After the fall of Lehman Brothers, Joe Peta was out of a job. Read more...
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After the fall of Lehman Brothers, Joe Peta was out of a job. He found a new one but lost that, too, when an ambulance mowed him down. In search of a way to cheer himself up while he recuperated in a wheelchair, Peta started watching baseball again, as he had growing up. That's when inspiration hit: Why not apply his outstanding risk-analysis skills to improve on sabermetrics, the method made famous by "Moneyball"--and beat the only market in town, the Vegas betting line? Why not treat MLB like the S&P 500?
In "Trading Bases," Peta shows how to subtract luck--in particular "cluster luck," as he puts it--from a team's statistics to best predict how it will perform in the next game and over the whole season. His baseball "hedge fund" returned an astounding 41 percent in 2011--and has never been down more than 5 percent. Peta takes readers to the ballpark in San Francisco, trading floors and baseball bars in New York, and sports books in Vegas, all while tracing the progress of his wagers. Often humorous, occasionally touching, and with a wink toward the sheer implausibility of the whole project, Trading Bases is all about the love of critical reasoning, trading cultures, risk management, and baseball. And not necessarily in that order.
Publishers Weekly® Reviews
- Reviewed in: Publishers Weekly, page .
- Review Date: 2012-12-10
- Reviewer: Staff
A Wall Street honcho takes his analytic skills to the big leagues in this rollicking financial adventure. With time on his hands after losing his job and getting run over by an ambulance, Peta, a former Lehman Brothers stock trader, concocted a numerical model that he hoped would predict the outcomes of Major League baseball games better than Las Vegas oddsmakers did—and turned his betting on the 2011 season into a toy investment fund. His lark prompts a fascinating tour of the science of “sabrmetrics,” which translates individual players’ stats—home runs, strike outs, and more exotic performance measures—into win-loss forecasts and playoff picks. (The deftly explained math only enhances the ball-park drama, especially when the Minnesota Twins go on an unexpected winning streak that threatens to sink the fund’s returns.) The author applies his baseball-gleaned insights on the all-important difference between luck and skill to Wall Street’s betting parlors, probing Lehman Brothers’ disastrous risk-management failures and wondering why traders aren’t evaluated as shrewdly as pitchers are. Peta’s hardheaded but warmhearted narrative reads like a mashup of Liar’s Poker and Moneyball peppered with besotted evocations of emerald green outfields and sports-bar camaraderie. His is that rare finance saga that’s both smart and loads of fun. (Mar. 7)