How I'm Hunting for Value While Everyone Else Takes a Break

The calendar is slowing down, but that often creates the best opportunities for patient traders willing to do the work before the crowd arrives.

One of the easiest mistakes in prediction markets is assuming there aren’t any opportunities just because the calendar looks quiet.

That’s especially true over the next few weeks.

The biggest rush of primary season is behind us for the moment. August will be packed. September will be packed. Then we’ll sprint toward Election Day. But these quieter stretches are often where some of the best positions get built. The reason for that is mainly because fewer people are paying attention.

That’s why we spent our latest show looking ahead instead of looking back.

The Thesis Is Always More Important Than The Trade

One thing we’ve tried to do on Predictable is build repeatable ways of thinking instead of chasing random picks. Sometimes a thesis survives. Sometimes it doesn’t. Earlier this week, we officially retired the idea that a Trump endorsement is basically an automatic win in every Republican primary. It’s still an important factor. It just isn’t enough by itself anymore.

Now we’re testing new ideas. Colorado is a great example.

At first glance, it looks like another establishment Democrat versus progressive challenger. Normally, that might point in one direction. But the rules matter. Colorado’s large unaffiliated voting bloc changes the equation in a meaningful way, which is one reason I’m still comfortable holding my position in John Hickenlooper even after his price climbed. The market sees one race. I’m trying to understand the structure underneath it.

That’s usually where value comes from.

Don’t Let One Poll Convince You To Panic

One of the biggest market moves came in Colorado’s governor primary, where a single poll completely flipped the odds in just a few hours. That’s always worth paying attention to, but it’s also a good reminder that not all information deserves the same weight.

This particular poll was commissioned by one of the campaigns. That doesn’t automatically make it wrong, but it does mean you should ask a few more questions before treating it like gospel. Is it confirming a broader trend? Is it an outlier? Would we even be seeing this poll if it had shown the opposite result?

Prediction markets can move fast, and sometimes they move too fast. A sharp swing creates opportunity just as often as it reflects new reality. If you already had conviction before the poll, this might be the moment to revisit your research instead of abandoning it. Sometimes the market is correctly incorporating new information. Other times it’s simply handing patient traders a better price.

Those moments are worth paying attention to.

Position Size Matters More Than Most People Think

One of the questions I get more than almost anything else is, “How much should I put on a trade?”

The answer is almost never “everything.”

I tend to think about positions in tiers. Some are large because I think the value is overwhelming or I have unusually high conviction. Others are medium-sized because I like the setup but still recognize there’s plenty of uncertainty. Then there are small positions, where I think I may have found something interesting but I’m still doing the homework.

My favorite category, though, is what I call a marker position.

Sometimes I’ll literally buy a single share. You may be thinking, well Stu, that’s dumb. If you’re trying to increase your bankroll that way, yes it’s dumb. But I do it simply so I don’t forget about the market. Think of it as a reminder fee. That one share becomes a bookmark. It reminds me to keep checking for new polling, new reporting, or anything else that could change the picture. More often than you’d think, those tiny marker positions eventually turn into much larger investments because the research keeps leading me back to them.

The goal isn’t to have an opinion on every market. The goal is to know which markets deserve more of your attention.

Even The Weird Markets Can Make You Better

We also had some fun on the most recent episode of Predictable.

We debated whether Jaylen Brunson should be the cover athlete for NBA 2K. Dan and I spent a little time talking about the latest Jaylen Brown trade rumors. Somehow LeBron James turned a retirement market into an investing discussion, which feels completely normal around here at this point. And for the record, I think there’s very little chance Lebron retires quietly into the night. The only thing LeBron enjoys more than playing basketball is everyone talking about LeBron playing basketball. Hard to imagine him skipping a farewell tour.

As entertaining as those markets are, they also serve a purpose. Our “Predict the Prediction” segment forces us to estimate what we think a market should be before we ever look at the actual price. That’s an incredibly useful exercise because it trains you to think independently instead of simply accepting whatever the market is currently saying.

If your estimate is dramatically different from the market’s, you’ve found something worth researching. Sometimes you’ll discover an opportunity that everyone else has missed. Other times you’ll discover exactly why the market disagrees with you. Both outcomes are valuable because both make you a better trader.

That’s really the point of the exercise.

I’ll be on vacation next week, but prediction markets don’t really care about my travel schedule. I’ll still be following Louisiana this weekend, Colorado on Tuesday, and posting updates whenever I find something worth your attention.

One lesson I’ve learned over the years is that the best opportunities often show up when everyone else assumes nothing is happening. The best trades rarely announce themselves, so even if I'm on the beach working my way through an embarrassing amount of cheese fries, I'll still be on the lookout.