Buffett Does Baseball

The best day of the year for sports nerds is rapidly approaching, and I'm pretty damn excited.  Yes, loyal reader(s?), I'm talking about the kryptonite to your sex life - or any other - fantasy baseball.

Anyway, the whole genesis of this sports blog was that my ego was riding high after last year's fantasy win, and I thought I could parlay that into a few extra bucks by disseminating my fantasy genius over the data-info highway.  OK, so I'm no Matthew Berry, but two wins and a 2nd place in four years ain't too bad.  Also, if I went around calling myself Mr. Roto I might have to reconsider my priorities in life.  

Somewhere between that ridiculous idea and this post, my Arsenal fandom became a full-blown obsession, and I got a little sidetracked from baseball.  But the season is upon us, I've got my first-choice dollar-allotment spreadsheet (and several contingency plans) ready, and I thought I would, in my great munificence, grace you all with The Sports Optimator's fantasy baseball preview/over-arching strategy.  

I've been investing in the stock market for about the same amount of time I've been playing fantasy baseball, and the investing has helped my fantasy game about immensely.  I called this post Buffett does baseball, because I try to take his approach into the draft room, and the better I am at it, the better my team does, for the most part.  Google "buffett quotes," and you'll get any number of iterations of his oft-repeated saying about buying a dollar for 50¢.  Simple in concept, yet deceptively difficult to employ.  It's a mental game, really, one that pits you against your leaguemates, but mostly yourself.  First a quick stock market analogy: 

• Stock A makes disposable razors, has been earning, on average, $4 a share over the last 10 years, and pays you $2.50 a share every year for your troubles.  It costs $40 a share.  
• Stock B sells radiation-detecting technology, has a cool-sounding name, hasn't ever turned a profit, and sells for $15 a share.  
• Stock C sells something that everybody wants, makes oodles of money, doesn't pay a dividend, and sells for $600 a share.  

Without naming names, some of us are out there buying that piece-of-shit stock (B) that will never return your investment in it, just because you can't help yourself from gambling on something that might be the next big thing, and because you read about some other doofus that sounded smart saying he was buying it, too.  Others of us are buying Stock C, but waited until it climbed from $200 to $550 to get in, because you just didn't want to be left behind as it rocketed past $1000.  And a few are buying Stock A and laughing all the way to the bank.  

Buy 23 shares of Stock A for your fantasy team and I virtually guarantee that you will place.  

• Stock A is your proverbial Value Stock, or Value Player, and they are your friend.  Your Brad Hawpes, Paul Konerkos, and Dan Ugglas.  If you can get him for the right price, even Pujols qualifies as a Value Player, because as Buffett said, "Price is what you pay, value is what you get."  For example: Espuhn lists Pujols' value as $35 this year.  Knowing that he is absolutely going off the table in the first couple of rounds when everybody is flush with cash, and that he is as reliable as - pardon the cliché - a Swiss watch or train, if you can get him for $33, you've saved yourself a few bucks for another slot, and he'll probably end up outperforming that conservative figure anway.  Conversely, if you let yourself get dragged into a bidding war, and end up with him for $43, you've got Stock C, and you're probably hosed.  Rule #1 of a good auction draft is Do Not Overpay (Buffettism: Do Not Lose Money).  $1 here and $1 there can be made up elsewhere, but it's a pretty hard and fast rule unless you know you have excess cash towards the end of the draft and can outbid people calmly.  Back to another example: Last year, for whatever reason, I guess because people thought his arm was gonna fall off at any minute, I got Lincecum for $25.  He's not a $50 pitcher, so it wasn't the steal of the century, but his value was listed at well over $30.  I hadn't earmarked him for my team, but I had to take him; he was on sale.  Do this with enough players that get discounted for whatever reason, and that you have good reason to have confidence in, and you start to assemble a pretty fine team.  
• Stock B: Last year it was Matt Wieters, and this year, depending on your league and your draft, it could be Matt Wieters again.  He hasn't proven anything, and if you can get him for a buck, or $3, well fine, but somebody out there is taking this guy (or any other hot prospect) for $12, and the odds are good they're gonna be hosed.  

Baseball has more stats than any other sport, telling you how Player X has performed over the last 5, 6, 12 years, and what you can reasonably expect for the coming year, and it's pretty reliable... when it comes to veterans.  Focus on those guys, don't overpay, and you have a pretty damn decent chance of taking some money home. 

I may post a follow-up to this one citing some more hard examples from last year's draft, in which there were some INSANE prices paid, both above and below market value ($3 for Mark Reynolds, anyone? $6 for Verlander? $8 for Wainwright?).  The Sports Optimator is also hoping to post one after this year's draft, with some calls on who snagged the values, and who didn't.  

See you then, as long as I'm not too hungover, and not in the throes of post-draft depression because I shoved my own advice up my arse and bid $63 for Hanley Ramirez.