“Past performance isn’t indicative of future results.”
It’s one of finance’s most time-honored safe harbor statements—and one we all instinctively understand isn’t entirely true.
Because whether we admit it or not, we rely on past behavior constantly to predict what comes next.
We do it in dating.
In hiring.
In vendor selection.
In investing. 💵
Even in deciding whether we’re ready to take on that next double black diamond ski run.
Judgment, pattern recognition, and probability assessment are hardwired into how we make decisions.
The Foundation of Credit and Risk
In credit analysis, this mindset is fundamental. Predictive default models are built by analyzing historical performance. Underwriters structure deals based on what has happened before—adjusted, of course, for what might change.
Past data isn’t perfect, but it’s rarely irrelevant. It’s how risk is priced, capital is allocated, and uncertainty is managed. We may disclaim it, but we depend on it.
And yet, the tools we use to predict the future are evolving.
Enter Prediction Markets
What’s increasingly interesting to me is the rise of prediction markets—platforms that aggregate collective beliefs about future events and convert them into real-time market signals.
Think of them as a living, breathing probability engine.
Want to hedge whether a future administration might ban lab-grown meat? 🥩
Curious how long Taylor Swift will stay at the top of the charts?
Wondering how many dissenting votes might emerge at the next Fed meeting?
Or which AI model will dominate this month?
These aren’t just curiosities. They’re reflections of how informed participants are pricing uncertainty right now.
Why Kalshi Has My Attention
My current favorite platform in this space is Kalshi, a CFTC-regulated exchange for event contracts. It offers prediction markets across politics, economics, technology, culture, and more—and does so within a regulated framework.
Call it gambling.
Call it betting.
But from a market perspective, it’s something else entirely: signal.
When real money is on the line, incentives sharpen. Collective insight often becomes more honest, more immediate, and sometimes more accurate than traditional forecasts or expert opinion alone.
Looking Ahead
Will prediction markets replace traditional models? Of course not. But they’re becoming a powerful complement—especially as we look ahead to longer-term planning and capital allocation decisions for 2026 and beyond.
The future will always be uncertain.
The past will always be imperfect.
But the way we synthesize information to bridge the two is changing—and ignoring these new signals may soon be a bigger risk than acknowledging them.