Friday, January 5, 2018

2017 Prediction Contest Results

No one has challenged our contention in the pre-scoring post that the SALT deduction has been repealed. We are now ready to announce some winners and also Hall of Shame members.

The winner was actually your host. My average probability for events that happened was 43% and for events that did not happen was 26%.

Recall that people gave the events that did happen an average probability of 44% and the events that did not happen an average probability of 31%. However, only 7 of the possible 31 events happened, so my edge in forecasting that events would not happen (and did not) was enough to win the contest.

In contrast, the Hall of Shame winner had an average probability for events that happened of 36% and for events that did not happen of 31%. He is one of my favorite accounts on Twitter and a smart guy, so it is worth looking at how this happened. Despite ample warning about the logarithmic scoring rules, he said that there was a 99.9% chance that Elizabeth Holmes would be replaced at Theranos and also that EUR/USD would hit parity. Neither of these happened and the logarithm punished him severely. He actually put the highest probability of anyone (25%) of SALT repeal, so I trust he will do better next year.

However, since it is not sporting to win your own contest, I will crown a guest as winner. Whomever posted this comment as "B" was only behind me by a touch in final score. He had an average probability for events that happened of 45% and for events that did not happen of 28%. What cost him the most was giving only a 5% chance that Chipotle would go below $300.

Second honorable mention is to "inner_scorecard" from Twitter. He was way too high on another Supreme Court seat opening (50%), one of the asset management schmucks leaving the business (66%), and on negative yielding debt reverting to below $1T (66%). However he made up points on S&P>2,500 and a Cat 3 making landfall (said 50% for both).

I hope you willl all take part in the 2018 contest. Start by taking a look at the prediction ideas in the next post, and propose your own.


CP said...

By the way, "B" should get in touch with us...

B said...

That would be me - though notably I did not beat the average. On the Munger/Buffett probability, I guessed 31 as follows (using SSA mortality table):

P(die|86.5) = 11.49%
P(die|93) = 21.93%

P(either buffett or munger dies) = 1 - P(both live) = 1-(1-P(die|86.5))*(1-P(die|93)) = ~31%

CP said...

I figure that despite poor diets, WB & CM have access to heroic medical care and a lot to live for.

So... who are you? I don't think we've seen you in the comments before.

You have any suggestions for 2018 events for prediction contest?

B said...

Yea - agreed on the poor diets - and they seem quite healthy for their age.

My name's Benson - I added my email to my blogger profile - I am a structured finance professional now working at a lending-focused fintech.

I've been reading this blog for a few years. The breadth of the linkfests are great and I've been trying to get more people involved in the prediction contest - though most people I've chatted with have shied away from this because of the number of items.

For 2018 events, some ideas are:
- bitcoin is no longer the cryptocurrency with the largest market cap
- cryptocurrency-based company raises money / IPOs at a 10B+ post-money valuation
- IPO of decacorn company occurs
- Core CPI exceeds 2.5%
- US company issues debt at negative spread (in USD)
- Fed raises rates 4 times in 2018
- Fed lowers rates at some point in 2018
- spread between 90-day treasury and 10-year treasury falls below 50 bps at some point
- JPYUSD below 100
- US Dollar Index falls below 80
- N Korea enters agreement with either US or S Korea to demilitarize / limit arms development
- AAPL falls below 150
- 6.0+ earthquake hits Bay Area or LA area
- XIV positive for the year
- 4 or more of the top 10 most viewed youtube music videos are songs sung in Spanish

Anonymous said...

2018 contest:

Anonymous said...

B -

We are waiting for your %s!