No, the title was not a typo. Now that the season is officially underway, we will soon be greeted to message board posts from panicked fantasy owners nervous about their slow starting stars. Numerous buy low articles will be published suggesting that the listed players will be quite easy to acquire, but in practice, these players are increasingly difficult to actually pry away. When every fantasy site is recommending the same guys to go out and trade for cheaply, don’t you think the owners of these players are reading these same articles and are smart enough not to give them up so quickly? So I propose a different strategy: the buy high and sell low.
This is the complete opposite philosophy from what is preached in many situations, not just limited to fantasy baseball. In the stock market, for example, you are typically advised to sell high (when a stock becomes overvalued in your opinion) and to buy low (when a stock is trading for less than your calculation of its intrinsic value). But there are actually certain times when it makes sense to buy a stock high or sell it low. A stock may be at its 52-week high after a recent run-up due to a strong earnings report, but you believe that this is just the beginning of a multi-year run. Apple and Google are good examples of this phenomenon. Selling a stock low would be a smart play if you believe the company is fundamentally broken and the stock will not rebound anytime soon. It stinks to sell low, but realizing that your money will earn more invested somewhere else is something you must accept.
The parallels to fantasy baseball are obvious. Jose Bautista last season is the easiest example to use to explain the benefit of this strategy. Last year, nobody believed that Bautista would continue hitting home runs at the pace he opened the season at. But of course we all know that he did. During the first month of the season, his owners were likely all itching to trade him under the belief that they found some sucker to sell him high to. If you were the owner making an offer for Bautista, it would have probably taken significantly less than Bautista’s final season dollar value to acquire him. So you would have profited quite nicely despite the fact that you were technically buying high. Of course, buy high trades are not always going to work out so well. The whole reason an owner is trying sell high in his mind is that the player’s performance is expected to drop off. That will happen more often than not simply because the sell high candidates usually do not have the track record to support such strong performance.
On the other side of the coin is the sell low trade. Lance Berkman last season makes for a good example. Berkman’s name still carried value early on and many fantasy owners were thinking they were buying low if they chose to acquire or attempt to acquire him. His owner, however, could have been knowingly trying to sell him low because he recognized Berkman’s age, injury issues and declining skills all pointed to a player who is less likely to rebound despite his excellent track record. The Berkman owner would have still netted good value for him and ultimately profited from the trade, despite supposedly selling him low.
I fully admit that buying high and selling low is a risky strategy and it takes serious balls to try executing on this type of trade. The better percentage play will always be buying low and selling high, but that is just too difficult to pull off as owners have many more free resources to evaluate players than they ever had before (thanks FanGraphs!). The buy high and sell low idea will be easier to pull off though, and even if you are wrong, you should not lose too much assuming you did not buy too high or sell too low for a near replacement level player.