Paul The Octopus cant be a psychic -but his care taker could.

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Right now, if you query Google for &#8220-Paul octopus psychic&#8220-, you get 3 million results. But that can&#8217-t be. Here&#8217-s why.

To divine the future, Paul The Octopus should send an information backward in time within his own mind. That can only be possible if the octopus is made aware of whether its prediction is right or wrong. But Paul The Octopus was not aware that it was being used as an oracle, and it was never aware of the outcome of the different Word Cup matches.

Hence, if you want an extra-rational explanation of the squid&#8217-s predictive skills, you have to turn your eyes instead to its German handler at the Sea Aquarium of Oberhausen. Only that humanoid could send an information (about the soccer match) backward in his/her mind.

Here&#8217-s how it would work. The octopus handler would receive 2 pieces of information from the future: one, which box the squid is going to pick (the one on the left or the one on the right), and, two, which soccer team is going to win. Armed with these 2 pieces of information, the octopus handler decides (in the past) where to put the box with the flag of the country whose team has won &#8212-on the left or on the right, in the aquarium.

If you don&#8217-t follow my logic, leave a comment, and I will re-explain. It is all about reversing the psychological arrow of time, so as to remember the future instead of the past.

I told you that vice presidential search committees and VP prediction markets are complete bullshit, didnt I?

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The McLaughlin Group of mid-June (yes, I know, that&#8217-s last month):

MS. BERNARD: Well, here&#8217-s what I think. I think the dirty little secret is Barack Obama probably already knows who he&#8217-s going to select to be his vice presidential running mate. You put out the search committee, probably because Hillary Clinton was all over his back last week &#8211-

DR. MCLAUGHLIN: So this is a smokescreen. This is a smokescreen.

MS. BERNARD: I don&#8217-t know if it&#8217-s a smokescreen, but I think he has a good idea who his vice presidential running mate is going to be. And the search committee is much ado about nothing.

I told you so.

No good advanced, primary indicators.

Don&#8217-t trade on VP prediction markets.

2 days after my ringing the alarm bell… THE FREE FALL

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– My first warning: June 4. + My second warning: June 4, later that day. + My third warning: June 5.

– Now, spot the timeline in the event derivative chart below.

Take that, Mike R. :-D

TAKEAWAY: If you are a UK-based or British trader on prediction markets, don&#8217-t believe a single word of what UK-based or British bloggers say about US politics. Go to US-based or American blogs to get the information you need to inform your US bets.

If you followed that British blogger, you&#8217-d be in the red today.

Get your information from sources close to the action &#8212-not one ocean away.

Get your information from vibrant sources who use intelligently both the information technology and the wisdom of crowds to comprehend the news &#8212-see my point #5 on yesterday&#8217-s post.

Pay attention to what I&#8217-m going to say in the coming weeks about &#8220-prediction market journalism&#8220-. Thanks.

Dont trade on the VP predictions markets. – Dont bet on Hillary Clinton as VP. – Dont listen to betting bloggers who tell you that Hillary Clinton has a chance to be on the Democratic ticket. – Dont believe in vice presidential selection committees. – Select well your primary, advanced indicators. –

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The topic of this post is:

Betting &amp- Information

#1. Don&#8217-t trade on the VP predictions markets.

I have stong reservations about those VP prediction markets. Only 2 men in the world know what is going to happen: Barack Obama, and John McCain.

You can&#8217-t divine their final thoughts.

Politicians often lie about their intentions &#8212-they also change mind, frequently.

The decision to name one VP nominee could be made in secret &#8212-without any early warnings.

Surprise is a card that Barack Obama and John McCain could play. Don&#8217-t bet against their final will.

#2. Don&#8217-t believe in &#8220-vice presidential selection committees&#8221-.

Last time, in 2000, a man named Dick Cheney was appointed to head George W. Bush&#8217-s vice presidential selection committee.

He was supposed to scout around to find and assess good candidates.

Surprise, surprise, that fake committee ended up putting Dick Cheney on the Republican ticket &#8212-and the rest is history (Iraq war, etc.).

#3. Don&#8217-t bet on Hillary Clinton as VP.

She does not have the slightest chance.

It&#8217-s highly unlikely that Barack Obama selects her on the Democratic ticket.

Hillary Clinton as VP nominee (and as VP) would present many quasi insurmountable problems.

#4. Don&#8217-t listen to betting bloggers who tell you that Hillary Clinton has a chance to be on the Democratic ticket.

They are clueless.

Don&#8217-t read clueless people. They are a waste of time.

#5. Select well your primary, advanced indicators.

  1. Go to the sources of information. Discard filters. Your insatiable curiosity should drive your search for information.
  2. Use technology to select the best news articles out there. Bookmark Memeorandum for US politics (and TechMeme for information technology) &#8212-they use bloggers&#8217- links to select what&#8217-s hot, a bit like Google&#8217-s PageRank does.
  3. Use the crowd to sense what&#8217-s hot or to discover marginally interesting tidbits. I have 56 friends on Google Reader who share their best items with me. I got many interesting stories that way, every day, from sources I would have never known about, otherwise. (Plus, I receive many e-mails each day from potential sources.)

#6. Choose your bets (and trades) carefully.

Just because an event derivative is cheap doesn&#8217-t mean that it&#8217-s a good bet.

Don&#8217-t pluck down money on a bet unless you&#8217-ve seriously researched the topic by yourself &#8212-and possesses some expertise or experience in that field.

FOLLOW-UP POST: 2 days after my ringing the alarm bell… THE FREE FALL


Democratic Vice President Nominee

Price for 2008 Democratic Vice-Presidential Nominee at

Price for 2008 Democratic Vice-Presidential Nominee at

Price for 2008 Democratic Vice-Presidential Nominee at

Price for 2008 Democratic Vice-Presidential Nominee at

Republican Vice President Nominee

Price for 2008 Republican Vice-Presidential Nominee at

Price for 2008 Republican Vice-Presidential Nominee at

Price for 2008 Republican Vice-Presidential Nominee at

Price for 2008 Republican Vice-Presidential Nominee at


Next Vice President:

Democratic Ticket

Democratic Vice President Nominee

Republican Vice President Nominee


Barack Obama will pick a woman as running mate.

© NewsFutures

Explainer On Prediction Markets

Prediction markets produce dynamic, objective probabilistic predictions on the outcomes of future events by aggregating disparate pieces of information that traders bring when they agree on prices. Prediction markets are meta forecasting tools that feed on the advanced indicators (i.e., the primary sources of information). Garbage in, garbage out&#8230- Intelligence in, intelligence out&#8230-

A prediction market is a market for a contract that yields payments based on the outcome of a partially uncertain future event, such as an election. A contract pays $100 only if candidate X wins the election, and $0 otherwise. When the market price of an X contract is $60, the prediction market believes that candidate X has a 60% chance of winning the election. The price of this event derivative can be interpreted as the objective probability of the future outcome (i.e., its most statistically accurate forecast). A 60% probability means that, in a series of events each with a 60% probability, then 6 times out of 10, the favored outcome will occur- and 4 times out of 10, the unfavored outcome will occur.

Each prediction exchange organizes its own set of real-money and/or play-money markets, using either a CDA or a MSR mechanism.