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 an Authorised Financial Adviser (AFA) and former lawyer with experience in the financial services and trustee industries. Sonnie operates Fairhaven Wealth (www.fairhavenwealth.co.nz).