Guest Review: Trading Bases

Summary: An ex–Wall Street trader improved on Moneyball’s famed sabermetrics to place bets that would beat the Vegas odds on Major League Baseball games—with a 41 percent return in his first year. Trading Bases explains how he did it.

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. -- Dutton

Since my father is a huge baseball fan, I thought he might enjoy TRADING BASES: A STORY ABOUT WALL STREET, GAMBLING, AND BASEBALL (NOT NECESSARILY IN THAT ORDER) by Joe Peta. I was pretty surprised to learn that he thought the statistical parts of the book were pretty complicated because he spent many years working in corporate finance. While I do have a finance degree and also enjoy baseball, I'm doubting this book is for me. If mydad had a hard time with parts of it, then I'm sure I wouldn't be able to grasp even the simplest concepts.

Here what Booking Pap Pap thought about TRADING BASES:

Since baseball is one of my passions, I was anxious to read TRADING BASES: A STORY ABOUT WALL STREET, GAMBLING, AND BASEBALL (NOT NECESSARILY IN THAT ORDER) by Joe Peta.  Peta was a fifteen year veteran of Wall Street who, while recovering from a job layoff and a serious injury after being hit by an ambulance, devised a system to bet on baseball.  He tested the system during the 2011 baseball season and managed to generate a 41% profit.

Peta continuously transitions from stories about baseball, Wall Street and his model for betting on games.  His stories about baseball, sometimes humorous, reflect his love and knowledge of the game.  He talks about his favorite teams, going to games with his father and taking his own daughter to her first baseball game.

The author’s accounts of Wall Street focus on his own career as well as his opinion that a “bet your company” attitude at places like Lehman Brothers caused the 2008 investment banking crisis.  Although interesting, I was sometimes lost trying to follow the “Wall Street lingo”. 

The development of his baseball betting model takes up a majority of the book.  Starting with sabermetrics, a statistical study of baseball developed by Bill James, Peta walks the reader through the development of a system to bet on individual games utilizing tools such as regression analysis, Pythagoras’ theory, skill-based performance analysis and “clusterluck”, an analysis of a team’s luck.  He focused on applying his model to determine the reasons for the success of the 2010 Tampa Bay Rays and whether it was repeatable.  During the 2011 season Peta continually evaluated his model’s success against the performance of the Minnesota Twins.  I found that I was sometimes confused in trying to follow the development of the betting model and in trying to understand the multitude of tables displayed in the book.

Peta makes a case that baseball, Wall Street and Las Vegas can learn from each other.  For example, he utilizes his Wall Street skills to take baseball’s sabermetrics to a new level, he contends that Wall Street could benefit from applying some of the analytical techniques utilized my major league baseball and he makes the point that Las Vegas could benefit from Wall Street’s methods to increase customer interest in sports betting.

TRADING BASES is an interesting book that combines baseball, Wall Street and sports betting.  It’s an easy read when Peta is telling his stories but becomes more complicated when he discusses Wall Street methods and his baseball betting model.  I would recommend this book for anyone who is interested in sports betting.

Thanks to the publisher for providing a review copy of this novel and to Booking Pap Pap for his wonderful review.