June 14, 2012

Resident Fantasy Genius

Ignoring the Trend Line

by Derek Carty

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If you missed it, I filled a guest spot on the Fantasy Baseball Roundtable Radio show last night alongside industry friends and show regulars Patrick DiCaprio, Mike Podhorzer, and Greg Marta.  We talked mostly about buy-high and sell-low players—you can listen to the whole show here, if you’re interested—but there was one more theoretical topic that came up in passing which I found interesting but didn’t have a chance to jump into: trend analysis.

When discussing “buy high” third basemen, Pat mentioned how he was questioning the utility of trend analysis, specifically in regard to Hanley Ramirez.  Despite a four-year trend of declining power, Hanley has bounced back this year to a level that falls between his 2008 and 2009 seasons:

If you were using trend analysis, you would have seen an aging Hanley Ramirez losing power each year and expected him to continue losing power (or at least level off) in 2012.  You would have been wrong, however.  And not only in results, mind you, but in process.  Trend analysis has no place in projecting a player, as much as some may find solace in using it, seeing a clear pattern and an easy solution.  But easy isn’t always best.

The problem with trend analysis is that it usually runs contradictory to one of the most fundamental concepts in projecting a player: regression to the mean.  The most illustrative way to explain regression to the mean that I’ve found is Bill James’ Whirlpool Principle:

All teams are drawn forcefully toward the center. Most of the teams which had winning records in [2010] will decline in [2011]; most of the teams which had losing records in [2010] will improve in [2011].

Naturally, you can make the leap from teams to players and understand that, basically, all players, whether they were above average or below average in one year, will perform closer to league average in the next year (absent other information).  We know this to be unequivocally, 100 percent true, and all projection systems—from the simplest Marcel to the complex PECOTA—incorporate regression to the mean in one way or another.

I’m sure you can see how this runs contrary to trend analysis.  While regression to the mean tells us that players will post numbers closer to league average next season, trend analysis tells us that they will continue further along the path they’re currently on, traveling further toward one extreme or another.  While the latter might seem to make some sort of sense—after all, it’s easy to visualize a line going straight down through Hanley’s numbers—it can wreak havoc on fantasy players who choose to use it, resulting in incorrect decisions more often than not.

To illustrate, from 1990 through 2010, 410 players (with at least 300 PA in each season) posted three-year HR/PA declines.  Check out how these players fared in the fourth year, on average:

Using trend analysis, we’d think that these players would continue their power slide, but just the opposite happened: they bounced back.  Yes, players who are on the decline should actually be expected to bounce back the following year.  While bells may go off in our heads when we see a neat little pattern in a player’s numbers, we need to fight the impulse to expect that pattern to continue.  Chances are, it won’t.