ALERT: A Great Natural Experiment in Progress Now, will see the results in about a month
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You all read The Wisdom of Crowds, right? You all know crowds can be remarkably smart and insightful. For example, so-called information markets are very good at predicting the future.

For example, when the Challenger exploded in 1987, it took months for the investigators to figure out what caused the disaster. However, 25 minutes after the explosion, the shares of the company that made the rubber O-rings, Morton Thiokol, dropped in price by 6% within an hour after the explosion and 12% by the end of the day. It was much later determined, the O-ring failure caused the disaster (more herehttp://goo.gl/Z0kla2). The crowd (traders) knew saw the cause looong before the experts figured it out.
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The crowds are especially (only?) effective, however, when (1) the members of the crowds made decisions independently and (2) the stakes are high. Otherwise, groupthink and lack of care messes up the prediction. So stock markets or gambling operations are a perfect place for observing the wisdom of crowds.
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Well, you’ve all heard about the trouble Volkswagen is in over its cheating about its diesel engine emission levels (more here https://goo.gl/5pzXKN). They were able to show pollution levels 40 (!) times lower than they really were. But Volkswagen is not what interests me. The question is, are other automakers better than Volkswagen x40 at designing clean diesel engines, as they claim, or are they ALL lying?
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Well, BMW shares were down 7.5% today. About 15% for the week. About 25% down from its peak in March. We know Volkswagen has been under investigation for several months. Coincidence? No allegations of cheating so far, but if the crowds are really wise, we’ll see lots of BWM in the news soon.