Markets Can Turn And Inform

If You Listen Correctly

Prediction markets are still moving in Trump’s direction. My friend Roger Simon asked me about them. If you don’t read Roger’s substack, you should. Basically, the prediction markets give Trump a 64.5% chance to win as of this morning.

But, markets price information as soon as they receive it. For example, when the tasteless comedian made some bad jokes, they took a very slight dip. This morning when the news broke that Kamala was pulling all her money out of North Carolina and conceding the state to Trump, the prediction market moved up to 66.7% on a Trump victory.

The childhood fable about the Emporer not wearing clothes can be translated into a person following any market and not realizing what exactly it is telling you.

Here is another funny one that was tweeted out by Chamath today. Trump’s Truth Social network is worth more than the New York Times. I laughed out loud.

Is it really? Would you pay more for Trump’s virtual network than the NYT? Personally, I would not. But what it shows is the absolute devastation in mainstream institutionalized media. Given the right management team changing the NYT culture etc, you could see how the trade should be to short DJT and go long NYT. But, the market is telling you that’s not going to happen.

Jeff Bezos penned an editorial in the paper he has owned since 2013 yesterday. Supposedly, he has lost 250,000 subscribers because of it. In it, he said,

Lack of credibility isn’t unique to The Post. Our brethren newspapers have the same issue. And it’s a problem not only for media, but also for the nation. Many people are turning to off-the-cuff podcasts, inaccurate social media posts and other unverified news sources, which can quickly spread misinformation and deepen divisions. The Washington Post and the New York Times win prizes, but increasingly we talk only to a certain elite. More and more, we talk to ourselves.

What I think that the market is telling you is exactly what Bezos is saying. The media has lied so much, and slanted stories so much, it has no credibility. Zero.

Worse, the newsrooms of America are employing propagandists, not newspeople. George Soros is not a news person. Neither is Jake Tapper. They are Democratic Party operatives. They aren’t objective observers who relay information. Perhaps the worst thing about Watergate was the press finally realized how powerful it was. It wasn’t until this election cycle that it realized how powerless it was.

It gets worse. Read this story from Mollie Hemingway in The Federalist. She blows open the story with receipts about how Jake Tapper of CNN was active in spreading the false story about Russian collusion in 2016. That led to false reporting on the Hunter Biden laptop in 2020. It also led to lots of false reporting about many issues that aren’t just political. Global warming comes to mind.

The fake Russian dossier which was bought and paid for by Hillary Clinton and the Democrats had its water carried for it in Congress by Adam Schiff. If you vote for Schiff in California, you are endorsing corruption and taking an axe to the tree of liberty.

An aside, The Conservative Treehouse had this story back in 2016 and named the FBI agent involved. TCT just didn’t have the street cred for anyone, including the right-wing media to run with the story. So much for Bezos comment about off-the-cuff podcasts and unverified news sources. One of the largest problems that the mainstream media has is they use unverified sources to spin stories they want told.

If you read John Kass, you know his story of persecution by the Chicago Tribune. He was a great writer and was kicked out unfairly and his reputation was besmirched by a bunch of Jacobian newspeople who did not value the truth.

I get much better information from outlets like X and blogs or podcasts than I do any traditional mainstream media outlet.

As a person who traded his own money for a living since 1986, and then invested in risky startups at pre-seed stage and seed stage, I have fought an internal war against my own confirmation bias my entire life. It’s hard to put your confirmation bias aside and follow the market so you can discern what it is telling you. I cannot tell you how difficult it is.

Other traders who read this blog can weigh in with their own experiences because it can be different for everyone. Reading the market is very different for different people because we can see things differently. It’s why when I was in the trading pit I talked to a lot of people and quizzed them on things. I wanted to understand how they were seeing things so I could learn something. One of the absolute worst things about trading electronically for me is being alone-even with social media outlets you are physically alone and I never enjoyed it.

It is weird the way your entire body, psychology, and emotions feel when you exit a successful investment. I do not feel euphoria. I feel a sense of relief. I get physically tired and need a nap. My energy levels don’t rise, they sag.

Funny thing when I lost money, my entire makeup felt differently. I wanted to fight. I had high energy. I didn’t want to quit. I got angry.

Why? Because when you take a position in the market, you have an opinion. You act out on that opinion. In financial markets, you buy or sell something. Information flows and your subconscience inherently filters out all the conflicting information that might disprove your opinion. We want to be “right” so badly. Staking out a position affects us psychologically and emotionally.

The same goes for politics. You don’t need to donate actual money to a candidate to buy the market. Putting a sign in your front yard or a bumper sticker on your car is enough to turn your actions into a psychological construct that creates confirmation bias inside your brain.

Hence, I see prediction markets predicting a Trump win and I say “That market is correct”. A Harris supporter brings up all the ways markets can be manipulated. They don’t see how it could possibly be true. The Harris supporter will recite all the reasons Trump is Hitler and will destroy democracy. He will put us all in the gulag too.

I have been around markets all my life and believe in them. The one thing that is really difficult to grasp is when markets turn. Often, you don’t see the signals and you get caught. You might lose your discipline because things are going well. You might miss it because you don’t consistently check your confirmation bias. You might be in a bubble and don’t even realize it.

Sometimes, it has cost me.

In December of 2007, I thought the market was way too high and I had most of my net worth in one stock. It was at all-time highs. That stock crashed $151 per share in one day on fake news in early 2008. In my gut, I knew I should be selling it but my confirmation bias bolstered by greed wouldn’t let me.

When I look at the prediction markets today on the race to become president, I ask myself,

• “What could stop Trump’s momentum?”

• “What can Harris do to change the preferences of soft Trump supporters?”

• “What could Trump do to alienate soft Trump supporters?”

It feels like the management team at Harris, Inc. is not going to change their culture, or course. They have lost a lot of credibility because of the obvious and traceable Harris flip-flops on several positions. Plus, she’s not a self-aware candidate so she can’t credibly say that she has switched and why she has switched.

Contrast that with JD Vance and his flip-flop on Trump.

If questions one and two are answered with, “nothing”, then what about question three?

It’s going to take a big mistake by Trump and he doesn’t normally make them. That’s why I found the MSG comedian act so odd. It was a small mistake.

Trump would have to become physically unable to do the job as President. Terminal cancer. Quick onset Alzheimers or something like that I think to lose at this point. The other thing that could happen is fraud. The State of Nevada will process unpostmarked ballots received three days after Election Day. Lancaster PA has uncovered fraud. Ballot boxes were set on fire in Oregon and Washington.

Fraud is a real and present danger.

The Republicans should keep the House and might stretch their majority. They most certainly grab the Senate, and might have a commanding majority.

In the aftermath, will the Democrats pull a Jeff Bezos? Will the Republicans take the right lessons from a victory and put them into both leadership and policy?

That means the McConnell Tribe needs to take a back seat in the Senate, and the Uniparty people need to take a step back in the House.