Despite being run over by an ambulance, and then fired from his job with Lehman Brothers, Joe Peta wasn't beaten. He twinned his knowledge of baseball with his trading acumen to develop a highly profitable betting model. In his book - Trading Bases - Peta tells his story of reinvention. His journey takes in the intricacies of data analysis, betting strategy and staking methods providing both a fascinating personal story as well as a excellent case-study for aspiring bettors keen to understand what getting an edge really means.
Although the title suggests it is about how an ex-Wall Street trader made money betting on baseball, this book is different to many others that claim to provide a winning formula or strategy that guarantees profit. Trading Bases is a personal account of the mathematics behind gambling that offers something to everyone on the betting knowledge spectrum.
Covering the basics
One thing that is apparent from the outset is distinguishing the difference between betting for fun and betting to make profit – a message often promoted by Pinnacle.
Within the first few chapters, Peta does an excellent job of simplifying various statistical analysis theories and practices used in baseball (most notably Bill James’ original development of sabermetrics). He also introduces one of his key concepts, cluster luck, in chapter two before going on to quantifying this concept in the next chapter.
These simple yet informative explanations allow any reader with limited knowledge of both baseball and betting in general to grasp what can be considered complicated subjects. Whether it’s the Kelly Criterion formula or terms specific to baseball, such as WAR (wins above replacement), PECOTA (player empirical comparison and optimisation test algorithm) or SIERA (skill-interactive earned run average), Trading Bases can certainly help expand your betting knowledge.
Aside from Peta being a lifelong fan of baseball, it is also the increased potential financial reward compared to other sports, such as football, or popular casino games like roulette that prompted him to devise his now famous baseball betting model.
His analysis of how bookmakers work, margins, implied percentages and direct comparisons between betting on specific sports could prove to be very insightful to bettors. In essence, he claims it is the aligned interests between bettor and team that means baseball provides a greater chance of achieving a positive expected value compared to betting on other sports or games.
Amongst the complexities of developing his strategy, one thing that is evident throughout Trading Bases is Peta’s emotional connection to the game of baseball. Whether it’s playing catch, taking his daughter to her first game or reminiscing about watching a game in his favourite bar, there is an underlying narrative that makes this book standout from the typical how-to betting guide.
Stockbroker turned bettor
One of the most interesting aspects of this book is the importance Peta’s previous experience of trading stocks on Wall Street played in the success of his betting model. Whilst Trading Bases is primarily about baseball, due to Peta’s employment background, it will quite often refer back to lessons learnt while working at Lehman Brothers.
In addition to being an expert in risk analysis, Peta’s use of basis points as a staking method became key to developing the winning model his betting hedge fund followed. Although the connection between traders and professional bettors is an obvious one, it is the ease with which Peta draws comparisons not only to bettors, but also to sports teams and individual players as well that make it a more interesting read.
Throughout Trading Bases, there is constant reference to the Wall Street crisis that Peta, to a point, had predicted. His explanation of why the Kansas City Royals have a much better idea of what their left-handed middle reliever is worth than Goldman Sachs does of its semiconductor trader is just one example that highlights the importance of collecting, analysing and interpreting data and how some of the world’s biggest investment firms were failing to do it.
More than a winning model
The main attraction of Trading Bases may well be the lure of uncovering a profitable betting strategy but it is Peta’s own story and conversational style of writing that make it such a great read. His betting exploits by no means take a back seat, but he manages to find the perfect balance between informing readers and keeping them entertained.
His journey of recovering from a car accident that turned his life around to rediscovering his passion for baseball all add to the fascinating theories and strategies Peta puts into practice. Even when readers might find the text quite dense and heavy going, he manages to lighten the mood with his often humorous and satirical footnotes.
There’s a multitude of books that apparently hold the key to successful betting, but one of the many things Trading Bases does well is separate itself from that notion. This book isn’t just an interesting story, it can be used as a useful guide to betting, as well as a tool to help those already using their own strategies.
If you enjoyed our take on Trading Bases, read our review of Joseph Buchdahl's Squares & Sharps, Suckers & Sharks.
Since this article was first published, we have interviewed Joe Peta and he has written his own articles for Pinnacle.
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