Moneyball is Back

One of the great books on investing is not about investing in stocks. It’s about investing in baseball players. The now well-known strategy discussed in Michael Lewis’ Moneyball tells how A’s GM Billy Beane created an edge by using statistics overlooked by other managers. The league has since caught up to Beane but there may be a new way to find some value. The WSJ’s CIO Journal reports:

New technology being tested by Major League Baseball this year could provide Oakland Athletics general manager Billy Beane with new ways of evaluating players. The new technology relies on clusters of high performance cameras abetted by software to provide data on every action on a baseball diamond. Mr. Beane, known for pioneering the use of advanced statistics to develop a successful baseball team despite having significantly lower budgets than his competition, says he’ll use the new pool of data to help his organization evaluate players.

In the early 2000s, statistics like on-base percentage were “undervalued,” Mr. Beane says; today OBP is widely understood, to the point that the A’s cannot afford most players with high OBPs, forcing Mr. Beane to look elsewhere for an edge. “The idea that you can create a template that will work forever doesn’t happen in any business,” Mr. Beane told CIO Journal during a phone interview. “There’s some really, really bright people in this business. You can’t do the same thing the same way and be successful for a long period of time.”

The A’s have already begun tracking different types of data about player performance, and have developed proprietary algorithms used to evaluate that data. The new technology will create a new data set that Mr. Beane and his team can throw into the mix, he said. “In today’s world, and baseball included, you have access to so much data. We’ve got to use every piece of data and piece of information, and hopefully that will help us be accurate with our player evaluation. For us, that’s our life blood,” he said.

While every team will have access to this data, Mr. Beane hopes it will still provide the A’s with an advantage other teams don’t enjoy. “Ultimately what you do with it is proprietary.”

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E.J. Smith - Your Survival Guy

Preparing your investments and family for when disaster strikes.

E.J. Smith is the Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH, where he completed course-work in Practical and Defensive Handgun, Conceal Carry Pistol, Shotguns, Precision Scope Rifle and Kidnapping Prevention. E.J. plays a Yamaha Recording Custom drum set with Zilldjian cymbals. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com. Sign up here to receive all the best content from Richardcyoung.com each week.