Predicting Politics is Harder than Predicting Economics and Finance

Tesla stock is above $480/share, but it did a 5-1 split, so the split-adjusted price is$2400, which is a 900% gain from the lows of 2019. This blows even Bitcoin and the vast majority of small cap stocks out of the water in terms of returns, and is even more impressive given how big of a company Tesla is. Looks like I was right yet again (I should have a macro to avoid having to type that over and over, because I sure say that a lot).

Since 2013, when Tesla was at $50/share, I have been telling people to buy. I am so confident I don’t check the price everyday, but only every few weeks or so. The last time I checked Tesla stock was in October. I already know what is going to happen, as the uninterrupted rise of Tesla, Google, Amazon, Microsoft, and ‘big tech’ over the past decade agrees with my predictions of the tech-singularity and the transition to type-1 civilization. Under such a transition, barring the destruction of humanity due to mistake or war, such a transition is inevitable and the aforementioned companies are best-positioned to dominate under this new economic and social regime. Tesla, which is worth upwards of$400 billion, will be worth at least \$10 trillion under this hypothetical type-1 economy, along with Amazon.

A Biden presidency does not change my outlook, both in terms Tesla and the stock market overall, but returns would probably be slightly higher under Trump. I did not make any definitive predictions about the 2020 election, and I consistently maintained that Trump’s odds were at 50-60%, and the close result agrees with this. It was not a blowout as Vox Day said it would be, even after accounting for possible fraud.

Predicting the outcome of political events is far harder than predicting economics and finance. The reason is, an economic system can be analyzed quantitatively , but political outcomes, although also based on human behavior, tend to exhibit much more randomness, as opposed to the cyclicality of markets and economies. People who are betting on politics on prediction markets such as Predict It, have no definitive ‘edge’ (unless they are privy to insider info)–they are just betting on hunches, which is probably no better than picking lottery numbers.

The reason why my economics and finance predictions have been so spot-on, whether about Covid, the stock market, or Tesla, is because I understand the underlying system, so predicting is as simple as extrapolating this system out into the future as it unfolds deterministically. People sometimes confuse complexity and predictability. Complex systems can be more predictable than simple ones. Politics is simpler than the US economy, but harder to predict. Even Nate Silver got it wrong both in 2016 and 2020 (there is an interesting Vox article about why, which is that poll respondents tend to lean democratic).

How much does IQ help in regard to predicting? It is a double-edged sword. Having a high IQ helps in regard to understanding complex systems, but it also can hurt in that it makes it easier to rationalize things that are empirically false. Many of the people who believe in Q or the impending dollar collapse or the collapse of America are smart in terms of IQ, but being smart also allows one to rationalize-away the empirically obvious counterevidence. This is why devoutly religious people and atheists are equally smart, contrary to the belief promulgated by the left that atheists are smarter, in part because religion requires a large amount of rationalization, whereas science requires a lot of understanding of complex systems. Reading biblical texts also requires a high degree of literacy, and it is believed that Christianity and the rise of literacy in the European world went hand in hand.