Underdogs and Inefficient Markets

I usually remember the most embarrassing moments of my childhood best: the time I almost burned my face off trying to light a pile of weeds, the day a kid named Perfecto (fed up with my yappin') lifted me above his head, and dropped all 75 pounds my 5th grade body on his knee, the pass I launched into the Centennial pep band... But, reading about the movie Moneyball today, I remembered something that raised my opinion of younger me.

Baseball cards were a big deal in the early 1990s. Who knows why people started paying real money for cards, but they did. And it meant that those of us in the target market all had dads with a story of attic fortune tossed by Grandma some spring cleaning ago. An industry grew up this regret and stories of regret. New card brands and special series were coming out all the time. Card shops were everywhere. Personal finance magazines featured 40 year-olds who were "investing" for retirement in baseball cards.

Of course, this was a classic bubble and I shouldn't have wasted my pre-teen money-making schemes on it. However, I am proud to say that in my card trading, I had hit upon the value of knowing value. I would study the Beckett price guide in hopes of liberating unappreciated pieces of neighborhood collections, usually by exploiting an inflated view of a favorite player.

Unfortunately, other kids started to (rightly) suspect something mercenary in my interest in (Beckett favorites) Frank Thomas and Ray Lankford. But like with Moneyball, it was just a matter of time before my trading partners started looking at the same information I was anyway. Competitive advantages erode and looking up Beckett prices was a particularly weak advantage. Still, I love the idea that you can smart your way to victory through an more accurate understanding of value. I am glad that younger me loved that idea too.

In high school basketball, I have some hunches about valuation. Here is my list:

Overvalued:

1. Mid-range jumpers - A 15 foot jump shot should either be a 20 footer for three or a five footer with a chance to get fouled. While teams do not avoid the three on principle the way they used to, the mid-range shot is still too big a part of most offenses. Don't shoot it. Don't practice it. Don't play people who shoot it or practice it.

2. Free throw percentage - Practice getting to the line. You'll make enough.

3. Thinking while playing - This is more a case of underestimating cost. Thinking is too slow. Anything important should be 90% habit. This is a corollary of the planning fallacy - the cost in time required for teaching a new play and poor execution are higher than you think.

4. Enrollment - Pet peeve. Tehachapi leaving the SSL is hollow vindication because few people recognize how completely normal and predictable Tehachapi's dominance was.

Undervalued:

1. Practice time - Practice time varies based on a few factors. School and district rules about practice vary greatly. These limits are most severe in the Kern High School District and function as a kind of regressive tax on schools where the kids don't play on club teams. Then, there is efficiency. Variation in what gets done within a 2 hour practice is very high.

2. Fouls - The best outcome for the offense is getting fouled. Players who can get fouled without high turnover numbers are worth a lot. Players who can win possessions and stop penetration without fouling are worth a lot.

3. Possessions - Use of counting stats and per game averages really distorts the picture.