Moneyball investing: Simple way to beat the market

Warren Buffett is a big believer in what he calls "the biblical standard" The key dilemma around Moneyball, the book by Michael Lewis and the movie based on it (I recommend both), is pretty simple. The New York Yankees had a payroll of $126 million in 2002. The Oakland A's had a payroll of only $40 million. How does an underfunded, outgunned outfit like the A's compete with the Yankees? As A's General Manager Billy Beane puts it in the movie: "There are rich teams, and there are poor teams. Then there's 50 feet of crap. And then there's us." Beane realizes he can't look at the player acquisition game the same way the Yankees do and win. He has to figure out a different way to find winning players. Fortunately, he meets Peter Brand (in real life, Paul DePodesta, who didn't want his name used in the movie version), who introduces him to a set of ideas the rest of baseball ignores. While other teams focus on apparent athletic talent, Brand focuses on how teams actually win. Teams win by creating, or preventing, runs. Using statistical methods, Brand focuses on players that create runs — instead of how fast they run, how far they can throw, or how far they hit the ball.