Prior to the 2002 Major League Baseball season, Oakland Athletics General Manager Billy Beane was charged with the task of filling the seats of Oakland Coliseum with paying customers. This meant a winning team on a very limited budget.
Billy Beane gave meaning to the Oakland A’s franchise in the same way true wealth advisers give meaning to their client’s money. The goals are identical, and so are the solutions. The most wins per dollar of payroll is to give your clients more dollars of future wealth for every unit of risk they invest.
What Billy Beane did was radical. He gutted his scouting department for a procedure that meets the need – ticket sales, is easy to understand – player performance, and is reliable – team wins.
The subjectivity of scout bias, and the qualitative methods of the baseball industry, were replaced with quantitative analysis – artificial intelligence. Rooted in empirical evidence, Beane’s new analysts measured the outcomes a player can control, and the player’s persistence in achieving them.
For pitchers, it was strikeouts, walks, and home runs allowed. Traditional stats like earned run average and wins were ignored. For batters, Beane measured home runs hit and on-base percentage, not batting average or runs batted in. ERA, games won, batting average, and RBIs include factors out of the player’s control.
The pitcher’s job was simplified – get the batter to swing at bad pitches. For the hitter – don’t swing at bad pitches. What Poetic Justice Capital does is equally radical. Macroeconomic forecasts, analyst price targets, and diversification schemes are the traditional bad pitches of industry best practices.
At Poetic Justice Capital, we watch bad pitches go by and take first base.
We do this by relying on the historical price information of broad asset classes and artificial intelligence. By integrating the uncertainty of the future with objective capital market assumptions, we also fill great seats for a winning season – dollars of future wealth for living in confidence and comfort.