moneyball

More Lessons from Moneyball

© Can Stock Photo / findog822

Michael Lewis’s book Moneyball turned 16 over the summer. In 2015, we wrote about the contrarian lessons we noticed in the Moneyball movement. The Oakland A’s won by using data to make roster decisions, favoring things like on-base percentage over batting average. Then, after the rest of the league adopted the A’s process, the 2015 World Series champion Royals won by bucking the trend and not following along.

We’ve found another lesson within Moneyball that applies to us—and you. Oakland A’s general manager Billy Beane rarely watched the product he helped put on the field to see how it performed. This may seem unusual (who wouldn’t want to watch baseball as part of their job?), but Beane had his reasons.

In a 2014 interview for the Men in Blazers podcast, Beane explained that he didn’t watch games because he did not want to do something about it in the heat of the moment. “When I watch a game, I get a visceral reaction to something that happens—which is probably not a good idea when you’re the boss, when you can actually pick up the phone and do something.”

Beane continued by saying doing something “probably isn’t logical and rational based on some temporary experience you just felt in a game.” This has meaning to us.

We all know that the market goes up and down, and we don’t find watching the ticker each second of the day to be helpful. Like Beane, we’ve strategically built our portfolios for performance over the long term (no guarantees), and we’re willing to ignore a hiccup from a star on occasion.

Like Beane, we can remove ourselves and our initial emotions from the equation. Then we can focus on only the moves to better our “team” and its goals in the big picture.

Clients, if you’d like to talk about this, or anything else, please email us or call.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

Take Me Out to the Ball Game

© Can Stock Photo Inc. / dehooks

Thirteen years ago, Oakland manager Billy Beane turned the world of professional baseball on its head. As depicted in the movie Moneyball, Beane knew that the Oakland Athletics didn’t have the budget to compete head to head with better-funded teams from larger markets. He looked to advanced statistics to give him an advantage, realizing that baseball’s conventional wisdom did a poor job of judging player performance. Traditional baseball skills like speed and contact hitting were being overvalued, while game-winning skills like patience at the plate and slugging power were being undervalued. By focusing on what really mattered over what was popular, Beane was able to find the best bargains in the baseball universe.

While many baseball franchises grudgingly followed suit after Beane, traditionalist manager Ned Yost has stuck to the old wisdom. Under him the Kansas City Royals have broken every rule set forth in Moneyball, emphasizing speedy contact hitters who will swing at anything to get the ball in play and steal bases at the slightest opportunity. Despite that, he’s taken the Royals to two consecutive championships and a long-awaited World Series pennant, leading some fans to hail his success as the death of Moneyball-style statistics.

In fact, Ned Yost apparently took to heart the one true lesson behind Moneyball: never follow the crowd.

The Oakland Athletics were able to win because they turned aside from what “everybody knew” about baseball. After their successes were highlighted by Moneyball, what “everybody knew” changed. When everybody else started chasing after the same statistics that led the Oakland A’s to victory, they started undervaluing old-fashioned baseball skills like speed and contact. Ned Yost ignored what “everybody knew” about those old baseball skills and built a great team around them.

Billy Beane is fond of comparing the baseball world to investment markets, and the comparison is an apt one. Both baseball and investment markets are prone to cycles as people chase after the crowd—creating opportunities for those who avoid the common wisdom of what “everybody knows.” The Royals’ pennant is a testament to the value of going against the grain.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.