November 20, 2013
Rereading Nate Silver: 9. Magazine Cover Indicator
Abstract: These are previews of a baseball season that concluded 10 years ago. Not even a review of a season; a preview, an analysis of hypotheticals that didn’t happen. There is no real reason to read this, except to see in little details how Nate’s brain operates--”The nerdiest part of our preseason blitzkrieg,” as he put it. If you’re meanspirited, you might scan it for projections that turned out to be wrong, but of course the deck is stacked in your favor. I’ll mostly skip articles like these, and would have skipped these except for one throwaway sentence in the last paragraph of the AL preview piece. It goes like this:
Key Quote: “I don't mean to dismiss the Angels' success from a year ago; in a league that has become increasingly dependant on working pitchers deep into the count, the Angels may gain a profound comparative advantage from swinging early.”
Which Stood Out Because: In my first year out of college, I got really into reading long magazine features. I was writing short news blurbs and pun headlines for a throwaway weekly newspaper, and the 8,000-word articles in the the New York Times magazine were my version of Jesse Pinkman’s box fantasy. One weekend, the cover story was about the A’s, 8,814 words about how they were smarter than everybody else. It was, it turned out, an excerpt from Moneyball, due out later than year, and it blew my mind. Among many nuggets: “There were all sorts of ancillary traits in a hitter--the number of pitches he saw per plate appearance, for instance--that had concrete value to a baseball offense but that were treated by most baseball people as worthless.” Immediately, I became obsessed with pitch counts.
I know now that seeing pitches isn’t inherently valuable; it’s valuable only in context. The game has changed, for one thing. The game theory has changed, for another. Right now, I’m not sure it’s valuable at all, but certainly at the time I’d have sworn it was, and for at least five years I took it as a given. And here’s Nate Silver, 11 days before I even heard of the concept, already moving on from it, while acknowledging that pitch-taking isn't an undervalued asset so much as a standard practice accepted (and perhaps overapplied) throughout the game.
This, of course, is a pretty perfect example of the magazine cover indicator: Once something gets enough attention to land on a magazine’s cover, its usefulness has likely been wrung out, its momentum priced into its share price. “If it seems magazine covers have a long history of steering investors the wrong way, then it's probably because they really do. In 2007, three professors at the University of Richmond proved it. In their study, ‘Are Cover Stories Effective Contrarian Indicators?’, the researchers looked at companies featured on the covers of three business magazines, Business Week, Fortune, and Forbes, over the course of 20 years. Their study found a statistically significant (inverse) correlation between appearance on the cover of one of the magazines and the subsequent performance of the company's stock.”
On the Nate Silver Must-Read Scale: 1