If anyone has read Superforecasting by Philip Tetlock you will know that you can improve your ability to predict. Almost all businesses can improve their forecasting and their predictions.Forecasting does not have to be pin point accurate, it has to be in the right ball park. Between now and the year end I hope to be able to show you how to double your money starting off with a stake of £25.00.

Many events now have betting markets and many markets allow you to cash out if the odds move in your favour. This means that if you bet on an outcome for an event in November at 40/1 in September and a month later the outcome is 10/1, then you can cash your bet out at a multiple of the stake before waiting for the outcome.

Key to being a good forecaster is doing the following:

  • Focus on important issues where there will be some pay off for being right.
  • Break big issues down into bite sized chunks.
  • Look at the issue from every angle including any information that goes against your estimate.
  • Revise your forecast in light of new information, be Bayesian.
  • Remove uncertainty.
  • Be nimble, don’t rush but don’t take too long. Fortune favours the early not the late. Be first in the queue for the bandwagon, before anyone knows it’s a bandwagon.
  • Learn from your forecasts what went well and what did not go well.
  • Keep a forecasting log.
  • Practice will imporve your forecasting skills.

 

One of the questions in the book is predicting how many piano tuners there are in Chicago by asking 5 questions and then estimating the answers .

We ask this question to new starts at PJH Law and almost all answer with a reasonably accurate estimate without looking at the internet. Key to the estimate is knowing what questions to ask.

The questions most people ask are along the lines of:

1. What’s the population of Chicago and what percentage of the population will own a piano?

2. How many bars, hotels are there and what percentage will have a piano?

3. How long does it take to tune a piano and how often do they need tuning?

4. Estimate how many pianos a tuner can tune in a year?

5. Divide the estimated number of pianos by the estimated number of pianos a piano tuner can in a year?

Here’s how NASA estimated the number. So based on that and based on some success with betting on an up and coming jockey  Billy Loughnane recently including an 80/1 winner at Ascot, here’s some forecasts which look reasonably probable and where we have a chance of turning a good profit in a reasonably short period of time by making accurate predictions:

1. Trump to win US election – this is based on Nate Silver’s predictions which are the most accurate. Current odds are 4/5 – 15 units staked. Likely return 27 units. Cash out at 25. Most Brits favour Harris. Being right is more important than being popular and pays more.

2. Trump to win popular vote 3/1.  5 units staked. Likely return 20 units, cash out at 10 or above. More likely than the odds suggest, as both Harris and Walz have skeletons rattling in their closets which are likely to emerge during their campaign. Trump’s skeletons are fully visible, what you see is what you get.

3. Trump to win by more than 10% points – 40/1 – 5 units staked. 200 units return, cash out at 50 units or above. An outside bet but counter-intuitively if Trump goes to jail in September his popularity is likely to increase.

The current odds are as at 2 September 2024 as per William Hill

 

Book mark this post for November 5th and see how the forecasts pan out, if the odds change dramatically between now and then I will update the post.