Warren Buffett has made a fortune correctly identifying valuable stocks that have been overlooked by the rest of the market. Nate Silver has made a noteworthy career of predicting the outcome of presidential races (and many other things) with stunning (and not so stunning) accuracy. How? In both cases: regression analysis.
But their success relies on their models being relatively obscured from the public eye – if everyone used Buffett’s methods, his undervalued stock choices wouldn’t be “overlooked” and therefore wouldn’t be undervalued. If everyone subscribed to FiveThirtyEight and trusted Silver’s models, this would affect voter trends themselves, thus invalidating the model.
Should Buffett and Silver just hope that most people don’t catch on to the magic of regression, or could they build the effects of public awareness into their models? Is your answer different in the case of financial investments vs. election predictions? Why or why not? Here are two links to help you in your answers: https://fivethirtyeight.com/features/a-users-guide-to-fivethirtyeights-2016-general-election-forecast/
https://www.bloomberg.com/view/articles/2016-08-24/the-fundamental-reason-buffett-beats-the-market