A matter of record

My favourite chapter of Michael Lewis’ book Moneyball is chapter 4, “Field of Ignorance”, where he talks about Bill James and the emergence of “sabermetrics” (“the search for objective knowledge about baseball”).

Lewis quotes James from an excerpt of his first Baseball Abstract:

One absolutely cannot tell, by watching, the difference between a .300 hitter and a .275 hitter. The difference is one hit every two weeks.  It might be that a reporter, seeing every game that the team plays, could sense the difference over the course of the year if no records were kept, but I doubt it.  Certainly the average fan, seeing perhaps a tenth of the team’s games, could never gauge two performances that accurately—in fact if you see both 15 games a year, there is a 40% chance that the .275 hitter will have more hits than the .300 hitter in the games that you see.  The difference between a good hitter and an average hitter is simply not visible—it is a matter of record.

It’s a profound point. The hitter is the centre of everyone’s attention, and a 10% difference is not obvious to the naked eye. What other instances of over- or under-performance are we blind to?

Sonnie Bailey

Sonnie is the founder and principal of Fairhaven Wealth.

Before founding Fairhaven Wealth, Sonnie worked in the legal and financial services industries for over a decade.

Sonnie first became involved with financial advice as a specialist financial services lawyer. For many years, he was an “adviser of advisers”, reviewing thousands of advice files prepared by hundreds of financial advisers, and providing feedback in relation to the quality and appropriateness of advice; industry best practice; risk management; and regulatory compliance. He has published work in industry publications and spoken at various financial advice conferences.

Sonnie has also worked with banks, investment management firms, insurers, and derivatives providers.

Sonnie has worked as a private client lawyer, focusing on succession, estate planning and trusts. He ran his own legal firm in Australia before relocating to New Zealand. He has also acted in independent trustee and company director positions.

Sonnie is passionate about helping people achieve their goals and manage the risks to which they are exposed.

He has written extensively on his blog, New Zealand Wealth and Risk, which can be found at www.wealthandrisk.nz.

Sonnie is married to his wonderful wife Chrissy, and has two young children, Ben and Anna.