How to Find Sure Things on Kalshi | Prediction Markets #1

[00:00:01] Today on The James Altucher Show. The key is you always want to get an unfair advantage. You don't want to bet on things that you don't really know but you have a feeling about. That's kind of a silly way to bet. When something is almost a sure thing, people don't bet on it. It's like hundreds of percent annualized return. By annualized, I mean it's only a five-day bet. I'm going to make five percent.

[00:00:28] How many five-day stretches are there in a year? If you make five percent 77 times in one year, it compounds into a lot of money. This isn't your average business podcast and he's not your average host. This is The James Altucher Show.

[00:00:59] I want to talk about prediction markets because basically it's a fun way to invest or gamble depending on what your appetite is. With prediction markets like Kalshi, K-A-L-S-H-I, you could bet on everything from the weather, like what will the weather be today in Chicago, to elections, like who will win the congressional race at such and such place. You could bet on who's going to be an Oscar winner. You could bet on who's going to win this soccer matches.

[00:01:28] There's also interesting what's called markets. You could bet on how many times will Donald Trump say the word Newsom in a speech. How many people will check in to the TSA at all the U.S. airports this week. And so you can bet on all sorts of things. And so the question is, is there a way to make money and get an advantage on the prediction markets? So first, how does it work?

[00:01:56] Basically, I'll just give a very simple example. Let's say there's a market on Kalshi. Will J.D. Vance run for president in 2028? And let's say, I'm just making the numbers up. Let's say one share of J.D. Vance on who will run for president in the United States costs 60 cents. That means if I buy 100 shares, I'll spend $60, 60 cents a share, $60.

[00:02:23] And if J.D. Vance announces he's going to run for president in 2028, the $60 will turn into $100. I will win the bet. And I made a $40 profit or about a 66% profit. So I invested $60 and I made a $40 profit. That's a two-thirds profit. So it's good. So that's roughly how prediction markets work. And I'm going to go through some of the predictions that I have bet on and why I bet on them.

[00:02:49] And the key is you always want to get an unfair advantage. You don't want to bet on things that you don't really know but you have a feeling about. Or let's say you're betting on France versus Ecuador in the World Cup and you're from France. So you want to bet on the favorite. That's kind of a silly way to bet. You want to bet on things where you have an unfair advantage. And I would say there's two kinds of unfair advantages.

[00:03:15] And both involve you having very specific knowledge. And I'm going to tell you how you can get that knowledge in certain cases and why I'm making some of the bets that I'm making. So there are two types of unfair advantages you can have. One is you know something about prediction markets in general that most people don't know. And I'll tell you what I mean in a second.

[00:03:39] The other type of advantages is if you know something very specific about a particular bet that other people don't know. And, well, what do you mean, you might say? Does that mean you know? Like, I'll give you the J.D. Advance example again. Did J.D. Advance tell you he's running for president and then you bet on that? That would be an unfair advantage. And unfortunately, that particular unfair advantage is illegal. That's insider trading. You know actual information in advance.

[00:04:06] Now, I personally don't think there should be that insider trading on a prediction market should be illegal. I think the whole idea of prediction markets is that the reason they were invented years ago is that maybe people, when they have money at stake, actually are better predictors than reporters in the media, for instance. So the prediction markets are actually used to predict real live events with some accuracy. And there's some evidence that suggests that prediction markets have accuracy.

[00:04:35] So you actually want the people with inside information to bet because then the whole world will know things more accurately in advance. But, okay, that argument aside, let's just talk about the unfair advantages so you can make some actual money. So I'll tell you about one very, very important unfair advantage anybody listening to this will have as of right now. When something is almost a sure thing, people don't bet on it.

[00:05:01] For instance, let's say back in 2024, Donald Trump and Kamala Harris had an election. And of course, Donald Trump won. And let's say the prediction market the next day, the day after election day, said, okay, Donald Trump's going to win. And it's 97 cents he's going to win. And Kamala Harris is three cents. Well, we know he already won. By that point, the next day, we know he already won. Why would it be 97 cents?

[00:05:28] Why wouldn't it be 99.9 cents? The reason is people just have given up on that market already. They're tired of that market. For 98 cents or 99 cents, you're only getting one penny. It doesn't seem like a lot. So nobody will bet on it. So often there's the case that long shots are undervalued. Now, I gave an extreme example. I don't know if that example actually existed, but I'll give you another example, one that I bet on today. So I'll give you an example right now of it's not quite a sure thing, but it's almost a sure thing.

[00:05:58] Will the U.S. confirm that aliens exist before 2027? Well, there's only six months left before 2027 as I speak. And I could say no for 90 cents. Now, I can tell you, I don't really know anything about this, but the U.S. government has never confirmed before that aliens exist.

[00:06:21] If I bet no, in order for the market to go against me, in order for me to lose, some official U.S. government official has to say, yes, extraterrestrial aliens exist. And that has to happen before 2027. This has never happened before. It's not going to happen this year. For instance, I mean, is the Trump administration going to do this before midterms? They're going to say aliens exist? No. There's no chance this is going to happen.

[00:06:48] So I am comfortable betting 90 cents to win a dollar that the U.S. will not confirm that aliens exist before 2027. Now, what does that mean? 90 cents to 100 cents is roughly 10 percent. It's actually 11 percent. And I'll make 11 percent of my money in six months. So that's an annualized 22 percent. So that's a pretty good investment.

[00:07:14] Like, there's not any other way to make 22 percent on what seems to be a sure thing. Like, your savings account only pays you 1 or 2 percent. Even the stock market on average does not gain 20 percent in a year. I would not bet all my money on this sure thing, just in case, God forbid, the U.S. says that aliens exist before 2027. But I have bought shares of this market.

[00:07:40] I specifically bought, no, the U.S. will not confirm that aliens exist before 2027. I bought this for 90 cents and I bought a bunch of shares. Let's say I bought 1,000 shares. I will have spent 900 dollars. And on January 1st of 2027, the market will end. The U.S. will not have confirmed that aliens exist. And I will make $1,000. So I'll make about 11 percent on my money.

[00:08:04] And the key thing here is, yes, A, first off, people tend to not want to tie up their money for a small gain. So it's only 10 cents on 90 cents bet. People view that as a small gain. People don't want to tie up their money for six months. B, people tend to undervalue sure things, just psychologically. People say, oh, well, maybe they'll confirm it. Or maybe they, you know, there's some people who think they already have aliens in warehouses hidden.

[00:08:34] And maybe that will be revealed. So there's conspiracy theorists who are a little bit crazy. And so I'm betting against them. So there's some people who are legitimately betting yes or where they feel legitimately. And again, I know historically people tend to undervalue sure things. So the key is to diversify your basket of sure things.

[00:08:53] So I will bet 90 cents on 30 different sure things as they pop up for a short-term, let's say, one day to six months, short-term sure things. And I will have a basket of that. And annualize, if you do that every month and every year, you can make hundreds and hundreds of percent on your money. So, for instance, will the U.S. confirm that aliens exist? No. I bet 90 cents with the hope of a dollar.

[00:09:19] You can bet as many shares as you want or however many is in the market and make money. Here's another one that I have bet on. How many launches will SpaceX have in June? So as I speak, there's five days left in June. And above 13 is trading for 94 cents. And why is it almost a short thing? Because SpaceX has already launched 13 launches. It's June 25th.

[00:09:44] Between June 1st and June 25th, SpaceX has already launched 13 rockets into space. And now this is above 13. And it's a 94% chance. It's trading for 94 cents. And you bet 94 cents, you win a dollar. So you make, you know, four or five cents. There's a little bit of a fee. You make five cents. For five days, making 5% of my money, that's an enormous, enormous annualized return. That's like hundreds of percent annualized return.

[00:10:11] By annualized, I mean it's only a five-day bet. I'm going to make 5%. How many five-day stretches are there in a year? There's 77 of them. And so if you make 5%, 77 times in one year, it compounds into a lot of money. So I'm happy making this bet. It's only a five-day bet. Why is it a short thing? Well, SpaceX has a launch scheduled in two days. That'll make it 14 launches or above 13. Well, what if they don't launch?

[00:10:39] The last time they had a failed launch was in June 2024. So almost certain thing that this is almost a short thing that they will have above 13 launches in June. And look, if I'm wrong, then that means if I make 20 short thing bets in June, then all my profits will be wiped out. Because if I win 19 of them, they'll lose this one. But the key is most months you'll win almost all, you'll win all of the short things.

[00:11:08] So the key is bet on short things as much as possible. That is a huge advantage that you have on prediction markets, knowing that people undervalue short things. Like this should be trading at 99 cents already, but it's trading at 94 cents. So I have a little bit of an advantage. Now, there's another type of advantage, which is when you have your own data and your own research that help you get an advantage over everyone else who's investing. And I'll give you an example.

[00:11:38] So right now, today, it's June 25th. And there's a market. What will Donald Trump say during the White House Correspondents Dinner? Well, the White House Correspondents Dinner is on July 24th. And they give you a bunch of choices. So for instance, you can bet 87 cents he'll say fake news. And by the way, that's almost a short thing. Because the White House Correspondents Dinner is Donald Trump speaking to a bunch of White House Correspondents.

[00:12:05] Now, he famously doesn't really like the traditional news media. And almost every single time he speaks to traditional news media, he says the words fake news. So 87 cents is probably a fair, sure thing. But I'm not going to bet on that because there's a much better bet here. Now, there's a 75% chance he says 250 because he's going to refer to the anniversary of America. They're saying it's an 85% chance he'll say the word oil during the Correspondents Dinner.

[00:12:35] That's possible. He'll say ballroom, 82% chance, stock market, Iran, a Ford, radical left, Barack Obama, Sleepy Joe, cheat, and on and on. And by the way, this goes all the way down to auto pen, movie star, China, hottest. I don't know how they pick these words, but there's all these words. So here's what I did. I took his last three months of speeches and broke down every word he's used.

[00:13:05] Now, again, this White House Correspondents Dinner is just in four weeks. And I'm taking a look at the last, let's say, 20 or 30 speeches that he's done. And I broke down all the words he's used. So for instance, oil in the last so many speeches, he's used 17 times. Iran, 15 times. China, 13 times. Hoax, four times because he talks about the Russia hoax. And actually, this was in a cabinet meeting.

[00:13:30] He mentioned specifically Barack Hussein Obama three times and Israel two times. He was in an interview with Maria Bartiroma and on and on. So what I'm interested in is what words doesn't he use that are on this list that I could bet on? And so it turns out the word movie star, he's used zero times in the past three months. But on the prediction market, it's giving him almost a 50-50 chance he's going to use the phrase movie star.

[00:13:59] So I looked at all the times in his whole life that he's used the phrase movie star that I could find. I found one speech in 2016 where it was a campaign stop. And he specifically pointed to a kid and said, oh, you look like a movie star. That's in 2016. That's 10 years ago he used the phrase movie star. So why would he use this phrase movie star in the White House Correspondent Center? So looking through all of Donald Trump's speeches, he does kind of mention movie star a couple times,

[00:14:26] but he always uses synonyms. So he'll say something like, oh, you look like you're straight out of central casting. Or he's like a male model. Or looks like we're in a movie here, you know, with all the good-looking people. He doesn't really refer to people as movie stars unless he's directly complimenting them as opposed to a speech. And in a speech, I can never find a single use of the word movie star. This is a speech at the White House Correspondent Center that he'll be giving.

[00:14:54] So again, as far as I could see, he's never used the word movie star in a speech. Also, don't forget, I take into account this is a combative setting. He does not like the media. It's unlikely he's going to refer to anyone as a movie star, particularly since he's never used the word movie star in a speech. It's a combative environment, and he tends to use synonyms for movie star anyway. So what I looked at is the fact that on Calci, people are already investing, and people are saying there's a 50-50 chance he's going to use the phrase movie star. So I'm going to bet no.

[00:15:24] I don't think there's a 50-50 chance. Now, I think there's more like a 0% chance. So I'll bet no, he's not going to use the word movie star. And I did make this bet, and I'm feeling pretty confident about it. And again, you want to diversify your bets. Maybe use the word movie star, and then you lose your bet. The whole thing is, you want to find places where, when I bet, you know, I bet on no for movie star. And actually, my actual cost was 57 cents.

[00:15:52] So the market is basically saying there's a 57% chance he's not going to use the word movie star. I think it's more like 100% chance. So when I think the odds are different than what the market is saying or the market is pricing it at, that's an enormous opportunity to make a lot of money. I could be wrong on this bet, of course. But if I make 30 bets like this where I'm using similar kind of reasoning, overall, I'm very confident I'm going to make a lot of money. And the money compounds.

[00:16:20] Whatever I make, I'll then make my bets higher on the next bets. And I always diversify and do a lot of bets. So that is a reasonable bet for me. And again, I used hardcore data. Now, here's another one. Every week, you could bet on the number of TSA check-ins that are going to happen that week. So a TSA check-in is when you go to the airport and you put your bags through the TSA. That's a TSA check-in when you go through security.

[00:16:48] It almost always averages around 2.7 or 2.8 million, give or take. The market is saying there's a 96% chance. So sure thing, there's a 96% chance that it'll be more than 2.75 million this week. And there's only a 20% chance it'll be more than 2.8 million check-ins. Well, okay, how can you get an unfair advantage here? It's very difficult. But what I do is I'll look at 2025 and 2024. What are the historical trends?

[00:17:18] So in 2025, there was 2.875 million check-ins in the equivalent week, the week before July 4th week. There was 2.875 million check-ins on average every day. So then does that beg the question? Oh, 20 cents might be an unfair advantage. Maybe it's more likely that we're going to have more than 2.8 million. Well, so far this year, particularly since the Iran war, things have been trending lower in 2026 than 2025. So things are trending lower.

[00:17:48] I'd rather not bet on that particular market. And 96 cents is probably too high. Like maybe I'll put in a bid for 93 cents. But even that, I would rather just stay away from that market unless I really can analyze the data more thoroughly or there's more of an advantage that the market is giving me. So that's an example where you can use hardcore data. But for a market like that, a lot of people are using hardcore data. So I'd rather stay away from it. I prefer like, you know, doing word counts on Trump's speeches because here's the thing about Trump.

[00:18:17] People either love Trump or hate Trump. People who hate Trump will think that he's going to definitely say, you know, Barack Hussein Obama or Autopin referring to Biden or Kamala or whatever. And people who love Trump might say, oh, he's going to say, you know, Iran or oil or deflate, whatever, tariffs. So people are betting their emotions on any Trump market. And so I like analyzing the word count in his speeches to really see, you know, what's accurate. Like, I don't know why people seem to think that there's at least a 50% chance he's going to say movie star

[00:18:47] when he's never said movie star in a speech before. So this is where I feel I have an unfair advantage. And again, you want to spread those opportunities around. So I gave three example predictions that you can make right now. One is, will the U.S. confirm that aliens exist before 2027? I've answered no. It's about 90 cents. For me, it's a sure thing. That's 10 cents, 10% of your money. Like, if you bet $10,000, you'll make $1,000. You bet $100,000, you'll make $10,000.

[00:19:16] Again, this is not intended to be investment advice. I have to say that legally, but we're having some fun here talking about prediction markets. But that's a prediction bet that I have made. Another bet that I've made is how many launches will SpaceX have in June of 2026? I say above 13. Already had 13, by the way. So above 12 is at 99%. Above 13, I bought for 94 cents. It's almost a sure thing. I think it is a sure thing.

[00:19:42] I think the accurate price is 100, but the market is telling me I can get 100 for 94 cents. So I might as well do it. And it's only five days away that we'll know the answer. I actually think it's going to be two days away because in two days, SpaceX is scheduled to have a launch. And by the way, the last failed launch was in June of 2024. So I feel that's a sure thing given the statistics.

[00:20:07] And then the other bet I told you about that I've made, it's in the market. What word will Donald Trump say in the White House Correspondents' Dinner? Now that's a month away. It's on July 24th or almost a month away on July 24th. And the market is giving almost a 50% chance he's going to say the word movie star. I think it's more like a 0% chance. So I bet no. You can bet yes or no. I bet no for 57 cents that he will not use the word or the phrase movie star.

[00:20:37] And that means for every share that I bought for 57 cents, I will get 100 cents. So I'll make almost double my money on that bet. Now again, I'm not going crazy. I'm not investing all my money. But I do think prediction markets are going to be a valid way to make a living and to make an income if you use the systematic advantage. Remember, there's two advantages. One, when you know statistics about prediction markets themselves.

[00:21:05] Or the other, when you have statistics about various events. Like here, I use statistics to analyze exactly how many times Trump has used each word in his last 20 speeches. And then I look back for specifically movie star. When does he ever use it in a speech? Under what context? Does he use synonyms? And so on. So if you like this, mention on Twitter. We'll do more of these prediction market podcasts. We'll keep them pretty small. And enjoy.

[00:21:48] Welcome to Pluto Phone. If you know the name of the movie you'd like to see, just stream it for free on Pluto TV, where all your blockbuster favorites are landing all summer long. Catch Anchorman, The Legend of Ron Burgundy. Fantastic. Men in Black, one through three. That's what I'm talking about. Mean Girls. Shut up. Titanic. I'm the king of the world. And so much more. For Showtime's, press nothing. They're free, 24-7. That is so fetch. On Pluto TV. Stream now. Pay never.