in this space get tons of newsletters every single day. Punchbowl is one of the main ones, along with Politico. If you\u2019re getting the Punchbowl newsletter and you see that the head of the Republican Party in Congress is saying this and that, and it looks like maybe the bill is in jeopardy \u2014 well, Punchbowl constantly slightly exaggerates whether a bill is in danger of passing or failing. They really play up the drama.<\/p>\n The longer you\u2019re in this space, the more you realize the intricacies of reporters \u2014 who you can trust, who is reliable, who is constantly exaggerating what\u2019s happening. It\u2019s very important as a trader to be able to distill between what\u2019s happening and what people are trying to pretend is happening.<\/p>\n Jordan Schneider: It is an ineffable thing that only really comes from following these stories in real time and seeing how people behave. It\u2019s more nuanced and sophisticated than just giving any Punchbowl headline a 20% discount factor in your model.<\/p>\n As I\u2019ve dabbled a little in the legal markets open to US citizens, it has been a remarkable and humbling learning experience. As someone who has been following news pretty closely and professionally since at least 2013, only trading in markets where I think I know something and being wrong a lot has taught me about probabilities and degrees of confidence. These markets are real now and liquid enough to have a lot of signal in them.<\/p>\n It\u2019s a really useful exercise for people who work in and around politics to go from being a pundit to someone who\u2019s forced to discipline their thinking and opinions about the future with a market. That didn\u2019t really exist until relatively recently, whereas financial market participants were able to have that learning experience of taking views and seeing them play out correctly or incorrectly and gaining context and experience over time.<\/p>\n Don\u2019t get addicted. Don\u2019t spend a lot of money on this stuff. I don\u2019t endorse gambling here on ChinaTalk, but as a learning tool to understand what the world is like, putting $10 in an account and trying to size markets and react to news is a worthy experiment to do for at least a month in a topic you\u2019re interested in.<\/p>\n Domer: I would second that. It\u2019s fun to do, even if you\u2019re just doing five or ten bucks, because if you\u2019re following it anyway, it gives you a little rooting interest, like watching a sports game. From that aspect, it\u2019s really fun.<\/p>\n The other thing is that prediction markets are easy if you know what you\u2019re doing, but it\u2019s also very easy to lose a lot of money very quickly. For instance, if you rewind to last year during the Trump versus Biden debate, there were whole accounts that are just gone now because they didn\u2019t think there was any chance that Biden would drop out even after the debate. I was thinking, \u201cI don\u2019t know, I\u2019m not going to stake my account on this. It seems sketchy.”<\/p>\n It\u2019s not just about being able to predict things correctly, which isn\u2019t that hard if you\u2019re familiar with the space. The really hard thing is being able to avoid the pitfalls and not betting against things that are actually more likely than you think they are.<\/p>\n![\"\u300c\u5fe0\u81e3\u8535\u300d\uff0847\u4eba\u306e\u6d6a\u4eba-\u30de\u30b9\u30bf\u30fc\u30ec\u30b9\u30b5\u30e0\u30e9\u30a4\u306e\u7269\u8a9e\uff09\u3002\u30ed\u30cb\u30f3\u304c\u30e2\u30ed\u30ca\u30aa\u306e\u57ce\u3001\u30d1\u30d6\u3092\u653b\u6483\u3059\u308b\u7b2c2\u5e55\u306e\u30b7\u30fc\u30f3\u3002](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/07\/https:\/\/substack-post-media.s3.amazonaws.com\/public\/images\/af6fc3b1-7cb8-4912-99a0-c6d9fad06405_1260.jpeg\" "\\"\u300c\u5fe0\u81e3\u8535\u300d\uff0847\u4eba\u306e\u6d6a\u4eba-\u30de\u30b9\u30bf\u30fc\u30ec\u30b9\u30b5\u30e0\u30e9\u30a4\u306e\u7269\u8a9e\uff09\u3002\u30ed\u30cb\u30f3\u304c\u30e2\u30ed\u30ca\u30aa\u306e\u57ce\u3001\u30d1\u30d6\u3092\u653b\u6483\u3059\u308b\u7b2c2\u5e55\u306e\u30b7\u30fc\u30f3\u3002")
<\/a>A woodblock print (ca. 1854) depicting the 47 R\u014dnin<\/a>, a band of lordless Samurai who avenged the death of their former master in 1703. Source<\/a>. <\/p>\n