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Tag: Michael Lewis
Astroball: Awesome Summer Reading
What do you get when you combine an evidence-based process with visionary team spirit and brilliant leadership? A World Series Commissioner’s Trophy, for starters. The “rags to riches” tale of the Houston Astros 2017 World Series victory is now available for your reading pleasure, thanks to Sports Illustrated senior writer Ben Reiter.
We love the recent approach to managing the Astros because it mirrors our approach to investing in two major ways:
- First, it is backed by data. The Astros management seeks to fully understand the factors that drive wins, quantify them, and weight heavily toward them.
- Second, like with investing, achieving your long-term goals may sometimes require short-term sacrifices. If you have the right philosophy and the right process, you can trust that the odds will work in your favor long-term.
Something of a visionary himself, Reiter actually predicted the team’s 2017 victory on the cover of the magazine’s June 30, 2014 edition. Was that luck or forecasting talent? You be the judge, when you read Reiter’s entertaining account in “Astroball: The New Way to Win It All.”
Reminiscent of Michael Lewis’ Moneyball tale of the Oakland A’s, the Astros applied similar evidence-based strategies to improve their game. They leveraged what the Oakland A’s Billy Beane began and took it a step further, incorporating (with help from the “Nerd Cave”) scores for more unconventional qualities, such as personality and grit. These elements and more are touched on in this review: “[R]oster-creation, all by itself, did not bring home the championship. Building an exceptional team is one thing, but making it work as a team is another.”
We’ve said it before; we’ll say it again: We couldn’t be prouder of our exceptional home-town team. Go Astros!
Bonus read: For more of baseball’s rich historical lore, I also enjoyed this recent PBS documentary on legendary hitter Ted Williams, in all his quirky glory (narrated by St. Louis’s own Jon Hamm). This related New York Times piece tells the backstory of how some of the film’s best footage was almost lost for good.
“The Undoing Project” by Michael Lewis
Michael Lewis’ latest book, “The Undoing Project,” weaves together the biographies of Amos Tversky and Daniel Kahneman, two Israeli psychologists whose work in the 1970s–1990s launched a new way of combining behavioral academics with practical applications. Their specialty was exploring the ways the human mind makes systematic errors when forced to judge uncertain situations.
At first, you may not think that sounds like gripping entertainment. But in typical Michael Lewis fashion, these pair of academics become a fascinating read.
I and my Hill Investment Group colleagues had the privilege of meeting Lewis and hearing him speak shortly after he published his 2003 book, “Moneyball.” In it, he showed how Major League Baseball teams were making poor decisions on valuing players based on human judgment. Defying convention, Oakland A’s General Manager Billy Beane evaluated players using data rather than “expert” judgments to successfully compete against teams boasting much higher payrolls.
When Lewis wrote “Moneyball,” he wasn’t aware how powerful his book would become. He was simply intrigued by a real-life illustration of objective evidence beating the pants off of conventional so-called wisdom.
In some respects, “The Undoing Project,” is a prequel to “Moneyball.” Lewis admits, he didn’t realize it at the time how much of what he explored in “Moneyball” came directly from professors Tversky and Kahneman and their earlier work. Once he connected the dots, he decided to write a book about them too. Their story is about how they used their understanding of systematic errors in people’s judgment to improve that judgment, and thus improve their decision-making.
I believe one of their most important findings is this: Knowing you or others have biases (such as relying on overly small samples, anchoring on past assumptions, and mistaking hindsight as being predictive) isn’t sufficient to overcome them. Even when we know we’re being influenced, we often let it happen anyway!
Here’s one example from Lewis’ book: In 2016, basketball player Jeremy Lin signed a $38 million contract with the Brooklyn Nets – clearly a coveted hire. But back in 2010, no NBA team would draft him. “He lit up our models,” one team manager said … but as a Chinese-American Harvard grad, Lin didn’t fit the stereotype. Even though they had the evidence (the models) in hand, they were unable to overcome their biases and recruit him when he could have been had for far less money.
Back to professors Kahneman and Tversky. In 2002, Daniel Kahneman won a Nobel Prize for the work that continues to shape our lives today. Amos Tversky likely would have received the award as well but, sadly, he passed away in 1996, and Nobel prizes are not awarded posthumously. In any case, their work has contributed to untold advances in medical diagnosis, military decisions, professional sports and – last but hardly least – financial economics.
Across all of these disciplines and more, the takeaway is that human bias is ever-present, which is why we must remain ever on guard against it. Hint: One of the best ways I know to combat your own biases is to recruit someone who is aware of how prevalent they are, to let you know when it’s happening to you.
Video: John’s Light Bulb Moment
John Reagan has been with our team 3 years in June. When he first approached us about opportunities at Hill, we were quickly convinced he was the perfect fit. And, his offer to work for free in the first two years really caught our attention. His passion and work ethic are unmatched, and we’re lucky to have him on the team. (Needless to say, his formal job offer included a salary from day one.)
In celebration of his time here, let’s take a brief look back at his light bulb moment. Watch as he discusses his first read of our favorite piece from Michael Lewis.