Bitcoin can only go as low as $0. Bitcoin could, in theory, go up not only to $100k but to $1 million or more.
I’m confused. In theory, $50k currently invested in VTI could also go to any of those values. Is there something I’m missing about the relative likelihood of different outcomes that would make Bitcoin the more attractive investment? I feel like there’s some Econ 101 lesson I’m forgetting here.
There’s no trade, since (as many people reminded me) Metaculus is not a prediction market and you can’t trade on its values, but there’s still a big contradiction with market prices here.
In this case, isn’t the trade to just use the info Metaculus provides to inform your trades elsewhere? In a way, that’s an advantage of having Metaculus in addition to money-based prediction markets—predictors at money-based vs. points-based prediction markets have different motivations for predicting, so they’re likely to be self-selected from different populations and may generate different, complementary predictions. Granted, for any individual question it would be easier to be able to trade directly in the money-based market, but I think there’s an overall benefit in having both types available.
trade to just use the info Metaculus provides to inform your trades elsewhere?
Well, no. If you can’t trade directly in a way that moves the price, it’s likely that OTHERS also have information that it’s wrong and couldn’t move the price. So the market information is far more likely to be correct than the Metaculus information.
I’m confused. In theory, $50k currently invested in VTI could also go to any of those values.
Yeah, I could do with more explanation here too. I see that ‘EMH implies 50-50 odds’ is clearly false, and not only because of the risk premium. And I see why bitcoin could be a great buy with a 50% chance of outperforming the stock market. But I don’t see why it obviously would be.
It definitely seems more volatile, but why couldn’t a sensible person judge that it is:
much more likely than the stock market to crater to ~0
more likely than the stock market to rise dramatically
only negligibly (if at all) more likely than the stock market to rise to insanely high levels
and that this all nets out to a ~50% chance of outperforming the stock market, and also an EV similar to (or less than) that of an index fund?
I’m confused. In theory, $50k currently invested in VTI could also go to any of those values. Is there something I’m missing about the relative likelihood of different outcomes that would make Bitcoin the more attractive investment? I feel like there’s some Econ 101 lesson I’m forgetting here.
In this case, isn’t the trade to just use the info Metaculus provides to inform your trades elsewhere? In a way, that’s an advantage of having Metaculus in addition to money-based prediction markets—predictors at money-based vs. points-based prediction markets have different motivations for predicting, so they’re likely to be self-selected from different populations and may generate different, complementary predictions. Granted, for any individual question it would be easier to be able to trade directly in the money-based market, but I think there’s an overall benefit in having both types available.
Well, no. If you can’t trade directly in a way that moves the price, it’s likely that OTHERS also have information that it’s wrong and couldn’t move the price. So the market information is far more likely to be correct than the Metaculus information.
If you can’t middle, it’s not arbitrage.
Yeah, I could do with more explanation here too. I see that ‘EMH implies 50-50 odds’ is clearly false, and not only because of the risk premium. And I see why bitcoin could be a great buy with a 50% chance of outperforming the stock market. But I don’t see why it obviously would be.
It definitely seems more volatile, but why couldn’t a sensible person judge that it is:
much more likely than the stock market to crater to ~0
more likely than the stock market to rise dramatically
only negligibly (if at all) more likely than the stock market to rise to insanely high levels
and that this all nets out to a ~50% chance of outperforming the stock market, and also an EV similar to (or less than) that of an index fund?