Supported by Greenhaven Road Capital, finding value off the beaten path.
Mike Lombardi talked with Tate Fraiser about the preseason and first week of the NFL season. Here are some notes about how these ideas apply beyond football.
1/ The rest-stress balance. “The Redskins were one of those teams that went to training camp to stay healthy and they didn’t look like they were ready to play.”
“The quality of the football is going to get better as we get going because in the preseason the teams aren’t getting ready for the season, they’re just trying to stay healthy.”
Brad Stulberg gave an interesting interview where he talked about a stress-rest balance for improvement. Success comes from compounding, Stulberg said, and it’s better to design a plan with activity-recovery periods.
This is what John Urshel did when he was in the NFL. Urschel would play games on Sunday, attend (remotely) M.I.T. classes on Monday and Tuesday, practice hard physically on Wednesday and Thursday, and prepare mentally on Friday and Saturday. Urschel’s pattern fits this rest-stress pattern.
2/ Headwinds, Tailwinds, penalty-winds. “Cleveland looks like they played great defense in the game but you factor in 144 yards of penalties, that’s a lot of ground you have to make up to get first downs.”
Investors weigh this question too. Rather than ask if a defense is good they’re wondering about a company, and instead of penalties, it’s a bull market.
Jack Schwager said, “If you’ve done well in a ball market all you can assume is you’ve been long during a bull market.” This is what makes Intelligent Fanatics so compelling. They’re like football teams that win despite penalties.
3/ Alpha erosion. “Teams have shown who they are and where they play people. How the Giants utilize Evan Engram. How the Cowboys utilize their personal. That’s all been declared now so defensive coordinators can get a handle on what’s going on and offensive coordinators can get a handle on what’s going on. I think you’re going to see a more match up conscious game. After the first week, you do have some tendencies. You have declared what you’re going to do. The quality of football will get better because of that.”
Offseason edges will soon be eroded. This the theory on Wharton Moneyball as to why Aaron Judge’s home run rate has declined. Pitchers know his tendencies. Now it’s up to Judge to improve again.
Daryl Morey saw alpha erosion as the Rocket’s draft board became less unique and more ubiquitous. Ed Thrope said, “any edge in the market is limited, small, temporary, and quickly captured by the smartest or best-informed investors.”
But new edges spring up. Leigh Drogen said his data edge will last for maybe another decade, but like cars in a train, more will come. “There will always be new data sets and there will always be new heuristics and inefficiencies that humans operate on relative to the data sets.”
4/ Coaching is a skill. “When Al Davis was first doing his thing in the NFL, players mattered the most, coaches didn’t. It was one scheme, man to man, two backs in the backfield. The game was really simple…But when video came into play everything started to change. The game became more complicated.”
“When Al was watching players and doing his thing in the sixties and seventies there wasn’t that great differentiation. Everybody was running basic schemes so the coaching pool didn’t really matter.”
The two-jar model is a theory that says outcomes equal skill plus luck. Michael Mauboussin writes that if you can lose on purpose it’s a skill heavy domain.
Football outcomes have lucky moments, where the ball bounces a funny way.
But it’s skill based too, with a growing influence from coaches.
5/ Playing left handed. “Wade (Phillips) has done a really good job of matching up and making you play left handed. Good defensive coordinators make you play left handed.”
Connor O’Shaughnessy said that current data bears this out about tennis. The best players in the world don’t hit winners so much as they don’t hit losers.
Understanding this was a turning point for Andre Agassi. Brad Gilbert coached Agassi through this change. After one of their first practices, Gilbert said, “Sometimes the best shot is a holding shot, an OK shot, a shot that gives the other guy a chance to miss.”
6/ Culture. “The special teams coaches set the culture of your organization…if you want your team to be all in then everybody should be all in and the players should play some part of the kicking game. That develops the all-in mentality”
Jerry Kaplan explains culture:
“Companies are not conscious in the human sense, but each one nonetheless has its own personality…The culture may be explicitly acknowledged as a credo or mission statement, but more often it exists as a n unexpressed set of accepted procedures, practices, and behaviors that may at times be at variance with the professed goals. This underlying code is not visible in inventories or income statements, but it is the soul of the company.”
“These characteristics are not created by fiat. They are not mandated, manufactured, or bought. They arise out of a natural process that reflects the personalities and desires of the founders, economic conditions, the available labor pool, and cultural attitudes. And that’s why the first few hires are so critical.”
Thanks for reading, I’m mikedariano.
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