Book Review: Moneyball by Michal Lewis How did the Oakland Athletics, one of the poorest teams in baseball, with a budget of 40 million dollars versus the New York Yankees 126 million dollar payroll, win so many games during the 2000 and 2001 seasons?
Here are the results:
Year: 2000 Yankees: 87 Wins, Oakland Athletics: 91 Wins
Year: 2001 Yankees: 95 Wins, Oakland Athletics: 102 Wins
Oddly enough, this happens to be one of the best Value Investment books written. I can see why Seth Klarman would recommend this at it explores a different perspective on investing and uncovers the many parallels of stock selection with baseball player selection. This is the story of how the General Manager of the Oakland Athletics, Billy Beane, won more games than any other baseball team with one of the lowest budgets in professional baseball.
"Moneyball" shows how Billy Beane, along with Paul DePodesta (A Harvard graduate in Economics) rethought the game of baseball. They used science and statistics, along with incredible discipline, to make an efficient team with little money. Much like how it takes time, patience and discipline to become a great investor.
During his younger years, Billy Beane happened to be one of the most naturally talented athletes drafted to the New York Mets right out of High School. Unfortunately, he never made it to the “Big Leagues” in a permanent position. He also regretted passing up the opportunity to go to Stanford University, in exchange for a pretty large signing bonus. One of the most interesting things about Beane’s story was that it was not his athletic ability that made him fail, but his mind.
If Billy struck out on his first at bat, the entire game would be over for him. He was so affected by what went wrong while playing that he would be paralyzed for the rest of the game. Other team members that were less naturally athletic were better programmed for success as they could allow themselves to learn from their failures and draw from their successes. Much like the value investor must fight the urge to become overly emotional over mistakes, which we all make along the way.
The true greatness of Billy Beane was his ability to use his experiences and gathered knowledge in order to find players that were almost the exact opposite qualities as himself. This helped him develop his management philosophy which sought to prove that it is not just athletic ability that is most important, but experience and mindset were equally important. These qualities were actually extremely overlooked and undervalued by many other professional managers seeking ball players that "looked" the part. Great players, according to Beane were not outwardly noticeable, but "diamonds in the rough" that could be acquired for a very cheap price.
This intimate look into the Oakland Athletics process of value investing is a fascinating example of how the framework of Value Investing almost never changes. It is well worth reading.
ThinkValu.com
Click here to purchase Moneyball on Amazon.com
Here are the results:
Year: 2000 Yankees: 87 Wins, Oakland Athletics: 91 Wins
Year: 2001 Yankees: 95 Wins, Oakland Athletics: 102 Wins
Oddly enough, this happens to be one of the best Value Investment books written. I can see why Seth Klarman would recommend this at it explores a different perspective on investing and uncovers the many parallels of stock selection with baseball player selection. This is the story of how the General Manager of the Oakland Athletics, Billy Beane, won more games than any other baseball team with one of the lowest budgets in professional baseball.
"Moneyball" shows how Billy Beane, along with Paul DePodesta (A Harvard graduate in Economics) rethought the game of baseball. They used science and statistics, along with incredible discipline, to make an efficient team with little money. Much like how it takes time, patience and discipline to become a great investor.
During his younger years, Billy Beane happened to be one of the most naturally talented athletes drafted to the New York Mets right out of High School. Unfortunately, he never made it to the “Big Leagues” in a permanent position. He also regretted passing up the opportunity to go to Stanford University, in exchange for a pretty large signing bonus. One of the most interesting things about Beane’s story was that it was not his athletic ability that made him fail, but his mind.
If Billy struck out on his first at bat, the entire game would be over for him. He was so affected by what went wrong while playing that he would be paralyzed for the rest of the game. Other team members that were less naturally athletic were better programmed for success as they could allow themselves to learn from their failures and draw from their successes. Much like the value investor must fight the urge to become overly emotional over mistakes, which we all make along the way.
The true greatness of Billy Beane was his ability to use his experiences and gathered knowledge in order to find players that were almost the exact opposite qualities as himself. This helped him develop his management philosophy which sought to prove that it is not just athletic ability that is most important, but experience and mindset were equally important. These qualities were actually extremely overlooked and undervalued by many other professional managers seeking ball players that "looked" the part. Great players, according to Beane were not outwardly noticeable, but "diamonds in the rough" that could be acquired for a very cheap price.
This intimate look into the Oakland Athletics process of value investing is a fascinating example of how the framework of Value Investing almost never changes. It is well worth reading.
ThinkValu.com
Click here to purchase Moneyball on Amazon.com
