Danny Moses has built a career on spotting what others overlook. Long before The Big Short turned him into a cultural reference point, he was one of the few investors willing to bet against the U.S. housing market in 2008. Today, he's sounding a very different kind of alarm—not about credit bubbles or leverage, but about the way investors gather information.
His message is simple: stop relying solely on old indicators. In a world where markets move faster than ever, Moses believes the next major edge will come from prediction markets—platforms like Polymarket and Kalshi that allow users to wager on everything from inflation data to crypto prices to the odds of a company joining a major stock index.
These markets, he argues, are no longer fringe curiosities. They’re becoming a powerful tool for investors who want to understand real‑time sentiment and identify catalysts before they show up in traditional data.
A New Source of Market Intelligence
Prediction markets operate on a straightforward principle: people put money behind their expectations. The resulting prices reflect the crowd’s probability estimate of an event happening. Unlike surveys or analyst forecasts, prediction markets require participants to risk capital—making the signals harder to dismiss as noise.
For Moses, this is exactly what makes them valuable.
"Browsing prediction markets forces you to think about things you might have overlooked," he said recently. And in his view, that’s something investors desperately need. Traditional indicators—earnings reports, macro data, historical correlations—are backward‑looking. Prediction markets, by contrast, capture forward‑looking probabilities.
And the range of topics is expanding quickly. Investors can now track markets tied to:
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Bitcoin price thresholds
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Federal Reserve decisions
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Corporate earnings surprises
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Index inclusions
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Commodity price swings
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Pop culture events
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Even the resale value of Labubu collectibles
This breadth is precisely what Moses finds compelling. Prediction markets offer a window into how thousands of participants—retail traders, quants, and increasingly institutions—are pricing risk in real time.
The SoFi Signal: A Catalyst Hidden in Plain Sight
One example Moses highlights is SoFi Technologies (SOFI). The fintech stock has surged 93% over the past year, but prediction markets recently assigned a 38% probability that SoFi will be added to a major benchmark index in 2026.
That may sound like a niche data point, but index inclusion can be a powerful catalyst. Carvana’s stock, for instance, jumped sharply after being added to the S&P 500. Moses argues that ignoring such probabilities can leave investors blindsided.
"If you’re shorting SoFi but haven’t considered the possibility of it being included in the S&P 500, that’s something you need to pay attention to," he said.
In other words: prediction markets don’t just forecast—they highlight asymmetric risks that traditional analysis often misses.
When Prediction Markets Beat Derivatives
Moses also believes prediction markets can offer more attractive risk‑reward profiles than options markets, especially for investors looking to hedge or speculate on binary outcomes.
He uses Bitcoin as an example. Suppose an investor wants to hedge against Bitcoin falling below $70,000 in the first quarter of 2026. Buying put options can be expensive, especially in a high‑volatility asset class. But if a prediction market assigns only an 8% probability to that outcome—roughly 12‑to‑1 odds—the cost of placing a bet is significantly lower.
"I might get a better market return," Moses said. "So I would choose to bet rather than buy put options."
This doesn’t mean prediction markets replace derivatives. But Moses sees them as a cheaper, more flexible alternative for certain scenarios—especially when the goal is to hedge tail risks or capture unlikely but high‑impact events.
Still Early—But Growing Fast
Despite their growing popularity, Moses believes prediction markets are still in the early innings. Liquidity remains uneven, regulatory frameworks are evolving, and institutional participation is only beginning to ramp up.
But he expects that to change quickly.
"I think institutional investors will use prediction markets more," he said. "And with institutional involvement, you’ll see more trading activity."
As more capital flows into these platforms, Moses expects prediction markets to become:
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More accurate
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More liquid
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More integrated into mainstream financial analysis
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More influential in shaping investor expectations
He also sees them becoming a valuable hedging tool—allowing investors to offset risks tied to political events, regulatory decisions, or macroeconomic shocks that are difficult to hedge through traditional instruments.
A Shift in Mindset: From Indicators to Probabilities
Moses’s broader message is that investors need to evolve. Markets today move faster, react to more variables, and are influenced by a wider range of participants than ever before. Relying solely on old indicators—earnings multiples, yield curves, or historical correlations—may no longer be enough.
Prediction markets, he argues, force investors to think probabilistically. They highlight scenarios that may be unlikely but still meaningful. They reveal how sentiment shifts in real time. And they provide a way to quantify risks that are otherwise difficult to measure.
For Moses, who built his reputation by spotting risks others ignored, this mindset is essential.
What This Means for Investors
Prediction markets won’t replace traditional analysis, but Moses believes they should become part of every investor’s research process. Here’s how he sees them being used:
1. Identifying Hidden Catalysts
Index inclusions, regulatory decisions, and corporate events often show up in prediction markets before they hit mainstream news.
2. Hedging Low‑Probability Risks
Prediction markets can offer cheaper ways to hedge tail risks than options markets.
3. Gauging Real‑Time Sentiment
Prices adjust instantly as new information emerges, offering a dynamic view of market expectations.
4. Challenging Assumptions
Prediction markets force investors to consider scenarios they may have overlooked.
Conclusion: A New Tool for a New Market Era
Danny Moses isn’t arguing that prediction markets are a magic formula. But he does believe they represent a new kind of signal—one that blends crowd wisdom, financial incentives, and real‑time data into a tool that investors can no longer afford to ignore.
In a world where markets move faster than ever, Moses’s advice is simple: Don’t just look at old indicators. Look at probabilities.
Prediction markets may not be the "wealth code," but they might be the closest thing investors have to a forward‑looking compass.