45 weeks of predicting markets: 250% return!
45 weeks of predicting markets: 250% return!
Q2 winner announced, Q3 competition starts for another $2000
Dear readers,
thank you all for following us, and a special thank you to our regular competition participants for helping make the BASON prediction tool better and better. Without your diligent predictions, we would not have built the BASON to where it is today.
The Q2 competition is finally finished, and we announced the winner of our $2000 prize on Monday:
A huge congrats to him, and a shout-out to all in the top 5: you’ve been great this quarter, keep it up!
The Q3 competition is open today. For those familiar with how this works, we invite you to continue making those valuable predictions each week. Once again the prize is $2000 for the best performer. There can be only one winner!
The new competition will last from July 5th to September 30th, but it will feature 11 instead of 13 weeks (we will take two weeks off during the holiday season, weeks 4 and 5, last week in July, first week in August - we will inform you beforehand).
What are you waiting for? Jump right in!
For those new to the competition, click on the button, log in via your Twitter or Gmail account and give us your prediction on 5 indicators and 2 stocks for the next 11 weeks. Persistence pays off in this game, don’t miss out on too many weeks, cause you lose points that way.
Also, this is a mutually beneficial game. You help us test and improve the BASON, we reward you with weekly option strategies on how to cash in on our predictions. And there’s also the $2000 prize we give out to one winner each quarter. This video walks you through the whole concept:
Subscribe to our YouTube channel for more info on the BASON, and for additional instructional videos:
What’s the chance of your predictions being right? Well, it’s in the title isn’t it :) Have a look at our performance thus far:
BASON performance for the past 12 months
For the past 12 months, we’ve been testing how our unique prediction methodology - the BASON (predicted Trump ‘16, Brexit, Biden ‘20, etc) applies to predicting markets. This is the result:
In total, our portfolio is up 74% in 2022.
S&P is down over 20% in 2022.
Overall, since we started the survey, we are up a whopping 250%!
S&P is down 8.7% since we started this.
How come the return is so huge? Because of the way we set up our options strategy (watch the video!) - we get 50% to 100% weekly returns on our $2000 exposure if we’re right, and lose 25% to 40% if we’re wrong (and a few times we were wrong but still made a tiny profit). So we have a positive asymmetric skew: limited downside and high upside.
When you have a strategy like that, you only need to be correct >60% of the time. The BASON? Earned money 80% of the time. So no wonder all these gains compounded into a 250% annual return.
Also, we were starting from a lower base, which made it easier to double or triple our money.
Either way, given that those returns were being made during one of the biggest historical bull runs in 2021, and amplified even higher during the bear market in 2022, the following still holds:
Bull market - BASON makes money.
Bear market - BASON makes money.
Powerful.
In monetary terms, $10,000 invested in the BASON since May ‘21 earned $35,000 by now. The same $10,000 invested in S&P500 would have given you $9,132 today.
The BASON has now outperformed every single asset class out there, equities, bonds, crypto, even commodities.
Again, powerful.
The BASON remained robust even during episodes of higher volatility (which typically reduces our accuracy). It delivered continued value over 23 weeks of testing during the first half of 2022. Where most investors lost money - we gained. Not by going short, but by following the methodology.
This is why our correlation with the market, after 45 weeks of testing, is at -0.16 (!)
We were wrong 8 times and lost money, but only 3 times did the market make money while we lost (4th quadrant). But we were right and made money in 37 out of 45 weeks (82%) - first and second quadrant. 20 times we made money while S&P lost. Really, really good numbers.
How does the #BASON work?
We ask people where they & their friends think the markets will end up at the end of each week - utilizing the wisdom of crowds - while applying network analysis to control for their groupthink bias. Basically it's a wisdom of crowds survey adjusted for bias using network theory.
You might have guessed that the network theory is the crucial ingredient here. We look for clusters of people based on who they’re friends with or who they follow on social media. We look for hetereogenous groups (more diverse in opinions), and give them higher weights compared to more homogenous groups (typical bubbles).
Here’s a 23-min video explaining the methodology in greater detail:
For more of our instructional videos subscribe to our YT channel:
Why does it work?
These two quotes from Shiller and Keynes might explain the logic of why all this makes sense:
“Psychologists have noted that the human species is unique in the advanced development of its theory of mind - that is, humans’ strong tendency to form a model in their own minds of the activities in others’ minds. We are thinking about what others are thinking, about their individual thoughts.”
Robert J. Shiller, 2019, Narrative Economics, Ch. 6
“People deciding which investments to make are basing their decision on observations of what other investors are thinking or what they are about to do with their investments”
John M. Keynes, 1936, The General Theory of Employment, Interest, and Money, Ch. 12
Keynes famously used the beauty contest experiment to prove that point. You get a prize if you pick out the girl who wins the contest. So you vote not on who you think is the best looking, but who you think that other people will pick as the best looking one. And that one happens to win the contest.
This is exactly the same logic we used in elections (Trump, Brexit, Biden) and that we now use in predicting markets. You prime yourself with one choice, and then correct your own bias (update belief) when thinking of others.
It’s pure Bayesian! And it works!
Join the competition to benefit from the BASON!
So when you join our competition keep all this in mind. Put yourself in other peoples’ shoes. Think about where they think the markets will end up.
Thanks for making it this far. If you liked what you saw feel free to subscribe to our newsletter and don’t miss out on our Q3’s competition:
Remember, the key to winning is consistency!
Thank you and good luck :)
Vuk, this is novel. I would like to discuss in more detail.
I just signed up for the Surveys but they are all locked. How can I participate?