Posts Tagged ‘sabermetrics’

The Great Read-cession, Part VII

The QuantsIt’s Part VII! (Remember, if you’re having trouble keeping up, check here for a complete list of all posts in the series.) Today John S looks at the magical world of hedge funds.

The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It

by Scott Patterson 2010

 

“Quant” is a word that pops up over and over again in descriptions of the financial crisis, but it never really gets defined. It tends to be used on Wall Street the way “sabermetrician” gets used in baseball or “Nate Silver” is used in politics: It just means someone who uses math in a slightly unconventional way while doing his job.

Nevertheless, these “quants” were blamed for much of the financial crisis, as those industry “experts” who concocted elaborate formulas showing that housing prices would never fall and homeowners would never default. I turned to Patterson’s book to find out who, exactly, these “quants” were and why their formulas—unlike Nate Silver’s and Billy Beane’s—went so awry.

Patterson’s title bills the book as a story of these “new… math whizzes,” and the cover even contains a quote from Warren Buffett: “Beware of geeks bearing formulas.”* Unfortunately, Patterson’s book focuses primarily on the world of quantitative hedge funds. In other words, instead of focusing on those within the banks themselves and how these whizzes were used to justify massive trading strategies, Patterson’s book is about some of the most successful outsiders. Continue reading

Moneyball: The Art of Filming an Unfair Game

Brad Pitt as Billy Beane

Three names go conspicuously unmentioned in the new film adaptation of Moneyball: Tim Hudson, Barry Zito, and Mark Mulder. There are two ways to react to this omission.

The first is to think that their exclusion is unacceptable for a film that purports to tell the story of the 2002 Oakland A’s. After all, the trio combined to win 57 games and pitch 675 innings to a combined 3.05 ERA that year. Zito in particular led the league in wins, en route to a Cy Young Award. Without those three, a team that won 103 games would have almost certainly missed the playoffs.

The other way to react to their absence, though, is to realize that it is entirely appropriate. Moneyball is not really a movie about the 2002 Oakland A’s—it’s a movie about Billy Beane (played by Brad Pitt) and his radical reinvention of the game. And it doesn’t take much reinvention to stick with a trio that was coming off a 2001 season in which they won 56 games and pitched 678 innings to a 3.43 ERA.

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Is Billy Beane a Good GM?

Up until recently, the answer to this question would be quick: “Well, obviously.” The more relevant question had always been, “Is Billy Beane baseball’s best GM?”

Billy Beane runs the Oakland Athletics, a team in a small market with a low payroll (26th out of 30 in 2009), yet he managed to assemble a consistent contender, as the A’s made the playoffs four years running (2000-2003) and the ALCS in 2006. In that time, Beane became a mini-celebrity, thanks to being the subject of Michael Lewis’ 2003 best-seller Moneyball: The Art of Winning an Unfair Game. The book was so successful that a movie adaptation was slated to be made by Steven Soderbergh, with Brad Pitt playing Beane.

Recently, however, Beane’s reputation has started to suffer. The A’s have had two consecutive losing seasons since being swept in the ’06 ALCS, and in 2009 are on pace to have their worst season since Beane took over in 1998.

Now, it should be stated right away that this is not a polemical, anti-Moneyball tirade. The book, which detailed Beane’s use of so-called “sabermetrics” to identify undervalued players, garnered a lot of knee-jerk reaction and criticism, since Beane was seen as bucking tradition (which he was). Continue reading

Fielding Symposium Part I: Baseball’s Next Statistical Revolution?

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In Moneyball, Michael Lewis chronicles Oakland A’s general manger Billy Beane’s use of unconventional statistics (sabermetrics, using baseball-speak) to field a competitive team despite Oakland’s small budget.  The A’s found that statistics like on-base percentage (OBP) and slugging percentage were undervalued on the open-market, allowing Beane to sign and trade for better players at a lower cost. Due to the popularity of Moneyball and the increased popularity of sabermetrics more generally, these statistics are not nearly as undervalued as they used to be. So, what’s a general manager like Beane to do now? What methods of evaluating players are currently undervalued?

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