What a difference a week makes. I was just about ready to give up hope on the baseball fund last week. As I was writing the post explaining why I didn’t think it would work, I realized that it actually might work. I actually might be able to track this thing without investing multiple hours every single day crunching data.
Since then, I have built two different spreadsheets and developed a workflow that SHOULD allow me to process each game relatively quickly either the night before or early that morning. Here are the two steps involved with that workflow:
Updating the Data Spreadsheet
The first spreadsheet that I put together is simply a neatly laid out database that contains the expected wins and starting rotation WARP for each team. It also breaks down each team’s starting rotation and contains the individual WARP of each of the five starting pitchers that comprise the rotation. This spreadsheet is affectionately referred to as Pete Rose, because he is still the most popular result when you search for information about betting on baseball.
In order to keep this information updated, I will have to pull up the PECOTA standings page from Baseball Prospectus every day. Loading this page side-by-side with my spreadsheet will allow me to quickly confirm that each of my team win totals remains correct. The PECOTA page also notes the most recent date of any changes made to each teams pitching staff. This will let me know whether or not I need to update the rotation data of any individual team.
Filling Out the Bet Card
The second step in my daily workflow will be actually processing the updated data into bets. In order to make this easy, I built all of the math that we talked about last week into a spreadsheet.
In order to quickly fill out this spreadsheet, I will simply have to pull up a schedule of each of the games every day with the moneylines. Any and every online sportsbook will be able to provide a template for this. Using that template, I will copy the two teams, starting pitchers, and lines for each scheduled game.
Once I have the teams, pitchers, and moneylines filled out, I will reference the win totals, rotation WARPs, and individual pitcher WARPs from the Pete Rose Spreadsheet. The Bet Card Spreadsheet will then automatically calculate the percentage edge that PECOTA finds for each game.
Adjusting the Bet Size
One of the most interesting aspects of Trading Bases from a trading standpoint was the way that author Joe Peta chose to size his bets differently based on the significance of his model’s projections. He broke his bets down into 7 different categories that covered bets that had a barely positive edge, all the way to bets with more than a 15% edge. He then specified a percentage of the total fund to wager based on which category each game fell into.
Using Peta’s model as inspirations, I broke the possible edges into five categories that are simply numbered 1 through 5, with 5 indicating the most confidence. Here is what that breakdown looks like:
- 0-3% edge is considered a 1
- 3-6% edge is considered a 2
- 6-11% edge is considered a 3
- 11-15% edge is considered a 4
- >15% edge is considered a 5
Tracking the Bets
At this point, the only thing I had left to figure out was how I was going to track these bets over the course of the season. What I really wanted to find was a website that would give me an account with something like $10,000 in play money to bet with and simply track the balance over the course of the season.
I didn’t find exactly what I was looking for, but I did find a pretty cool site called Wager Minds that was mentioned at the end of Trading Bases. While we won’t be able to track our progress in real time, this site is going to offer us a really cool way to track our progress.
Probably the best part of the site is that it gave me the option to make the results public. That means that I can keep running the numbers and posting the bets live, and you can follow my account to see what bets I’m making each day and what the results have been.
With all of that work now behind us, let’s take a look at some actual baseball games:
Having all of this work in line got me ridiculously excited for the opening night game between the Dodgers and Padres (for the purposes of this strategy, I am ignoring the nonsense that happened in Australia last week).
The Dodgers projected for 99 wins at this point, had a rotation WARP of 14, and were starting Hyun-Jin Ryu and his 2.4 WARP.
The Padres were much less impressive. They projected for 82 wins, a starting rotation WARP of 5.2, and were rolling out their ace, Andrew Cashner and his 0.9 WARP.
Vegas liked the Dodger here, giving then odds of -112. The Padres were listed as dogs at +102.
Crunching all of those numbers gave us a 3.64% advantage betting on the Dodgers and a -6.97% advantage betting on the Padres. That makes this a 2 bet size game to start off the year.
I have to say that this was one of the most exciting games I have watched in a while. Wanting this Baseball Fund to work has placed a huge amount of importance on these games, so watching this one last night was a blast. However, things didn’t go the fund’s way last night.
After getting off to a rocky start, Ryu settled and ended up throwing seven shutout innings, leaving the game with a 1-0 lead. Then, in the bottom of the 8th inning, Dodgers set-up man Brian Wilson (the guy with the nutty beard) strung together a series of mistakes that allowed San Diego to take a 3-1 lead. Padres closer Houston Street shut down the Dodgers in the 9th and the first game was in the books.
Lucky for the Baseball Fund, this was just the first game of the year. There are still something like 2500 games left to be played….
For the true opening day on Monday, March 31, 2014, the Baseball Fund sees value in ten different games. Of those ten games, only one will be more than a 1 in bet size.
The big game today will be the Atlanta Braves heading into Milwaukee to face the Brewers. The pitching injuries that the Braves recently suffered have really reduced their projected wins, and the Brewers are starting Yovanni Gallardo and his 2.5 WARP.
When you factor in the home field advantage, the Baseball Fund gives the Brewers .582 odds of winning, while Vegas sees them as a slight underdog at +100. This represents an 8.2% advantage.
The Brewers actually represent the only underdog that the Baseball Fund is taking on opening day. The other nine teams that the fund is taking are all slight favorites. While the fund is leaning heavily on favorites for opening day, it doesn’t seem to be as concerned with home vs road teams. Including the Brewers, the fund likes 6 home teams and 4 road teams.
Here are the other nine bets that the Baseball Fund will be making today:
- Red Sox
- White Sox
The Excitement Factor
As I was watching the Dodgers blow the game in the 8th last night, I recalled an idea that Joe Peta mentioned in Trading Bases. He discussed how exciting it would be for investors to get daily updates about the bets the fund was taking each day. Then they could watch games as often as they wanted to with a rooting interest in most of them.
One of the things that all of the Market Wizards we have studied stress is removing emotion from trading. With the Baseball Fund we are able to make betting choices using a purely systematic approach. However, once those bets are placed, we can let those emotions thrill us while watching the games play out.
I want to point out that there is no ESPN for the stock market, but I know that someone will comment about CNBC. That’s different. Outside of a few places like New York and Chicago, there aren’t “stock bars” in every town across the country. There are sports bars everywhere. The beauty of the Baseball Fund is that it combines trading with sports, which people are naturally more passionate about.
The appeal of tying your investments to specific teams each year could be exactly what is needed to get Americans back into a saving and investing mindset, as opposed to the free-spending credit card world we currently find ourselves in.