Thursday 18 June 2015

Kershaw Ka-Ching!

My new baseball system is Lay Clayton Kershaw. Having made a tidy profit from his game last Friday night, he was back in action again last night, with four figures traded at a crazy SP as low as 1.36.

I wrote last week that "Kershaw's numbers are actually down this season on previous years" so anywhere close to 1.36 was value in my opinion. In the entire 2014 season, he lost a total of 3 games, while winning 21. So far this season, he has already lost 3, winning just 5. His 2015 ERA is 3.21 (highest since his 2008 rookie season), a sharp decline on his two season ERA for 2013-14 which was 1.8.

The Texas Rangers scored one run in the top of the second innings, two in the third and one more in the fourth to trade at 1.1, implied probability of 91%, which is too high according to my Baseball Bible which has a figure of 84%.

The Los Angeles Dodgers rallied but came up short losing 3:5, and Kershaw threw a tantrum in the dugout.

That last link from 2010 contained an interesting quote from my son's "Essentials of Investments" text book:
An interesting question is whether a technical rule that seems to work will continue to work in the future once it becomes widely recognised. A clever analyst may occasionally uncover a profitable trading rule, but the real test of efficient markets is whether the rule itself becomes reflected in stock prices once its value is discovered. Once a useful technical rule (or price pattern) is discovered, it ought to be invalidated when the mass of traders attempts to exploit it. In this sense, price patterns ought to be self-destructing. Thus the market dynamic is one of a continual search for profitable trading rules, followed by destruction by overuse of those rules found to be successful, followed by more search for yet-undiscovered rules.
Although written for financial markets, that last sentence about sums it up for sports markets too. Edges don't last for ever and it's a continual battle to come of with new ideas. If your market of choice is the seriously popular in-play football, I'm afraid your chances of long-term profitability are rather slim as I wrote yesterday, to which Ixnay commented:
Ouch, that's disappointing :)
Thanks for your opinion! 
It may be disappointing, but it should be no more surprising than thinking you can compete with professionals in any endeavour. While most true professions have a high barrier of entry, (a degree or professional qualification / natural talent / years of practice) any idiot can trade football with no experience or brain required.

While most people are realistic enough to know that they don't know as much about a profession as a professional in most disciplines, some people do seem to think they know as much (actually more) when it comes to trading.
No one commented yet to offer a reason why they feel they might know more than the market (i.e. other traders), which perhaps is a sign that no one really feels this way, but I suspect many read the post, nodded in agreement, then moved on, silently telling themselves that they are somehow different.

There are a few such characters around the blog world with bizarre theories on how they have somehow found a value entry point that everyone else has missed, but such theories are based on flawed logic. Apparently the question of "why isn't everyone doing this?" hasn't occurred to them, or rather it probably has, but they choose to ignore it.

Long term profits are not possible when you have no edge, and I have it on good authority that one sad individual doesn't even actually put any money on his ramblings, a sure sign that deep down he knows he has no edge (or perhaps no money left!)

Writing about theoretical wins is one way to spend your time I suppose, or you could always look out for Kershaw's next outing. The Dodgers play the San Francisco Giants on the nationally televised Sunday night game. Not sure who will be pitching in blue, but the Giants have a fading pitcher on the mound who is actually having an improved season this year - Tim Lincecum. If Kershaw plays, it will be a repeat of this costly game from July 2010.


fizzer555 said...


Although I agree completely that spotting a pitcher down from his peak before the market builds it in is a good strategy ( I had VerLayDer lay bets making money for a season but the market has long caught up with that) I still think that Kershaw is a superman amongst pitchers and isn't on the downgrade just yet. In fact, if the market does start reacting to his ERA too much he may end up being a value bet.

Latest sabermetric analysis on Kershaw is (courtesy of BaseballHQ) is: -
6/8/2015 - Don't worry about Kershaw ... every year from 2011-14, Clayton Kershaw (LHP, LA) has been in a class of his own. Kershaw was a consensus top-five pick in 2015 fantasy drafts, and while rare for a pitcher, his elite consistency warranted such a move. But Kershaw's 3.36 ERA has been mere mortal thus far in 2015. Any reason to panic?

Year IP ERA xERA Ctl Dom Cmd GB/LD/FB H%/S% hr/f FpK SwK Vel BPV
==== === ==== ==== === ==== === ======== ===== ==== === === ==== ===
2011 233 2.28 2.95 2.1 9.6 4.6 43/18/39 28/79 7% 64% 11% 93.4 137
2012 227 2.53 3.23 2.5 9.1 3.6 47/19/34 27/78 8% 65% 11% 93.2 121
2013 23 1.83 2.93 2.0 8.8 4.5 46/23/31 26/82 6% 65% 12% 92.6 130
2014 198 1.77 2.27 1.4 10.8 7.7 52/19/29 29/81 7% 69% 15% 93.0 187
2015 80 3.36 2.34 2.1 11.3 5.3 52/25/23 32/71 16% 65% 15% 93.5 176
Deep breath. He'll be fine:

His Dom is at a career-high level, and it's supported by excellent SwK and a slight uptick in fastball velocity.
He's given back some of 2014's Ctl gains, but we're nitpicking. Kershaw is frequently getting ahead in counts and exhibiting pinpoint control.
2015's hr/f sure looks like an outlier. Combine that with unfortunate swings in H% and S%, and we quickly see why his ERA is more than a run higher than xERA.
Kershaw's "shaky" production through 12 starts means he's unlikely to provide a full return on preseason investments, but there's nothing wrong under the hood. Kershaw's missing plenty of bats, has an elite Cmd / GB% combo, and his BPV is still other-worldly for a starter. He's still the best pitcher in the game.

Bob said...

I tend to agree with your comments about only getting involved where you think you have an edge, but surely the barrier to becoming an expert trading some sports markets is much lower than for financial markets. And if you're taking a sensible approach then it doesn't have to cost a lot to test a strategy and determine, in a statistical sense, if it's positive expectation value.

I don't disagree with your sentiment, but I'd rather encourage people to have a well considered attempt rather than not bothering at all.