Central Planning

When Covid hit in March of 2020, the stock market plummeted in the ensuing panic, and understandably so. Not only were many anticipating a correction anyway after a historic run-up, but now people were out of work, staying at home and uncertain about what was happening. Over the next month or two, the market rebounded somewhat, but businesses were shuttered, and uncertainty was still high. I sold my remaining stocks, feeling good about getting out after the rebound, and not panic-selling at the lows.

Of course, we remember what happened next. The government injected a ton of money into the economy, and the market surged well beyond its February, 2020 highs. Anyone like me who sold during the covid downturn had made a mistake.

. . .

When I was a kid, I loved baseball cards. I loved owning a piece of the players I watched on TV, checking out their stats on the back, flipping them, sorting them, opening packs and hoping for good ones.

When I was eight (in 1979), I went to a card show with a friend and his dad. My mom gave me $10 to spend, and I used it on a $6 first-year Pete Rose card with the cup on it, and a $4 Tom Seaver first year (cup) card*.

*At the time, I thought those were rookie cards, but didn’t realize both had actual rookie cards they shared with other players. I also wound up trading those cards (which was a mistake), but that’s the subject for another post.

Fast forward to 1987, I was 16, had been to a few more card shows, had some spending money and an idea of which cards would become valuable. At the time, the 1984 Donruss Don Mattingly rookie card was already going for something like $80 (I only had the less valuable, but still pricey Topps version), and I decided to invest in the new crop of cards coming out that year.

I bought boxes upon boxes of the 1987 Topps set, made a few complete sets with them, and pulled out all the best rookies, some of whom would almost certainly pay off big in the future. Players like Bo Jackson, Jose Canseco, Mark McGwire (though he also had a 1985 Olympic card), Barry Larkin, Will Clark and Rafael Palmeiro. But I went especially big on a rookie Barry Bonds, buying a large stack of his cards at a show in addition to the ones I had set aside from my packs. I must have 50 Bonds rookies in my closet back in LA.

As you know, Bonds wound up with 762 home runs. If you had told me at the time his career home run total, that I would have those cards 36 years later and that inflation from 1986 to 2023 would be nearly 3x, I’d have guessed the value of that stack would be about $250K or $5K per card. After all, 36 years before 1987 was 1951, one year before Mickey Mantle’s (Topps) rookie card came out, and that was going for thousands of dollars even then.

Of course, Topps printed the 1987 set into oblivion, and Bonds later got tainted by the steroid scandal, though the overprinting weighs much more heavily than the steroids on the card’s price, as none of those rookies — even Hall of Famer Larkin — has any value. Although I could not have been more correct on the player — Bonds’ production exceeded anything imaginable even to my 16-year old brain — I had made a mistake investing so much of my pocket money on him that year.

. . .

People are understandably at a loss these days about what to do with their savings. Inflation is high, so you don’t want to keep it in cash, but the economy seems precarious, so expensive stocks and real estate are risky too. Moreover, even if you’re right about the direction of the economy, you might be wrong on the government’s response to it.

Whenever a centralized authority is in charge of the supply of the thing you are buying, or in this case, the medium in which the things you buy are measured, it’s not enough to be right about the underlying asset. You must be right about the humans who constitute that authority, and reading minds, especially when you have no way of knowing their real motives, is difficult.

. . .

I feel this way to a lesser extent in fantasy baseball when every year we anticipate the introduction of a new ball, or humidors, new rules or various stadiums monkeying around with height and distance of the fences. It’s not enough to have a good read on the players — you also have to know the conditions in which they’ll be playing.

Of course, nothing with respect to MLB’s run-scoring manipulation is nearly as extreme as the Federal Reserve printing money, or Topps counterfeiting any potential value its 1987 series might ever have had. But the run environment does make a difference, not only in which players might fare better or worse in which parks, but also what the ideal resource allocation toward pitching and hitting is during each round of the draft.

There’s nothing we can do about what seems to be an accelerating trend of MLB itself and the teams’ front offices meddling with their game — whether to increase attendance or gain an edge over the competition. There will be frequent and unpredictable changes, and even harder to predict second- and third-order effects from them. The best strategy, to me, seems to draft counter to the prevailing wisdom which is based on what everyone already knows. In other words, the more uncertain the environment, the more you should fade the consensus about it.

If people are reaching up to grab two aces early, draft hitting. If people are going hitting early, grab two aces. Of course, the more unpredictable the environment gets, the less there will be a consensus to fade — half the teams might push pitching, while the other half are waiting on pitchers until the middle rounds. In that case, you could stack certain teams or go heavy on players in certain weaker divisions in anticipation of localized anomalies. Or you could draft extreme hitting or pitching teams, in case the environment upsets the present equilibrium between the two. And I’m sure there are myriad other ways to game the possibility of an oddball — or at least vastly different year over year — environment.

But while I enjoy this kind of game theory angling as much as the next person, I liked the game better when there was less meddling, and your focus was more on the players themselves. Say what you want about fantasy football, its insane and unpredictable small-sample swings and big-play dependence, at least everyone (except Tom Brady) uses the same ball every year.