The world has decided there should be two camps in all things and that people cannot cross betwixt the two. It makes for great Reddit debates and Facebook sound bytes but in reality the best thing to do with sacred cows is make them into burgers.
I realized last night that that is the true lesson of Moneyball. Finding the common sense beliefs that everyone thinks are logical, examining them closely, and determining which ones are extremely illogical. To this day if you mention that situational hitting is a myth and that strikeouts don’t matter as much as people think you will be lambasted, but you’ll also be acting more logical than people relying on common sense.
Moneyball has been on my mind for the past couple months because it keeps coming up in business meetings, and they keep explaining it too simply. The idea wasn’t that RBIs are worthless and don’t correlate to winning. The idea was that RBIs aren’t an individual stat and are a poor valuation model for a player.
There is also the fact that nearly 25 years have passed since the 2002 Oakland A’s took the field. The A’s are now homeless wandering somewhere between Sacramento and Las Vegas, and the Dodger’s philosophy of being rich and smart has dominated recent seasons.
Right there is the biggest flaw of talking about Moneyball. It isn’t that Earl Weaver and to some degree Branch Rickey were doing it long before Billy Beane or that Zito, Mulder, and Hudson were just as big, if not bigger, a factor in the A’s success that season than all the mispriced assets, but that in the time since that season, book, movie, the game has changed dramatically.
This is why the idea of quality is far more attractive than either growth or value when it comes to investing. An asset might be priced accurately and still provide upside and likewise it might be underpriced and also provide upside. The goal isn’t picking one or the other. It is deciding where the truth lives and putting time, effort, and resources in that direction.
Think of it this way. You have $100,000 to invest. Should you put it in Netflix, UPS, Macy’s, eBay, Spotify, DigitalOcean, and Sonos or Amazon. I don’t think the choice is that simple. A single company that does many things or many companies that add up to do all the things that one company does. Knowing the best choice is not answerable in the present and while neither is a clear value or growth play they both have advantages and disadvantages. The real key might be in not trying to be the A’s or the Yankees of the early 2000’s but trying to figure out how to be the Dodgers of today or even better the Braves or Cardinals of always, grow with value and then seek growth.
Baseball and investing can teach us a lot about each other and those lessons are far from over.
David Huzzard Writes 