Looks likely that tonight is going to be a massive transfer of wealth from “sharps”(among other people) to him. Post hoc and all, but I think if somebody is raking in huge wins while making “stupid” decisions it’s worth considering whether they’re actually so stupid after all.
1. there might no be any real sharps (=traders having access to real private arbitragiable information that are consistently taking risk-neutral bets on them) in this market at all.
This is because a) this might simple be a noisy, high entropy source that is inherently difficult to predict, hence there is little arbitragiable information and/or b) sharps have not been sufficiently incenticiz
2. The transfer of wealth is actually disappointing because Theo the French Whale moved the price so much.
For an understanding of what the trading decisions of a verifiable sharp looks like one should take a look at Jim Simons’ Medaillon fund. They do enormous hidden information collection, ?myssterious computer models, but at the end of the day take a large amount of very hedged tiny edge positions.
You are misunderstanding my argument (and most of the LW commentariat with you). I might note that I made my statement before the election result and clearly said ‘win or lose’ but it seems that even on LW people think winning on a noisy N=1 sample is proof of rationality.
but it seems that even on LW people think winning on a noisy N=1 sample is proof of rationality
It’s not proof of a high degree of rationality but it is evidence against being an “idiot” as you said. Especially since the election isn’t merely a binary yes/no outcome, we can observe that there was a huge republican blowout exceeding most forecasts(and in fact freddi bet a lot on republican pop vote too at worse odds, as well as some random states, which gives a larger update) This should increase our credence that predicting a republican win was rational. There were also some smart observers with IMO good arguments that trump was favored pre-election, e.g. https://x.com/woke8yearold/status/1851673670713802881
“Guy with somewhat superior election modeling to Nate Silver, a lot of money, and high risk tolerance” is consistent with what we’ve seen. Not saying that we have strong evidence that Freddi is a genius but we also don’t have much reason to think he is an idiot IMO.
That’s why I said: “In expectation”, “win or lose”
That the coinflip came out one way rather than another doesnt prove the guy had actual inside knowledge. He bought a large part of the shares at crazy odds because his market impact moved the price so much.
But yes, he could be a sharp in sheeps clothings. I doubt it but who knows. EDIT: I calculated the implied private odds for a rational Kelly bettor that this guy would have to have. Suffice to say these private odds seem unrealistic for election betting.
Point is that the winners contribute epistemics and the losers contribute money. The real winner is society [if the questions are about socially-relevant topics].
Looks likely that tonight is going to be a massive transfer of wealth from “sharps”(among other people) to him. Post hoc and all, but I think if somebody is raking in huge wins while making “stupid” decisions it’s worth considering whether they’re actually so stupid after all.
>> ‘a massive transfer of wealth from “sharps” ’.
no. That’s exactly the point.
1. there might no be any real sharps (=traders having access to real private arbitragiable information that are consistently taking risk-neutral bets on them) in this market at all.
This is because a) this might simple be a noisy, high entropy source that is inherently difficult to predict, hence there is little arbitragiable information and/or b) sharps have not been sufficiently incenticiz
2. The transfer of wealth is actually disappointing because Theo the French Whale moved the price so much.
For an understanding of what the trading decisions of a verifiable sharp looks like one should take a look at Jim Simons’ Medaillon fund. They do enormous hidden information collection, ?myssterious computer models, but at the end of the day take a large amount of very hedged tiny edge positions.
***************************************************
You are misunderstanding my argument (and most of the LW commentariat with you). I might note that I made my statement before the election result and clearly said ‘win or lose’ but it seems that even on LW people think winning on a noisy N=1 sample is proof of rationality.
It’s not proof of a high degree of rationality but it is evidence against being an “idiot” as you said. Especially since the election isn’t merely a binary yes/no outcome, we can observe that there was a huge republican blowout exceeding most forecasts(and in fact freddi bet a lot on republican pop vote too at worse odds, as well as some random states, which gives a larger update) This should increase our credence that predicting a republican win was rational. There were also some smart observers with IMO good arguments that trump was favored pre-election, e.g. https://x.com/woke8yearold/status/1851673670713802881
“Guy with somewhat superior election modeling to Nate Silver, a lot of money, and high risk tolerance” is consistent with what we’ve seen. Not saying that we have strong evidence that Freddi is a genius but we also don’t have much reason to think he is an idiot IMO.
Okay fair enough “rich idiot” was meant more tongue-in-cheek—that’s not what I intended.
That’s why I said: “In expectation”, “win or lose”
That the coinflip came out one way rather than another doesnt prove the guy had actual inside knowledge. He bought a large part of the shares at crazy odds because his market impact moved the price so much.
But yes, he could be a sharp in sheeps clothings. I doubt it but who knows. EDIT: I calculated the implied private odds for a rational Kelly bettor that this guy would have to have. Suffice to say these private odds seem unrealistic for election betting.
Point is that the winners contribute epistemics and the losers contribute money. The real winner is society [if the questions are about socially-relevant topics].