| Prediction | ||
| Predicting what would happen in peoples’ lives has been around for ever. Fortune tellers have made their own fortunes through predictions about others love-lives and the like. From Babylonian times, it became more formalised by relating their predictions to people’s so-called astrological star signs. This gave a veneer of objectivity to what was being said, because most people believed that stars really did have an influence on their lives. However in the emerging scientific community of the renaissance, there was a backlash against it: such was the concern of Galileo not to be taken in by its irrationality, that he rejected the idea that the gravitational pull of the moon caused the tides - it seemed just too much like astrology. Newton, for the same reason, in developing his theory of gravity, finally accepted the moon’s influence, but with a lot of hesitation. As Popper said in his book ‘Conjectures & Refutations’: “Astrologers have always been greatly impressed, and misled, by what they believed to be confirming evidence - so much so that they were quite unimpressed by any unfavourable evidence. Moreover, by making their interpretations and prophecies sufficiently vague, they were able to explain away anything that might have been a refutation of the theory had the theory and the prophecies been more precise. It is a typical soothsayer's trick to predict things so vaguely that the predictions can hardly fail: that they become irrefutable.”. And so they make money out of peoples’ wish to believe that the future can be known before it’s happened. Evangeline Adams was born in New Jersey in 1868, and was a descendant of American President John Quincy Adams. Despite living at a time when it was a criminal offence to engage in fortune telling, she had become famous as the go-to astrologer. She charged $50 a session for her time and her clients included actors Mary Pickford, Charlie Chaplin and even, at one point, J Pierpont Morgan, the legendary banker. She was taken to court three times by the city of New York – and won on each occasion. in the second of the cases, in 1914, her victory resulted from her description of the character of the judge’s son purely from his astrological sign which convinced the judge that she was no mere fortune teller. Ultimately, the Courts decided that she had a belief in Astrology and so the prohibition of the exercise of that belief was unconstitutional. Over the years she had built up an undeserved reputation for predicting stock market movements, and so in the unstable months before the 1929 Wall Street crash, a number of investors consulted Evangeline Adams. On Thursday, October 24 - “Black Thursday” - when the Dow lost 11 per cent at the opening bell, Adams held an emergency group session for her clients. She assured them that the movement of the planets had generated “spheres of influence over susceptible groups, who in turn will continue to influence the market.” In short, you have the protection of the cosmos even If others don’t - and so the misfortune of others will ultimately bring the stock-market back to health. After her clients had left, she contacted her broker who told her that her own portfolio had lost $100,000. She ordered him to immediately sell everything. Christianity is making a come-back particularly on the right wing where it is a marker of extreme nationalism and racism. But you might think that few sane people would now consult an astrologer. Bizarrely, though, the practice is actually coming back into fashion, alongside tarot cards and “aura readings”, all making good money for the successors to Evangeline Adams. But the new kid on the block is Polymarket, Kalshi and the other so-called prediction markets. They are - in effect - betting sites. This is not however how they describe themselves. They portray themselves as selling shares and actually are regulated as if they were selling real financial instruments. They allow you to place money on the outcome of almost any event. You do that by buying one of the ‘shares’ issued in that bet, along with others who have decided to do so. Polymarket, which has Donald Trump Jr as an adviser, allows you to bet on whether Trump will “flip the bird again in 2026” – i.e. give someone the middle finger - if the FTSE will close up or down today, whether the US will strike Iran or Somalia next, and who is going to win the best reggae album at the Grammys. Everything is a binary contract, meaning you buy either “yes” or “no” shares in an event. For instance: ‘Will Khamenei be out as supreme leader of Iran by March 31?’ The price last week was 46 per cent chance of “yes”, 55 per cent chance of “no”. If the Iranian cleric goes, and you’ve placed $100 on a “yes”, you win $119, plus your stake - a very good return, if Lady Luck smiles on you. Prediction markets are booming in the United States and are in fact now being used by news organisations instead of polling results. It’s a lot cheaper. Polymarket was used during the broadcast of last week’s Golden Globes on CBS. Shayne Coplan, Polymarket’s chief executive, said that his platform predicted 26 out of the 28 Golden Globe winners correctly, tweeting: “You can’t deny its accuracy”. It’s using the wisdom of the crowd. But is this true? There are particular problems with prediction markets: the liquidity is often very thin - prices can move substantially on a small bet. Against that however is the argument that if someone has suddenly bet $50,000 on Hamnet winning best picture, they know something the wider public doesn’t know. But that simply highlights a problem inherent in the system - some of the contracts are very susceptible to insider trading. A concrete example is that of the aide (now in prison) to Rishi Sunak who bet on when he would call a general election – a couple of hours before he actually did so. You can of course bet on virtually anything: the number of posts Elon Musk will publish on X next month or if Trump will say “hottest” in his State of the Union address. But there remains uneasiness over possible manipulation. And then there’s the lack of precision in the description of some of the bets. Last week, Polymarket refused to pay someone who had predicted that the US would “invade” Venezuela by the end of January. His $32,000 wager, which should have netted him $400,000, was placed hours before the raid to capture Nicolás Maduro. Polymarket however says that the US military mission was not an “invasion”. In Regency London, members of gentlemen’s clubs would bet on how many of their fellow members would die in a year or which raindrop would first reach the bottom of a windowpane. Many traders in 1929 treated equities just like the raindrops reaching the bottom of the window, rather than as actual stakes in the businesses they represented. One cause of the 1929 Wall Street Crash was the emergence of 'investment pools': speculators would combine their resources to buy shares in a particular company, it didn’t really matter which, so secretly driving up the price of shares. They knew that outsiders would be likely to get on the band-waggon, further fuelling the rise. The speculators would then agree to sell at a certain moment to secure their artificially inflated profits, leaving the others to suffer the inevitable fall in price. When people start betting on how many migrants Trump will deport, or the number of measles cases in the United States, we see a return to the sort of behaviour indulged in by bored ‘gentlemen’, but this time given wings by technology. Every human action and tragedy can now be monetised. Fans of prediction markets claim that they can forecast the future because they harness the ‘wisdom of the crowd’. But investors in the prediction market are a very small sub-set of the population. A tiny crowd of watchers of films may perhaps have an informed opinion as to which will win awards. But if the tiny unrepresentative ‘crowd’ doesn’t actually have detailed knowledge of more important things, such as what’s likely to happen in a world subject to political turmoil, then we have to ask: What wisdom? What crowd? 18 January 2026 Paul Buckingham |
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