Supported by Greenhaven Road Capital, finding value off the beaten path.
Before each NBA season, Bill Simmons and Joe House team up to pick over or under win totals for each team. Sports and forecasting go together like burgers and fries. We’ll use the Simmons and House section about the Utah Jazz (1:33:30) to look at how other decisions can be made.
Our caveat. House and Simmons are entertainers and it’s betting slips, not loose lips that tell us what they really think. Without skin in the game we know little, but can still think about better decisions.
The Utah Jazz over-under is 49.5 and gamblers need to bet $135 to win $100. “It could be minus 235 and I would bet the over,” said House, “There’s no price I’m not willing to pay to bet the over for Utah. I think they are so good. I think they are the third best team in the Western Conference.”
October 2018 was also the Howard Marks podcast tour and Marks would disagree with House. He told Barry Ritholtz, “It’s not what you buy, it’s what you pay.”
But House believes. “They had 48 wins last years.” So, it’s not just that House likes the team but it’s that their base rate from last season is 48 wins. But we need to keep digging. “The west got better from a top-heavy standpoint,” Simmons said. Sure, House added, “But they had the point differential of a 53 win team and I think the sky is the limit.”
Good base rates include statistics that can be measured and that matter. The Jazz under-performed based on point differential, so maybe they were better than their record suggested. In a podcast with Ted Seides, Michael Schwimer explained the nuances around hitting. It’s more than just batting average, it’s also about what types of pitchers a hitter faces. Base rates, according to Michael Mauboussin, Phillip Tetlock, and Daniel Kahneman, offer us the “outside view” and are a great place to start.
Then Joe House (possibly) oversteps. “I watched them (the Jazz) a lot. I went and saw the ‘almost Bullets’ play Utah and they could just not figure out how to get open shots against Utah. They are very well coached, they are disciplined, they have a ton of talent. This is a Joe House L-O-C-K lock.”
Later Simmons added, “Every year there’s one team that really played well in the last eight or nine weeks of the season and put up some crazy record and we’re like ‘Whoa, what about that team?’ Every year there’s a team that does that and I don’t know if that translates into them being a contender the next year. Sometimes teams just peak at the right time, take advantage of injuries on other teams, or have a favorable schedule.”
House’s possible miscalculation may be from the availability bias. This, said Haralabob Voulgaris, is why people underestimate defense. This, said Simmons, is why Doc Rivers signed players who played well against him. “Teams that perform out of the ordinary, either good or bad, will get the most attention by both the media and bettors,” wrote Kristian Brinch Hansen
Simmons noted that maybe the Jazz were lucky. That could be part of the reason too.
There’s a lot of tiny red flags with this team, concluded Simmons and House but they might have the most important thing; good culture.
Throughout the two-plus hours, the two agree to trust the infrastructure for teams like San Antonio, Dallas, Houston, Miami, and Los Angeles. For other teams like Milwaukee, they praise the coaching changes. Teams like Phoneix aren’t so lucky. “The case against them is that they have no point guard and they just fired their GM nine days before the season, which was actually kind of hilarious,” said Simmons. “Have the guy do the draft and free agency and then fire him? What kind of jackass that’s in charge of anything would do that?”
Howard Marks said to hire adults and create an environment where they could do their best work. Britian created a gold medal culture. Culture is what kept Pixar from being copied. Culture, wrote Peter Thiel, isn’t something you have. It’s something you are. Culture in sports comes from the owner’s box.
Thanks for reading, with love, a blog boy.