bis

I spent the last 5 years asking 400 people a single question. It changed how I think about generating an edge in trading. The question: Name a president that you don't think other people will name, keeping in mind that other people are also trying to name a president that others won't name. Take a moment to answer before reading on. The results map directly onto how I think about alpha. Bucket the 45 presidents into 6 tiers by name recognition with Tier 1 being the most famous and Tier 6 the most obscure. The results show a clear bias toward obscurity—selections rise steadily from Tier 2 through Tier 6—with a sharp reverse-psychology spike back up at Tier 1. People favor going obscure ("Who would think of Millard Fillmore?") but many deploy maximum reverse psychology ("Washington is too obvious. Nobody will say him"). In reality, Washington and Fillmore are the two most common answers. [sorry, @dumborambo_, it is true] The sweet spot is Tier 2: Clinton, JFK, Jefferson, both Bushes, Nixon, LBJ. Household names, but not top-of-mindnames. Out of 407 respondents, only 20 picked from this group. That is 16% of presidents, under 5% of selections. Most people are genuinely shocked to learn these are the best answers. [Maybe except for @Rigatohni, who picked the last unnamed president (George W. Bush)]. This is how I approach every market I've traded. Sports betting, options, commodities, prediction markets. Tier 1 alpha ("Google has the best search engine," "Nvidia makes the chips") is real but saturated. The edge is gone before you arrive. Tier 6 alpha (tracking flight delays to beat sportsbooks, exotic statistical arbitrage) sounds clever but is almost always fruitless for the same reason: everyone who thinks they're being original is being original in the same direction. Tier 2 alpha is the sweet spot. It is never complicated and does not require a Harvard PhD, but it is also never obvious enough that the crowd has caught on. The smartest people I know have failed in trading because they couldn't believe Tier 2 alpha existed. Anything approachable, they assumed, had already been found by someone smarter. When I showed them edges that were statistically irrefutable, they called me a blind squirrel. I used to half-believe them. But the more edges I find, the more the pattern holds. The best alpha is Tier 2. Once you see it, you'll wonder why you didn't see it sooner.