This is a weird first post, but I figure the best way to get started is to start.
Inspired by some of the prediction markets I’ve participated in, and some thinkers I admire (who also post their predictions annually or talk a lot about thinking in bets), I'm doing the same - if only to remind myself that thinking probabilistically is hard and to enforce some intellectual accountability.
The real value, by my lights, is thinking about the logic & having a record to look back on to see if my reasoning still made sense even where I got things wrong (or right!).
As far as methodology I’m using some public predictions and questions from other folks, as well as using a “prediction market” style percentage and indicating whether I’d buy/sell/hold at the original number. Imperfect, but easier than other options, out there.
I’ll run through Yglesias → Vox → ACX and some bonuses of my own (and Zvi’s post may be useful even though it is in the reverse order).
Predictions for next year (Yglesias - 2022)
Democrats lose both houses of Congress (90%) → SELL - 80%.
I’m comfortable pegging the House at 95% gone, but not that high on the Senate, maybe 85%? So conditionally I’m down to 80.
Democrats lose at least two Senate seats (80%) → SELL - 75%.
If I’m at 85% on Dems losing the Senate, that means at one or more seat (looking at you Georgia). Gives some room to be a bit lower here… how much? eh, call it 10% for “close enough”. The “miss” would mean that Dems hold 2 of 3 of the most endangered seats (AZ, GA, NV) plus nothing else plus nobody with an unexpected death or forced retirement… a tall order.
Democrats lose fewer than six Senate seats (80%)→ SELL - 75%
Really could’ve gone with hold, but a lot of Senators are, well… old, and it wouldn’t be too surprising if there were non-electoral losses on top of the electoral ones.
Nancy Pelosi announces retirement plans (70%) → SELL - 5%
I’m sort of cheating here because Pelosi announced she is running again in 2022 between the Yglesias’ prediction and now. That said I really would’ve had this much lower (TRUST ME) - probably 25% at the time. Leaving some wiggle room in case she changes her mind.
Stephen Breyer does not retire (60%)→ SELL - 1%
See above. 1% because who knows?
Some version of Build Back Better passes (60%)→ SELL - 51%
More likely than not, but just barely.
Joe Biden is still president (90%)→ BUY- 96%
Betting on a 10% chance he is out seems high. Actuarial tables but death probability at ~5.1% given age alone, but I think other factors mitigate here. Add in a little risk from scandal and who knows what & lets go with 96%.
At least one Biden cabinet-rank official resigns (70%)→ BUY - 75%
Less than 2 years would be a pretty short tenure for a cabinet official…. BUT this definition also includes the Chief of Staff and some other “weird” positions like Science Advisor and Director of OSTP. I waffled between hold and buy to 75% but that’s nitpicking.
No military conflict between the PRC and Taiwan (a worryingly low 90%) - Buy→95%
Hopefully I’m not just wishcasting, but I think everything else points to this not being seen as an immediately useful goal to the PRC.
New U.S. sanctions on Russia (70%)→ BUY - 80%
The Ukraine situation has deteriorated quite a bit, Nordstream 2 fights are ongoing, and elections will make people want to look tough on Russia and China.
Saudi Arabia and Israel establish diplomatic relations (60%)→ SELL - 45%
I’ll believe it when I see it, and what is to be gained on their end when they can already backchannel to Israel and we (or others) aren’t pushing them?
Fewer U.S. Covid deaths in 2022 than in 2021 (80%)→ BUY - 90%
5% I’m just off on my model based on current variants/policy/behaviors and 5% we get some other new issue or variant.
Emmanuel Macron re-elected (60%) - SELL → 51%
Going to barely yes - Yglesias knows more than me here, but, meh, I think its not uncommon to have some establishment bias over here on our side of the pond.
Traffic light coalition exploits loopholes to get around the constitutional debt brake (70%) - SELL → 60%
No real clue, don’t want to google too much, but I’ll apply the logic above plus say that techno-optimists like these wonky things a little too much, so I’m discounting here.
No recession in 2021 (90%) → BUY - 95%
Not even looking this one up. Nope, nope, and nope. Except 5% maybe some weird Fed loophole about calling things that aren’t recessions recessions?
Liz Cheney loses primary (80%) → HOLD
Boy do I wish this was lower… Side note: Cheney won her other primary races in the 75%-25% range, and here we are today. Ugh.
Some version of USICA passes Congress (70%)→ HOLD
So basically a 3 in 10 chance the House and Senate can’t work things out? Probably about right… If anything I’d go lower because this could take too much time and get punted due to other priorities…
Lula elected president of Brazil (60%)→ HOLD
Sure, why not?
China officially abandons Covid Zero (70%) → SELL to 55%
It’s going to be hard to keep up forever, but until there is a face-saving off ramp their government has tons of credibility invested in the policy. Maybe they blame the Olympics and dirty foreigners breaking the system?
Fewer U.S. Covid-19 deaths in 2022 than in 2020 (80%)→ BUY - 89.99%
Giving a little indicator that I’m confident 2022 is better than 2020 which was itself better than 2021 here… but the number shouldn’t match
Addt’l booster shots of mRNA vaccines authorized for seniors (80%)→ HOLD
Seems like a “show we’re doing something” action that also gives (yet another) opportunity to save face as CDC et al backtracks on the re-re-re-ratcheting of masks, isolation, etc. Plus they certainly can’t say NOW that “all the others were fine but this one seems unsafe” from an FDA point of view unless they have very very strong evidence of some problem…
November 2022 year-on-year CPI growth is below 6% (70%) → BUY - 75%
Odds are we’re under 6% inflation, but further shocks aren’t inconceivable and unwinding the pandemic supply issues is going to be a slog.
November 2022 year-on-year CPI growth is above 4% (70%) → BUY - 90%
I’m likely ending up with too narrow and too confident of a 4% to 6% window here, but I’m pretty anchored on the “we are above 4%” number.
The Fed ends up doing more than its currently forecast three interest rate hikes (60%)→ BUY - 75%
Fed says 3, banks and others are predicting more… I take Powell to be signaling “action but not too much and also don’t panic but also we’re in control” while investment banks are prepping for more. I’ll go with more.
Russia does not invade Ukraine (60%) → HOLD
My gut says it may be closer to a 50/50 at this point based on further escalation and the increasing chance that more troops at the border (and for longer times) increases the chances of something “getting out of hand”.
Viktor Orbán loses power in Hungary (60%) → SELL 40%
Not an expert, and admittedly I’m mainly going off of a gut feel that the excitement in Western media that he will lose and be gone is affecting their reporting. Also - isn’t this supposed to be an illiberal strongman who won’t leave office?
Sinn Fein becomes the largest party in the Northern Ireland assembly (60%)→ HOLD
A quick google tells me… some guy on slugger o’toole has a spreadsheet and we should really watch out for West Belfast and North Antrim. OK fine, 60% it is.
The U.S. and Canada reach an agreement on softwood lumber (70%) → SELL 40%
It’s easier to remain without an agreement than to put one in place, this administration remains quite anti-trade like its predecessor, there is sensitivity that anything that smacks of “offshoring” is bad, and domestic lumber interests can live with the status quo… why fix it if it’s already broke?
Democrats go down at least one governor on net (60%) → HOLD
The unemployment rate stays between 4 and 5% (70%) → SELL (50%)
50% if this is year end, and even lower if it means “at any time during year” (15%) since we may have ended 2021 at 3.9% or so and things are absurdly tight…plus we still have low workforce participation rates which holds the unemployment number down.
Vox 2022 Prediction Questions
Democrats will lose their majorities in the US House and Senate (95 percent) → SELL - 80%.
Same question, so same prediction as the Yglesias #1 question.
Inflation in the US will average under 3 percent (80 percent) → SELL - 20%
They are using the Core PCE, which tends to undershoot CPI and also excludes food/energy. They’re also limiting themselves to the first 3 quarters of 2022, so its three quarters of data. That said Q4 was at 4.9% and one quarter of 4.5% means each other quarter would have to be at 2%. Honestly I think they are insanely wishcasting here that magically the current administration fixes things somehow (because Vox). Good luck with that. Would be happy to be wrong though.
Unemployment in the US will fall below 4 percent by November (80 percent) → BUY - 99%
I’m pretty sure we’re already there? Even with lag between my prediction and theirs maybe accounting for difference, I still like to think I’d be bullish here.
The Supreme Court will overturn Roe v. Wade (65 percent) → SELL - 50%
Coin flip, partly because of confusion. I’m a little confused on resolution conditions because if this means literally overturning Roe that is a pretty high bar. If this just means Dobbs upholds some restrictions that is very different than overturning Roe.
Stephen Breyer will retire from the Supreme Court (55 percent) → BUY - 99%
Cheating because of the announcement already made, but I’m at 99%. You never know if something crazy happens and he stays.
Emmanuel Macron will be reelected as president of France (65 percent) → 51%
Going to barely yes, to match my prior - Yglesias & Vox might know more than me here, but, meh, I think its not uncommon to have some establishment bias over here on our side of the pond.
Jair Bolsonaro will be reelected as president of Brazil (55 percent) → SELL - 40%
My Lula prediction was 60% so adjusting to 40% here. Sure, why not?
Bongbong Marcos will be elected as president of the Philippines (55 percent) - HOLD
I know nothing of relevance here, so I’ll stick with them. Shrug emoji?
Rebels will NOT capture the Ethiopian capital of Addis Ababa (55 percent) → BUY - 85%
Big updates since the original predictions by Vox…
China will not reopen its borders in the first half of 2022 (80%): HOLD
I think if Zero COVID changes this happens, but I can see it waiting a bit per my face saving logic…
Chinese GDP will continue to grow for the first 3/4 of the year (95%): HOLD
With the caveat that I don’t see them reporting negative GDP if it happens if they can avoid it in any way. Fiddling down to 90% doesn’t seem worth it.
20% of US kids between 0.5 and 5 years old will get at least one COVID vaccine by year's end (65%): SELL to 35%
Not impossible, but it would need parents to want to & FDA/CDC would have to recommend it instead of saying “if you want to, I guess” (and make US an outlier among many other developed countries). Plus older kids are apparently still sub 20%.
WHO will designate another Variant Of Concern by year's end (75%): HOLD
Sure why not?
12 billion COVID shots will be given out globally by 11/2022 (80%): HOLD
No strong feelings and I’ll trust they are in the ballpark.
At least one country will have less than 10% of people vaccinated with two shots by 11/2022 (70%): BUY to 98%
Are they aware that North Korea exists!?!? Plus there are lots of other places where this is at least somewhat plausible.
A psychedelic drug will be decriminalized/legalized in at least one more US state (75%): SELL to 49%
I know there is some momentum, but this seems like the equivalent of “THIS IS THE YEAR THE FEDS LEGALIZE MARIJUANA MAN!”… which gets said every year.
AI will discover a new drug promising enough for clinical trials (85%): HOLD
I guess a few have happened already, so I’ll go with the crowd.
US govt will not renew the ban on funding gain-of-function research (60%): BUY to 80%
Logic being that this would require action, could be painted as “anti-science”, and unfortunately the people being loud about it politically are the “wrong people”… Here’s hoping we don’t make the next bat flu here!
The Biden administration will set the social cost of carbon at $100/ton or more (70%): BUY to 85%
The number itself doesn’t really “DO” anything, they’ll get killed by enviros if they don’t. Why wouldn’t they set it there or higher is the question? My breakdown would be like 2% they set it lower, 15% they just never get around to it, but all signs pointing to $100+, except I’m trying to use round-ish numbers.
2022 will be warmer than 2021 (80%): HOLD → Sell to 75%
If 2021 was below “trend” than this makes this easier to assume, but I also am skeptical of point-in-time modeling… Lets go with 75%.
Kenneth Branagh's Belfast will win Best Picture (55%): SELL to 25%
Maybe not great methodology by me, but the Google tells me this is about white people in Northern Ireland. That can’t help. 55% seems crazy high on that alone given the times.
Norway will win the most medals at the 2022 Winter Olympics (60%): HOLD
Sure, why not.
Predictions (ACX - 2022)
I’ll admit this is more work than anticipated, I’m running out of steam, and many of Scott’s predictions are not of great enough interest mainly because I would be out of my realm and I’d likely defer and hold… so I’m sticking to his first 21 or so questions here….
US/WORLD
Biden approval rating (as per 538) is greater than fifty percent: 40% → SELL TO 25%
Possible recency bias on my part, but I just don’t see many opportunities to reverse the slide, and if anything, current events plus losing the House and probably the Senate too doesn’t help.
At least $250 million in damage from a single round of mass protests in US: 10% → BUY to 20%
$250M isn’t that much in terms of damages, and between COVID, elections, Trump, Antifa, and police interactions that’s a lot of “known” opportunities for additional damage, plus all the things we aren’t thinking about.
PredictIt thinks Joe Biden is most likely 2024 Dem nominee: 80% → BUY to 90%
If he is still in Office (which I put at 96%) he is almost certainly the favorite to be the nominee at year end. That said, I’m relying on PredictIt here which isn’t exactly predictable. 90% for the PredictIt discount?
…thinks Donald Trump is most likely 2024 GOP nominee: 60% → BUY to 80%
See above, plus who else jumps the line? No way he announces “I’m not running” unless he is in jail, and even then… regardless of if a run is planned.
Beijing Olympics happen successfully on schedule: 99% → HOLD
Unclear on conditions, but I guess COVID or some terrorism, social unrest thing would make it “unsuccessful”? 1 in 100 doesn’t sound crazy, maybe a touch low, since I think we discount these things based on our “on average these things go great” approach.
Major flare-up (worse than past 5 years) in Russia/Ukraine conflict: 50% → Sell to 35%
So this would mean “worse” than Crimea and I’m not quite sure how to adjudicate that. Full-scale war sure, but “minor incursion”? Matching this up to my invasion answer, less a bit, since I think some sort of intermediate conflict is our current leading outcome if hostilities erupt.
Major flare-up (worse past 10 years) in Israel/Palestine conflict: 5% - HOLD
Major flare-up (worse than in past 50 years) in China/Taiwan conflict: 5% - Buy to 8%.
AFAIK, they haven’t shot at each other in the past 50 years, or had anything other than diplomatic issues. If I have hostilities at 5% this should be higher since there is some marginal condition that could be major but isn’t open hostilities.
Honduran ZEDEs legally crippled to the point where no reasonable person would invest in them further: 5% - BUY to 25%
I am no expert, but given the current legal situation there and risk of expropriation, I’m not sure I’d invest there & I think I’m reasonable… That said if this means some action happens legally or extra-legally, I’m just signaling 5% seems low.
New ZEDE approved in Honduras: 30% → HOLD and stick with Scott’s number
ECON/TECH
Gamestop stock price still above $100: 30% → HOLD
Bitcoin above 100K: 20% → HOLD
Ethereum above 5K: 20% → HOLD
Ethereum above 0.05 BTC: 90% → HOLD
Bored Ape floor price here below current price of $203K: 40% → HOLD
Dow above 35K: 90% → SELL to 75%.
...above 37.5K: 40% → SELL to 30%.
Inflation for the year below five percent: 90% → SELL to 30%.
Unemployment below five percent: 50% → BUY to 70%.
Google widely allows remote work, no questions asked: 50% → HOLD
Starship reaches orbit: 90% → SELL to 85% (FAA, overconfidence, etc)
Using bulk notes here to save some effort:
Generally I’d defer to others who’ve put more time and effort into this, so lots of HOLD. On stocks, I think sticking to historical norm of ~75% it is an up year makes more sense than 90%. A ~8% gain to break 37.5 doesn’t sound crazy but maybe a touch high.
For inflation and unemployment I’m obviously more worried that inflation is real and sticks around, mostly because I think the supply chain and logistics issues are “real world meatspace” problems and not so easy to solve as the Fed and other experts might think. Using something like the Arnold Kling PPST model as a way to think about things points me to things remaining pretty high because of these business issues & that ignores the Fed/money supply side of things. At least unemployment will be low though!
My Own Questions
For my own purposes I have a couple “fun” or motivational predictions to track:
I’m “consistently” at my target weight by next year: 20%
I hope I’m wrong, but I’ve set a similar goal the last few years and haven’t gotten there and other factors mitigate against success now. Perhaps proving the blog version of me wrong helps here though?
I’m still doing WORDLE most every day (260+ attempts at year end): 50%
I get one of the WORDLEs correct on my first guess: 1%
At some point this year I can’t complete one of the WORDLEs: 30%
The final WORDLE is contingent upon still doing them frequently, a success assumption, etc. If I do less of them, more chance I keep the “perfect record”. I really didn’t want to pick something that high but yay probability.
I complete X or more Substack posts:
5 or more: 60%
10 or more: 50%
50 or more: 10%
100 or more: 2%
Major life change #1: 50%
Major life change #2: 33%
One of the Phillies or 76ers wins their Championship:
100% baby!!!5%Sixers odds sit at 4% at the moment, betting wise, and Phillies at 3% ish… I’ll be pessimistic, say those are high and go with 5% total.
Interesting. Not sure I completely get it but I don’t pick stocks.
When you say, “other side of the pond,” are you British? Yglesias is an American, right?