Will 2026 be the second-hottest year on record?
Alpha Opportunity
Alpha Thesis
Our AI estimates a true probability of 22.0% vs the market's 57.0%, identifying a 35.0% edge on the NO side. Historically, global temperatures have been rising, with recent years frequently ranking among the hottest on record. The base rate for a year being among the top three hottest is high due to ongoing climate change. The likelihood of an El Niño event in 2026 increases the probability of higher global temperatures. However, the exact ranking depends on the relative temperatures of 2024 and 2025, which are uncertain.
📐Key Metrics
Key Findings
- Historical Temperature Trends — Historically, global temperatures have been rising, with recent years frequently ranking among the hottest on record. The base rate for a year being among the top three hottest is high due to ongoing climate change.
- El Niño and Climate Predictions — The likelihood of an El Niño event in 2026 increases the probability of higher global temperatures. However, the exact ranking depends on the relative temperatures of 2024 and 2025, which are uncertain.
- Potential Volcanic Activity — Significant volcanic eruptions could temporarily cool global temperatures, but such events are unpredictable and not currently forecasted.
- Solar Activity — Solar activity is expected to be relatively stable, with no major anomalies predicted that would significantly impact global temperatures.
- Resolution Criteria — This market resolves YES if the 'No_Smoothing' value for 2026 in the NASA GISS 'Land-Ocean Temperature Index (C)' table (https://data.giss.nasa.gov/gistemp/graphs/graph_data/Global_Mean_Estimates_based_on_Land_and_Ocean_Data/graph.txt) ranks as the second highest temperature when compared against all other years in the dataset. If 2026 ties with another year, it will resolve according to the rank of the year it ties with. The market resolves NO if 2026 is ranked anything other than second. If NASA data for 2026 is not available by March 1, 2027, 11:59 PM ET, resolution will be based on a consensus of credible reporting.
- 10 Sources Analyzed — Including GISS Surface Temperature Analysis (GISTEMP v4), El Nino forms, expected to strengthen, say NOAA forecasters, New report suggests more global temperature records ahead
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Alpha Quality Factors
Criteria that determine how exploitable this mispricing is
Human Bias Detected
Cognitive biases creating this alpha opportunity
The market overweights vivid, recent events, making this outcome feel more likely than it actually is.
The crowd may lack specialized knowledge that narrows the true probability range.