Newspapers are evil. Ten years ago I decided, every time I want to read, I’d read a book instead of a newspaper.

Not to be snobbish. But newspapers are just full of sh*t. I know. I wrote for five of them.

People say to me, “That’s stupid. How do you get informed?”

What?

I’m a firm believer that the best way to make the world a better place is to become a better person.

Be kind to the people around you, be healthy, be creative, and don’t waste energy trying to control the things you can’t control.

But now I have a better way to get informed. A more fun way.

I gamble.

I log onto PredictIt.org.

It’s a prediction market.

You can buy “shares” in world events.

For instance, “Will Donald Trump win the presidency in 2020?”

Right now you can buy shares of “Yes” to that question for 41 cents. If Donald Trump wins, you will get 100 cents for every share you own.

So if you buy 1,000 shares today for 41 cents, you spend $410. If Donald Trump wins, you will get $1,000 deposited into your account. You will gain $590.

But even better, you don’t have to wait until the end of the bet.

Like a stock in the stock market, you can sell your shares at any point.

So if it looks like Donald Trump is moving up in the polls, then shares of “Yes” will tick higher. Maybe if he doesn’t get impeached, the shares will go to 50 cents and you can sell for a 25% gain even before the first primary.

Because I just started, the maximum I could deposit was $1,000.

I started looking at all the questions. And then something interesting happened.

I got addicted. And I became informed.

Every time I placed a bet, I’d have (as Nassim Taleb would call it) “skin in the game.”

Since I had money on the line, I wanted to learn more.

I didn’t read newspapers but I did my research. I never once went to an online newspaper.

Below I describe the bets I currently have and why I made them.

Then I summarize what I feel are the rules for good gambling (in stocks, in a casino, in a prediction market like this).

For instance, Rule #3: Keep emotions out of it.

Here are my bets:

WILL VICE-PRESIDENT PENCE BREAK 2 OR FEWER TIE-BREAKERS IN 2019?

I didn’t make this bet but considered it.

In the Constitution, if the Senate has a tie vote, the vice-president comes in and breaks the tie.

“2 or fewer” would cost me 87 cents a share.

Research:

So far, he’s done none in 2019. He did quite a bit in 2018 so on that basis it is possible he could do more than two in the next 2.5 months. 87 cents seems fair.

Any more info I can gather? I looked up all the votes in the Senate so far in 2019. I used Senate.gov.

Most votes in the Senate have been pretty partisan, meaning Republicans all vote together and Democrats all vote together. If this remains the case, Pence will have ZERO tiebreakers

Almost all the tie-breakers by Pence involved nominations for obscure government jobs or judgeships.

I looked up all the nominations pending. Nothing seemed controversial.

But… impeachment could change all of this.

87 cents seemed fair and I didn’t really see where I had an unfair advantage. Plus I didn’t want to tie up 87 cents for every dollar.

No bet.

WILL ELIZABETH WARREN BE PRESIDENT IN 2020?

I bet “No” for 67 cents.

Why?

When I bet, she was (maybe she still is) the frontrunner.

I looked back to 2016, 2008, 1992, 1988 (Democrats), etc.

Whoever the frontrunner was before the primaries often had a lot of trouble staying consistently the frontrunner.

Even Clinton in 1992 had to deal with scandals. And Barak in 2008 was not the frontrunner at this time. Nor was Trump in 2016.

All the fire is aimed at the frontrunner.

My plan is to take this bet off either after Iowa or New Hampshire, depending on how Warren does.

I bet 67 cents on “No.” Currently I am up (shares trading for 73 cents).

I could sell now for a 10-cent profit but I think “Working Class” Warren with a $12 million net worth will have some difficulties in Iowa.

[Again, keep emotions out of it.]

ANDREW YANG WILL BE PRESIDENT IN 2020

Andrew Yang is a long shot in the polls but he’s been gaining, going from 1% to more than 3% to even 5% in many states.

I bet 9 cents. With shares trading at 7 cents, I am down.

Still, I bet slightly higher on this than on Warren because I thought he would uptick after the last debate. He didn’t.

I still think he might uptick because he has raised so much more money than expected.

After the next debate I may take this bet off.

BREXIT WON’T HAPPEN BY 11/1

I don’t know anything about Brexit, other than that everyone has different agendas and nobody is agreeing.

Brexit refers to the British plan to leave the European Union.

Boris Johnson has staked his reputation on getting out of the EU by 11/1. Hence this timeline on the bet.

I bet “No” for 73 cents and it’s currently at 77 cents, so I’m a little up.

But it’s been a wild ride (I bet a little over a week ago).

My assumption was politicians don’t really care when they “stake their reputation,” so his promise was meaningless.

Northern Ireland and Great Britain have the exact opposite agendas. Ireland is historically a trade-free zone, but if Great Britain suddenly does not become a trade-free zone with the EU, that could affect the economy.

So my guess is that this is impossible for the U.K. Parliament to agree on easily, particularly since (as my research told me) Johnson’s coalition doesn’t have the majority of votes in Parliament.

He did come up with an agreement that the EU agreed with.

So I was way down on my bet for a few days until the U.K. Parliament demanded an extension to making a deal.

Now I am slightly up, with 10 days left.

He can also illegally take the U.K. out of the EU in what is called a “no-deal” Brexit.

This would be illegal and Parliament does not want this to happen.

BUT, I hedged…

WILL THERE BE A NO-DEAL BREXIT IN 2019?

I paid 10 cents for “YES”.

This is a hedge. There’s a slight chance Parliament will not back Brexit but Boris Johnson will pull the U.K. out anyway to keep his promise.

Hence, a no-deal exit. I have 10 cents on the downside and 90 cents on the upside.

I have 27 cents on the upside that there will be no Brexit at all by 11/1.

It’s looking like the only way for a Brexit to happen is if Johnson does a no-deal exit. Then I win 90 cents per share and lose 73 cents, winning 17 cents per share on a total 83 cents bet. A return of 20% in just a few weeks.

I knew nothing about Brexit before any of this. It’s the thrill of the hunt that forced me to get informed.
 

IMPEACHMENT: WILL DONALD TRUMP BE IMPEACHED IN 2019?

I paid 44 cents for shares of “No.” Currently trading at 54 cents so I am about 24% up in a few weeks.

Again, this has nothing to do with personal opinions or agendas.

I think I have an unfair advantage in that many people are betting their emotions.

But, still, it forced me to understand the laws a bit better.

1) Trump claims that the House is acting against the Constitution because they did not vote for an official impeachment inquiry as they did in 1998, 1973, and 1868.

Trump is wrong. The Constitution doesn’t specify how an impeachment inquiry can begin.

But, since there is a precedent, this might slow things down if the House wants to step carefully.

I am making the bet that this confuses the issue enough to bring it into 2020, in which case I win the bet.

2) An impeachment is not a legal hearing. It’s not due process. It’s totally partisan.

But it’s dangerous for it to be partisan.

It could show that whenever the House has a majority that’s different from the party of the president, then impeachment is possible.

So they try to make it as legal as possible.

They have to show there’s a reasonable case for a “high crime and misdemeanor” (a term that has never been defined on purpose).

The question is: Was there a “quid pro quo” in the president’s phone call with the Ukrainian president?

I don’t know the answer. But we do know a few things:

a. There was never a point where Trump said, “If you do this I’ll do this.”

b. The Ukrainian president, at the time of the call, never even knew that $400 million in military aid was being held back. So no quid pro quo was even possible unless he knew the aid was in jeopardy.

c. The more the House pushes on this issue, the more it seems to be hurting Biden’s chances for president.

d. The House is afraid to repeat a Newt Gingrich-style backlash that happened after Clinton’s impeachment (although Clinton’s approval ratings were higher).

e. Pelosi now is bringing back Putin as a possible reason to impeach, which shows me she’s not as confident anymore in her original reasons for impeachment.

Remember, this is not “Should Trump be impeached?” Nor is this, “Will he be impeached?”

Emotions are not part of this.

I wouldn’t bet on “Will Trump be impeached in 2020?”

Technically, the House can hold a vote today and impeach him.

But for the reasons described above, my guess is they won’t do that before December 31.

They are going to take time trying to build a super solid case. And my guess is, they won’t do it by January 1.

That said, this issue is holding steady. I bet 44 cents a share on a “No” and it’s currently trading at 52 cents.

I’m slightly up but it seems random at this point. Once 2020 gets closer this will start to trade like a stock option and will be much more volatile.

My theory is that starting November, every day there is no impeachment will send shares of this bet higher and I will get out of it by mid-November around 60-70 cents.

WILL HILLARY RUN FOR PRESIDENT IN 2020?

I hate this bet because I bet 84 cents on “No” and so can lose the entire 84 cents immediately if she even files an exploratory committee with the Federal Election Commission.

Still, the fact that we are almost at the Iowa caucuses, questions about her health, and the recent back and forth with Tulsi Gabbard (showing she doesn’t have a unified base in the Democratic party, which would put her at risk of losing primaries) makes me think she wants to be kingmaker more than king.

I don’t think this is a good risk/reward bet. But I think I’m safe until Iowa.

Once the Iowa caucus happens and we inch towards a clearer view of the primaries, my guess is this will go from 84 cents to 90+ cents and I will take the bet off.

WHO WILL BE THE NEXT SUPREME COURT JUDGE TO LEAVE?

I bet 7 cents a share on Stephen Breyer. Currently flat on the trade.

Ruth Bader Ginsburg is first at 74 cents, which is maybe reasonable based on her age (86) and recent health issues.

Stephen Breyer is 81 years old, so on actuarial tables alone, he has about a 19% chance of dying in the next year.

This is a morbid way to look at it and he has no known health issues, nor do I want him to die.

BUT… 7 cents compared to actuarial odds of 19% seems like a wide spread.

So I made this bet, expecting to lose, but for a 7-cent bet and 93-cent upside (1,350%) it’s not an unreasonable bet to make given the statistics.

It’s not about winning every bet but having high expected value.

5% GDP GROWTH IN 2020?

The rules on this one: “Real” growth (subtracting out inflation) of at least 1.25% (5% annualized) for at least one quarter between now and the end of 2020.

I bet “Yes” for 10 cents. Currently down at 8 cents.

I like these bets with lopsided risk/reward (10-cent bet to win a 90-cent profit).

I have many ways to win between now and the end of 2020.

First off, it’s been over five years since we’ve had that kind of growth in the economy. In Q3 of 2014 there was 5.5% annualized growth. The last few quarters have been roughly 2%, 3%, 1%.

So why make this bet?

A) The lobsided risk/reward. If I simply have the odds of 5% growth that we’ve had over the past 20 quarters (two out of the 20, making 10 cents a reasonable amount per share) then my bet is a fair bet but not a no-brainer bet.

B) We’re going into an election year so Trump will, legally or illegally, do everything he can to make people feel like the economy is doing great.

We’ve already seen him do this in three ways:

1) Tax repatriation: Incentives for corporations to bring back cash they have abroad. Typically companies don’t want to do this because there are tax consequences.

But in recent tax bills, these penalties have been greatly reduced and hundreds of billions of dollars have come back to the U.S.

This money will get spent over the next 18 months.

With a GDP of $15 trillion and a potential for hundreds of billions to be spent, this alone could cause GDP to blip above 5%

2) Bank deregulation: Local banks have been deregulated this past year. Meaning they can lend out more money.

In the past year, according to the Federal Reserve database, since this deregulation has occurred, it seems like the money supply has increased. If this continues, I think we’ll get close to 5%.

Again, we just have to get close in the next six months and my bet should be in the money and I can take it off.

If, by chance, a surprise number hits and we surpass 5% in a quarter, then I take 100 cents off.

3) Rate cuts: Due to (possibly illegal) pressure from Trump, the Fed has been cutting rates.

With low rates, there is less incentive for people to keep money in the bank, so they spend.

The more they spend, the higher GDP goes. Consumer spending data is released every month. If I get one good month, my bet will be in the money and I may take all or part of it off.

***

I love games. So instead of reading boring newspapers, I’m making the news a game.

The key to good betting is not to be right all the time, but to have a strategy where the “expected value” of your bets in the long run is positive. [See Annie Duke’s book “Thinking in Probabilities” for more on this and listen to my podcast with Annie.]

I love the idea of these prediction markets because it lets me be competitive, stay informed, and practice that gambling muscle without too much risk.

THE SKILLS OF GAMBLING:

A) Understanding statistics

B) Information is power (this is how you get an unfair advantage)

C) Removing emotions

D) Focusing on expected value more than winning each bet. For instance, I don’t expect to win the Supreme Court bet but my odds have a higher expected value than the size of my bet

E) Understanding psychology. People feel very emotional towards Trump, impeachment, etc. So my guess is the bet odds are skewed as a result

F) Having fun. Else, what’s the point?

Maybe the world is one giant information stock market.

Based on information, you invest time, money, opportunities.

Or maybe I’m just an addict.