Opinion Valuation in the field and in the market Mesmerized Internet

 Opinion Valuation in the field and in the market Mesmerized Internet

Opinion Valuation in the field and in the market  Mesmerized Internet


Some people have reacted cautiously to the Game Stop saga. There really isn't much of a stock, they say. Eventually Creditors will run out of money to support him. Or it goes up high enough to sell it and it goes down again. That sounds reasonable to me. Reddit can't keep investing in Game Stop forever. While the stock market isn't exactly efficient, it will probably figure it out eventually. So at some point the stock price will go down to where it really is, which is probably not that much.

I mention Game Stop because I've been hearing a lot lately about true value and things that don't cost that much. In particular, I've heard this about Trevor Bauer. Now that the Sets have traded Steven Matt, their interest in Bauer seems genuine. But those who dislike Bauer say he isn't worth the huge contract.

The argument goes in several different ways. Bauer can earn more than Jacob DE Prom this season - DE Prom is much better, so Bauer is not worth it. In the future, he will not repeat the figures for 2020, so by definition he will be overpaid. Aside from a few happy years, he's a 4.00 ERA reliever. Why pay millions and millions of dollars for this?

The problem with this argument, however, is that Trevor Bauer is not like Game Stop's stake. Well, in some ways - unpredictability, weirdness, weird subscribers on the Internet - he is, but there is a significant difference between them. Bauer operates in a market that is far less efficient than the stock market. The ML free agent market is so volatile and has such a small sample size that it is practically ineffective.

Baseball players don't really have a single value. In theory, they could; I guess you could project that Bauer's average score is 143 ERA + and calculate exactly how much it costs. This is not how the free agent market works. Players are not paid strictly based on predicted statistics. Bauer may be making more money next year than Jacob DE Prom, but he won't be playing either. What for? Bauer is a free agent, and DE Prom has signed a contract extension; Bauer enters the market later, which means there was inflation; Bauer is not attached to the Met, while DE Prom received a discount in his hometown.

Whichever team signs the contract, Bauer will likely have to pay more than he is worth during the contract period. This is the nature of sports contracts. It's the same with George Sp-ringer. When Sp-ringer makes over $ 20 million at age 36, is his number enough to earn that kind of salary? Probably no. But now he is a good enough player, and the Blue Jays decided to overpay for his older years in exchange for the years before them. If they didn't, the other team would have done it. So while Sp ringer's data may not be worth $ 20 million in six years, this is what the Blue Jays were willing to pay.