Howard Marks is the cochairman and cofounder of Oaktree Capital Management. Mr. Marks is an exceptional investor. He has been compounding money at similar rates as Warren Buffet for 25-plus years. If you’ve read his books or his memos one of the common themes is the importance of more perceptive thinking or what he calls second level thinking. For example, if a stock goes from $10 to $60 in two months a first level thinker will say, “we should buy the stock.” However, a second level thinker will say, “the company is great but the price its selling at is too optimistic. We should sell.”

My initial reaction to the Corey Kluber was this was a bad trade for the Indians and great for the Rangers. Kluber was sent to the Rangers for Delino DeShields Jr. and Emmanuel Clase. DeShields is an above average defender in center field with no power but can have an OBP in the .340s and steal 25-plus bases. Clase is the classic young reliever who got promoted to the majors before the developmental was close to finishing because he has an elite fastball (this happened to Neftalí Feliz, who also started his career for the Rangers).

The Indians got a fringe starter at center field and a young reliever with an excellent fastball without the command of his secondary pitches. From 2014-18 Kluber was at least one of the top 10 best pitchers in baseball. The first level thoughts about the Indians return is light. However, I want to try to look deeper.

Other than 1-2 organizations I believe front offices are extremely intelligent and competent. In my opinion, the Indians and Rangers are well run organizations. Therefore, I assume there is no lack competency.

Let’s take a step back. When someone makes a trade with someone, especially in pro sports and in equities, it’s a very hubristic act. You’re telling the other person that the asset you’re receiving is worth more than the other person thinks.

When any trade is made it’s important to ask yourself, “what does the team know that I don’t know?” The dominant narrative is the Indians got a really light return. Obviously, the Indians do not believe that so why did they do the deal? These are the likely answers; also, it could be a combination of multiple of these:

1. Kluber will probably be not as good as 2014-18. In fact, he could only be a mediocre pitcher now. Kluber will make $17.5 million in 2020 and that is a lot for a small market team.
2. The Indians have a deep starting rotation without Kluber. They have Mike Clevinger, Shane Bieber and Carlos Carrasco at the top of the rotation. They also have Aaron Civale, who looked like a number three pitcher in spots and Zach Plesac who reminds me of Chase Anderson when he first made it the Majors. Not to mention Logan Allen who, if he can improve his command, could step into the rotation. From 1-6 the Indians have a top 10 rotation in baseball.
3. The Indians think DeShields and Clase are better than the current census. It’s possible, but their recent history of talent acquisition gives me pause. For example, they signed Yonder Alonso and let Carlos Santana They also traded for Jake Bauers in exchange for Yandy Diaz. That said, if you’re in an AL-only I think there is a 40-50% chance Clase has the most saves on the Indians in 2020 and if you draft Brad Hand you’ll want to handcuff him with Clase.
4. The deal with the Rangers was the best deal they could get. If you believe the return the Indians got was light that means the other 28 teams were offering less than the Rangers. If the other teams were offering less the question becomes, “what do the other 28 teams know that we don’t know?” I have to assume the Indians at least spoke to every team about Kluber and the Ranger deal was the best they could get.

All four factors factored into the decision to trade Kluber. The fourth point, in regards to Kluber’s 2020 fantasy value, is the most concerning. He makes a lot of money but I have to think if clubs, even small market ones like the Reds, Brewers, Braves, Twins and Padres, thought he could return to form they would have offered more for him. Therefore, I have to conclude we’re going to see a diminished version of Kluber. (The changing of ballparks means very little to me even if it is Texas and its new ballpark.)

As of December 16, these are the numbers I project for Kluber: 190 innings,  3.36 ERA, 190 strikeouts and a 1.11 WHIP. (I don’t project wins until early March.) Those numbers are still good but they’re no longer elite. He is my 17^th rated starting pitcher.