Baseball’s been called ‘The American Pastime’ since forever. Most people, even those who barely or never actually played the game, think they understand what’s goin’ on in any particular situation. Take last year’s American League Cy Young award winner, Felix Hernandez. The guy had a pedestrian 13 wins and 12 losses for Heaven’s sake. How does winning 13 games, much less losing almost as many, qualify anyone to even be on the B-list of Cy Young Award candidates?
How ’bout some salient facts?
First, lets review what factor decides which team wins any particular game. Silly right? The team with the most runs wins — no exceptions. Therefore, does it not follow that the truest way to appraise a given pitcher’s ‘spikes on the rubber’ ability, is to find out how many ‘earned runs’ he allows in the average nine inning game? The key word there was ‘earned’, as any run(s) allowed on his watch caused by teammates’ errors aren’t his fault, and therefore aren’t counted against him. It’s called Earned Run Average, or ERA.
Here’s the formula: Total earned runs allowed/total innings pitched X 9 = Earned run average.
In Felix’s case last season, he allowed just 2.27 runs per nine innings pitched — the lowest in the American League. Less knowledgeable fans might’ve ‘voted’ for the NY Yankee’s Sabathia, who won 21 games — just three short of double Hernandez’ total. The thing is, Sabathia allowed almost a whole run more per game — 3.18 vs 2.27 — than Hernandez. Wonder how many games Hernandez woulda won if he’d been laboring for the Yanks?! Betcha it woulda been more than 21. 🙂
Let’s really amplify the difference between the two. Sabathia, truly an elite pitcher, allowed 40% more runs per nine innings than did his Seattle counterpart, Hernandez.
So, now that you know what’s really what, which pitcher would you have wanted to pitch for your team last year? Wins are often the most misleading factor in gaging the quality of major league pitching. Sabathia won so many more games than Hernandez simply because the Yanks are a scoring machine, and the Mariners treat run scoring like it’s sinning.
In eight of Felix’s 12 losses, he allowed 0-3 runs. The Mariners, his team, socred 3.18 runs a game last year. The Yanks? Try 5.3 runs a game. Is it any wonder why Felix won just 13 while Sabathia won 21?
Number of wins doesn’t even begin to tell the story of who’s the more effective pitcher. Yet the public at large is as sure as day follows night that it does.
The bottom line is that if this were a decision about where to invest, and/or in which property to invest, most folks, the vast majority in fact, would’ve chosen based on data, the bulk of which was irrelevant to their desired end result.
The difference is that when playing General Manager of your fantasy baseball team, there are little to no financial repercussions when you make poor decisions based on a significantly deficient understanding of what’s what.
On the other hand, making those kinda mistakes while investing in real estate for your retirement can be devastating in the literal sense. Just ask all those investors who’ve been chasing price around the country how it’s workin’ out for ’em so far. For most it hasn’t turned out well at all.
Finally, let’s go back to the baseball analogy. Imagine both Felix Hernandez and CC Sabathia had been free agents from Day 1, with the ability to play for whatever team they chose. Look at those teams as analogous to regional real estate markets. Here’s how it turned out for each ‘pitcher/investor’.
Sabathia, a relatively less effective investor, but with a better understanding of what’s what, geographically speaking, ‘invests’ in New York and gets 21 wins for his good judgment. Hernandez, chooses poorly, opting for Seattle, winning just 13 games, even though technically he was a better investor.
The moral of the story?
You better pick right, and know what’s what when investing in real estate for your retirement. Unlike baseball players, you won’t have banked millions a year regardless of how many games you won — or lost. Figuring out you had things wrong just as you’re hitting retirement is not an experience you wanna endure.
Know what’s what before, not after.
Photo: R.M. Calamar