Last July I picked up an investing book about the stock market. I knew very little and was never interested in investing but for some reason unknown to me I decided to buy it. After reading it I started listening to the Rule 1 Podcast. I quickly got hooked and have now spent all my free time trying to be an investor.
What got me hooked was I saw so many parallels between fantasy baseball and investing. For example, at the draft every owner has more or less the same information available, but owners continue to make the same mistakes over and over again.
One example is over drafting rookie’s and/or players with small sample sizes. The poster children for this phenomenon are Vladimir Guerrero Jr. and Adalberto Mondesi. The both have NFBC average draft positions (ADP) in the late 30s/early 40s. Both of these players are going before Anthony Rendon, which says a lot considering he has been a very good fantasy producer for four of five seasons.
The Guerrero and Mondesi fantasy owners are taking that high because they believe in their potential, which is immense for both. Guerrero has been compared to, from a fantasy perspective, Miguel Cabrera. Mondesi could hit 25 home runs and steal 60 bases. If the season was played out one thousand times I think he puts those numbers.
However, what are the probabilities Mondesi actually does that in 2019? I think it’s less than 10-percent. That doesn’t mean his upside should not be considered, but I’m advocating fantasy owners to think in terms of probabilities and what the most likely outcome is for every baseball player.
Guerrero is an immense talent. Every scouting report I’ve read says he’s going to hit when he makes it to the Majors. With his current ADP fantasy owners are assuming he receives the Kris Bryant treatment where he wastes away in the Triple-A for 20 days before getting called up (from a management perspective I 100% advocate this.) It’s also possible Guerrero is in the minors longer. The Blue Jays GM has recently said, “I just don’t see him as a major league player.” He’s probably pandering but I think there’s at 25-30% chance he doesn’t come up until June or later.
Mondesi had a great 2018, but don’t forget the 190 at-bats he had in 2016-17. Can he repeat 2018’s numbers over a full season? Sure. However, I can also see him hitting .220 and batting ninth in the order. If Billy Hamilton has a hot start and Mondesi starts slow I can see Ned Yost hitting Hamilton first and Mondesi ninth. I think the ladder is much more likely than the former, but at Guerrero and Mondesi’s ADP fantasy owners are only focusing on the probabilities of excellent performance instead the probability of outcomes.
In investing and in fantasy baseball its more important evaluate the probability of an outcome versus the possibility of certain outcomes. If both were players taken in the 8th-9th rounds I wouldn’t have an issue because their upside makes them worth the risk, but at their current ADPs there is little to room for downside in their performances.
