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I made pretty good returns (e.g. 40% annualized) during the 2020 election on predictit. I even found a pure arbitrage opportunity. But you can't really scale

I made pretty good returns (e.g. 40% annualized) during the 2020 election on predictit. I even found a pure arbitrage opportunity. But you can't really scale up to make it worthwhile on PredictIt due to bet size limitations.

teraflop 3y ago
The one and only time I traded on PredictIt, around the beginning of the pandemic, I made an easy couple hundred bucks on this market: https://www.predictit.org/markets/detail/4683 https://www.predictit.org/markets/detail/4683 The majority of traders seemingly looked at the headline and failed to understand the contract terms, which only required a "quarterly annualized" GDP growth of 5%, during at least one quarter of 2020. So a severe economic downturn in Q2, followed by even a modest recovery in Q3, would have made a "yes" outcome all but guaranteed. The comments became pretty hilarious once someone pointed this out.
- dataflow 3y ago
  > The majority of traders seemingly looked at the headline and failed to understand the contract term Nice way to blame the masses. Seems to me more like the terms contradicted the headline, thus making this a mechanism for exploiting people who assume they're making an honest bet. Seems like fraud, honestly.
  - mikeyouse 3y ago
    Seems like fraud to spell out the terms of the bet in plain language and then enforce those terms? The annual rate of increase in real gross domestic product (GDP) in one or more quarters prior to or including the fourth quarter of 2020, as rounded to the nearest tenth of a percent, per the advance, second or third estimate, as published subsequent to the launch of this market for any such quarter by the Bureau of Economic Analysis (BEA), shall be 5.0% or higher.
    - dataflow 3y ago
      Are you seriously claiming the average person's interpretation of "Will the US economy hit 5.0%+ GDP growth by year-end 2020?" would match the "spelled out terms"?
      - mikeyouse 3y ago
        I'm seriously claiming that if you don't read the actual terms of a legal agreement, you shouldn't wager on the outcome of that agreement. The headline statement leaves a ton of ambiguity, so any reasonable person would read the short paragraph that describes in full detail how the outcome will be measured and then bet accordingly. Caveat Emptor and all that.
        dataflow 3y ago
        No. If this was in an advertisement I'm pretty damn sure it would violate truth-in-advertising laws. Clarifications are one thing, contradictions are another. Most "reasonable" people reading it come away with an understanding of it that contradicts the fine print. Which is exactly what happened, and hence why so many people lost money. You don't get to put contradictory terms in a contract then blame it on "caveat emptor".
        mikeyouse 3y ago
        With any understanding of how GDP is measured / reported, there's no contradiction at all.. I'm honestly confused what you're finding so misleading about this particular bet.
        dataflow 3y ago
        Is the difference between "Will the US economy hit 5.0%+ GDP growth by year-end 2020?" and "Will the US economy hit 5.0%+ annualized GDP growth in any quarter in 2020?" really that hard to understand? Any sane person will tell you "Will the US economy hit 5.0%+ GDP growth by year-end 2020?" means GDP at the end of 2020 will be at least 5% higher than it was at beginning of 2020 (unless there's an explicit starting point mentioned). Aside from the question of the data source, it's pretty crystal clear what it means, and that it lacks any notion of quarters or annualization. And it's very obviously different from "Will the US economy hit 5.0%+ annualized GDP growth in any quarter in 2020?", which is what the fine print is measuring.

teraflop 3y ago

The one and only time I traded on PredictIt, around the beginning of the pandemic, I made an easy couple hundred bucks on this market: https://www.predictit.org/markets/detail/4683 https://www.predictit.org/markets/detail/4683 The majority of traders seemingly looked at the headline and failed to understand the contract terms, which only required a "quarterly annualized" GDP growth of 5%, during at least one quarter of 2020. So a severe economic downturn in Q2, followed by even a modest recovery in Q3, would have made a "yes" outcome all but guaranteed. The comments became pretty hilarious once someone pointed this out.

dataflow 3y ago
> The majority of traders seemingly looked at the headline and failed to understand the contract term Nice way to blame the masses. Seems to me more like the terms contradicted the headline, thus making this a mechanism for exploiting people who assume they're making an honest bet. Seems like fraud, honestly.
- mikeyouse 3y ago
  Seems like fraud to spell out the terms of the bet in plain language and then enforce those terms? The annual rate of increase in real gross domestic product (GDP) in one or more quarters prior to or including the fourth quarter of 2020, as rounded to the nearest tenth of a percent, per the advance, second or third estimate, as published subsequent to the launch of this market for any such quarter by the Bureau of Economic Analysis (BEA), shall be 5.0% or higher.
  - dataflow 3y ago
    Are you seriously claiming the average person's interpretation of "Will the US economy hit 5.0%+ GDP growth by year-end 2020?" would match the "spelled out terms"?
    - mikeyouse 3y ago
      I'm seriously claiming that if you don't read the actual terms of a legal agreement, you shouldn't wager on the outcome of that agreement. The headline statement leaves a ton of ambiguity, so any reasonable person would read the short paragraph that describes in full detail how the outcome will be measured and then bet accordingly. Caveat Emptor and all that.
      - dataflow 3y ago
        No. If this was in an advertisement I'm pretty damn sure it would violate truth-in-advertising laws. Clarifications are one thing, contradictions are another. Most "reasonable" people reading it come away with an understanding of it that contradicts the fine print. Which is exactly what happened, and hence why so many people lost money. You don't get to put contradictory terms in a contract then blame it on "caveat emptor".
        mikeyouse 3y ago
        With any understanding of how GDP is measured / reported, there's no contradiction at all.. I'm honestly confused what you're finding so misleading about this particular bet.
        dataflow 3y ago
        Is the difference between "Will the US economy hit 5.0%+ GDP growth by year-end 2020?" and "Will the US economy hit 5.0%+ annualized GDP growth in any quarter in 2020?" really that hard to understand? Any sane person will tell you "Will the US economy hit 5.0%+ GDP growth by year-end 2020?" means GDP at the end of 2020 will be at least 5% higher than it was at beginning of 2020 (unless there's an explicit starting point mentioned). Aside from the question of the data source, it's pretty crystal clear what it means, and that it lacks any notion of quarters or annualization. And it's very obviously different from "Will the US economy hit 5.0%+ annualized GDP growth in any quarter in 2020?", which is what the fine print is measuring.