Bigger Than Stocks

The world is getting weirder. August 15, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Question: Do you think the world is going to get weirder or less weird in the years to come? Bigger Than Stocks CHRIS CAMPBELL Dear Reader, You’re sitting at home, watching the latest season of Stranger Things. Hopper’s doing his thing, and he says something off: You catch a tiny tell. You think, “You know what? I bet Eleven’s gonna lose her powers again in the next season.” In the future, you could turn that flash of insight into cash. Speculation gets a bad rap. BUT Around the world, it's rapidly becoming a tool for generating insights, driving innovation, and improving decision-making in all areas of life. Two words: prediction markets. These markets allow participants to bet on the outcomes of events, from elections to product launches. Basically anything. And they’re going to be bigger than most people realize. Today, let’s look at 9 off-the-cuff reasons prediction markets are going to be bigger than the stock market in the future. 1] An infinite supply of markets. The stock market is limited by the number of publicly traded companies. In contrast, prediction markets can be created for any event, idea, or outcome—from the next big election to whether cats will overtake dogs as the most popular pets by 2030. This virtually unlimited supply of prediction markets means they can scale far beyond the stock market in terms of diversity and volume of bets. If you think the stock market is big, wait until people are betting on everything from asteroid landings to celebrity marriages. 2] Lower barriers to entry Roughly 55% of Americans own stocks, while prediction markets are open to anyone with an internet connection. They’re easier to access, more flexible, and not limited by financial literacy. You don’t need to understand earnings reports or P/E ratios to bet on the likelihood of a political outcome or a cultural event. The barriers to entry are much lower, which means a larger and more diverse group of participants—potentially billions—will be engaged in prediction markets. (Also, 24/7/365.) 3] The power of pop culture Meme stocks and memecoins are just early iterations of prediction markets. Early signs of what’s to come. In fact, platforms like Smarkets have seen massive engagement around events like the Oscars, Eurovision, Olympics, and the Super Bowl. Pop culture betting is already outpacing some smaller stock markets in participation and volume, showing that prediction markets can ride the wave of cultural trends in a way that trad markets cannot. 4] Faster feedback loops Stock markets typically operate on quarterly earnings cycles and long-term investment horizons, but prediction markets thrive on immediate feedback and short-term outcomes. In prediction markets, you can place a bet today and see the result tomorrow, or even within hours. This immediacy creates more engagement, akin to social media, where instant gratification drives user participation. 5] The psychology of risk Research has shown people are more willing to take risks on outcomes they feel personally connected to, even if those risks are speculative. Prediction markets tap into this psychology by allowing people to bet on outcomes they care about, from who will win the next NBA championship to which tech company will launch the next big gadget. The emotional connection to these events increases participation. In contrast, the stock market is often seen as impersonal, intimidating, and rigged - which deters participation from a wider audience. [Crypto Phenomenon to Launch 18-Month Rally?]( Every four years, a phenomenon takes place in the cryptocurrency market that has been known to send top-performing coins up a rare 52,000%…66,000%…Even 81,000% in a matter of about 18 months… And just two months ago, this phenomenon happened again. James Altucher predicts that those who get in now could see a six-figure return in the next 12-18 months on just a $1,000 stake. He’s put everything you need to know into this short presentation. [Check it out here.]( 6] The “fun economy” Let’s be honest: betting on whether Kanye West will file for bankruptcy this year or whether your favorite team will win the championship is more fun than deciphering balance sheets. Prediction markets tap into this fun factor, making speculation accessible and enjoyable. The gamification of speculation, combined with the ability to bet on almost anything, will attract a younger audience than the traditional stock market. This entertainment-driven engagement could propel prediction markets into mainstream popularity, far beyond the niche of financial speculation. 7] Intelligence as a commodity Prediction markets are like real-time supercomputers that aggregate human intelligence. As prediction markets become more accurate at forecasting outcomes, insurance companies could start using them to help assess risk in real time. Instead of relying solely on actuarial tables, they’ll integrate prediction market data to get more accurate forecasts on everything from natural disasters to health outcomes. Policymakers will begin using them to guide decisions. Corporations will use them to forecast market trends and consumer behavior. This creates a whole new revenue stream that could eclipse traditional stock market gains. What major AI company won’t want to plug into prediction markets? None of them. 8] Uncertainty is on the rise. The stock market hates uncertainty—when things get weird, prices go haywire. But prediction markets love uncertainty. The weirder things get, the more exciting the bets become. Question: Do you think the world is going to get weirder or less weird in the years to come? 9] It makes us smarter. In the stock market, a lot of moves are based on copying what the big players are doing. In contrast, prediction markets reward those who thrive on the ability to spot overlooked insights. If you can spot a trend that others miss, or if you have unique knowledge, you can profit from it. Over time, this doesn’t just hone your own ability to make smarter, more informed decisions… it makes us all smarter. There are more reasons. It won’t happen overnight. And, off course, regulation is a bottleneck… But the benefits outweigh the risks and the incentive to leverage the brainpower of billions will become too large. How to invest? More on that tomorrow. Until next time, Chris Campbell For Altucher Confidential Rate this email Like Dislike Thanks for rating this content! 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