Timelines, Mojtaba Khamenei, Strait of Hormuz
Product updates, forecasting results, and what we got wrong last week.
Rough straits
Q was ahead of the market on the Strait of Hormuz, forecasting closure with confidence in the 90% range while the market was still at 60 cents.
The strait is currently closed to shipping. The market will resolve as closed unless the U.S. manages to reopen it in the next few days.
New feature: breaking news
The homepage now displays markets with significant volume or odds swings at the top of the page. We also display recent signals collected for each market, so you can see why the odds are moving and whether they’re moving too much.
In addition to tracking breaking developments, the feature surfaces trading opportunities where traders might be overreacting to misrepresented or poorly sourced reporting.
Take the Will Mojtaba Khamenei be the next Supreme Leader of Iran? market.
It reached a high of 81 cents yesterday, driven by reporting that the Assembly of Experts was leaning toward selecting him as Iran’s next supreme leader.
Q issued an assessment at just 52%.
The reporting wasn’t high quality. Iran International is not a great source on internal regime politics, and the analysts interviewed were largely speculating and hedging.
Even if you take the reporting at face value, it comes with assumptions that Q rightly questioned: that there will be another supreme leader at all, that Mojtaba survives the current conflict, and that the reporting reflects reality rather than a deliberate leak to force an outcome
The market has since cooled to around 50 cents, converging with Q’s assessment. This is not a thinly traded market, with more than four million dollars in volume. But traders often overreact to out-of-context headlines shared on social media. Q is a corrective for that.
New feature: exposed assets
We added equities and commodities exposed to projected prediction market outcomes. Outlook can be bullish, bearish, or uncertain, where uncertain means significant exposure but unclear directional impact on the asset’s price.
The goal is to help people understand how prediction markets impact deeper, more liquid markets like equities and commodities. For the Strait of Hormuz market, Q identified shipping companies Maersk and Frontline Plc. as exposed (bullish), along with the U.S. Oil Fund.
Recently resolved markets
Q successfully forecasted that a U.S. or Israeli strike on Iran would happen by end of March, and that Russia would fully recapture Pokrovsk in Ukraine’s Donetsk province.
While Q got the timeframe for the U.S./Israeli combat operation wrong on several markets, Q did correctly anticipate that odds for an Israeli strike were underpriced, and that an Israeli strike would likely precipitate U.S. combat operations, because Israeli security decision-makers did not feel that the deal under discussion met Israel's security needs
“We knew there was going to be Israeli action,” Rubio said on Monday. “We knew that would precipitate an attack against American forces and we knew that if we didn’t pre-emptively go after them before they launched those attacks, we would suffer higher casualties.”
Q’s win rate remains 76% across 175 forecasted markets, having only miscalculated on several Iran-related markets (that the rest of the market also missed), as well as an IMAX earnings market.
What we got wrong, and what we’re fixing
Since we store the reasoning for each prediction in our graph database, we were able to reverse engineer how those forecasts were made and where the logic broke down.
The biggest issue was correlated outcomes. Q was treating each market independently. But Israeli striking Iran makes it more likely that the U.S. strikes Iran. A deal being unlikely makes a strike more likely. These dependencies were not flowing between forecasts.
In practice, Q would forecast the odds of an Israeli strike in isolation, and separately forecast the odds of a U.S. strike in isolation. But the second forecast should be conditioned on the first. If Israel strikes, Iran retaliates against U.S. assets, which forces a U.S. response. Q did not connect those dots at the time. This led to a somewhat bearish outlook on escalation markets relative to Polymarket.
We pushed initial changes to the Q forecasting pipeline to incorporate analysis of correlated outcomes. Early results suggest better calibrated forecasts, particularly on markets involving military escalation and interdependent outcomes.
We also noticed that the pipeline updates are yielding a wider spread in Q’s assessments on conflict/escalation markets. Q is now more bullish than the market on some things, less bullish on others, versus the previous tendency toward perpetual bearishness. A wider spread means Q is reasoning more thoughtfully.
Quotient tracks how emerging global events impact financial markets.
Website: https://quotient.social