Trading Bases: A Story About Wall Street, Gambling, and Baseball (Not Necessarily in That Order )

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An ex–Wall Street trader improved on Moneyball’s famed sabermetrics to place bets that would beat the Vegas odds on Major League Baseball games—with a 41 percent return in his first year. Trading Bases explains how he did it.

After the fall of Lehman Brothers, Joe Peta was out of a job. He found a new one but lost that, too, when an ambulance mowed him down. In search of a way to cheer himself up while he recuperated in a wheelchair, Peta started watching baseball again, as he ...

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Trading Bases: How a Wall Street Trader Made a Fortune Betting on Baseball

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An ex–Wall Street trader improved on Moneyball’s famed sabermetrics to place bets that would beat the Vegas odds on Major League Baseball games—with a 41 percent return in his first year. Trading Bases explains how he did it.

After the fall of Lehman Brothers, Joe Peta was out of a job. He found a new one but lost that, too, when an ambulance mowed him down. In search of a way to cheer himself up while he recuperated in a wheelchair, Peta started watching baseball again, as he had growing up. That’s when inspiration hit: Why not apply his outstanding risk-analysis skills to improve on sabermetrics, the method made famous by Moneyball—and beat the only market in town, the Vegas betting line? Why not treat MLB like the S&P 500?

In Trading Bases, Peta shows how to subtract luck—in particular “cluster luck,” as he puts it—from a team’s statistics to best predict how it will perform in the next game and over the whole season. His baseball “hedge fund” returned an astounding 41 percent in 2011—and has never been down more than 5 percent. Peta takes readers to the ballpark in San Francisco, trading floors and baseball bars in New York, and sports books in Vegas, all while tracing the progress of his wagers. Often humorous, occasionally touching, and with a wink toward the sheer implausibility of the whole project, Trading Bases is all about the love of critical reasoning, trading cultures, risk management, and baseball. And not necessarily in that order.

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Editorial Reviews

Publishers Weekly
A Wall Street honcho takes his analytic skills to the big leagues in this rollicking financial adventure. With time on his hands after losing his job and getting run over by an ambulance, Peta, a former Lehman Brothers stock trader, concocted a numerical model that he hoped would predict the outcomes of Major League baseball games better than Las Vegas oddsmakers did—and turned his betting on the 2011 season into a toy investment fund. His lark prompts a fascinating tour of the science of “sabrmetrics,” which translates individual players’ stats—home runs, strike outs, and more exotic performance measures—into win-loss forecasts and playoff picks. (The deftly explained math only enhances the ball-park drama, especially when the Minnesota Twins go on an unexpected winning streak that threatens to sink the fund’s returns.) The author applies his baseball-gleaned insights on the all-important difference between luck and skill to Wall Street’s betting parlors, probing Lehman Brothers’ disastrous risk-management failures and wondering why traders aren’t evaluated as shrewdly as pitchers are. Peta’s hardheaded but warmhearted narrative reads like a mashup of Liar’s Poker and Moneyball peppered with besotted evocations of emerald green outfields and sports-bar camaraderie. His is that rare finance saga that’s both smart and loads of fun. (Mar. 7)
From the Publisher
"You don’t have to be a baseball analyst or former stock trader to connect with Trading Bases...Trading Bases will help you to be that fan." - Dallas Morning News

"A funny and stimulating account of a former stock trader who applies his Wall Street philosophy and knowledge of baseball statistics to try to beat the betting line." - The Chicago Tribune 

"His swaggering story, from frantic stock trader to professional sports bettor, is the basis of Trading Bases, an entertaining book about how to turn your passions into profits. Even casual baseball fans could learn from it. Serious fans should slurp it up like ballpark beer." - The Los Angeles Times 

Kirkus Reviews
A fun approach to developing the discipline necessary to separate reproducible skills from the disruptive effects of chance in baseball, finance and life. Peta's 15-year career as an equity trader with Lehman Brothers abruptly ended when an ambulance ran into him and crushed his leg. The author discusses how he pulled his life back together in the months when he was laid up, unable to walk and separated from his family on the West Coast. Peta developed a system for betting on baseball and began the work to turn it into a business. Conceptually, the author built on the work of predecessors from the sabermetrics school of baseball statistical analysis like Bill James and Nate Silver. Peta worked on developing statistical indicators that might give him an edge in the 2011 season, looking to find ways to separate analysis of acquired skills from chance or accident. Peta's approach is helpful to understanding statistical analysis in any field, not just the chosen baseball specialty. He applies the same approach to Wall Street trading results and showing how using profit-and-loss results to assess a manager's performance can be as misleading as using wins to identify a team's best pitcher. Neither reflect quantification of developable skill sets, but rather uncontrollable external factors. Peta's system was ready for operation by the beginning of the 2011 season; by August, he was able to walk, ready for the coming World Series. His system ended its first season comfortably ahead. The main focus on baseball provides a starting point for much more.
The Barnes & Noble Review

Even casual sports fans are inclined to gamble on occasion, most notably by filling out brackets for the NCAA men's basketball tournament. The tournament coincidentally comes to its conclusion right around the time that baseball, a sport that more people see as a romantic pastime than a gambling opportunity, is beginning its regular season.

But Joe Peta, a former Wall Street trader for Lehman Brothers, sees baseball as a romantic gambling investment — a distinct perspective that makes Trading Bases: A Story About Wall Street, Gambling, and Baseball (Not Necessarily in That Order) both an intriguing personal chronicle and a sophisticated investigation into the financial opportunities available to informed investors who want to gain an edge by betting on America's pastime.

In 2011 Peta broke his leg and was briefly confined to a wheelchair after he was hit by ambulance in New York City. Incapacitated and newly unemployed, he turned his attention to baseball, his favorite sport. He studied the latest advances in objective baseball analysis, looking to exploit disparities between his assessment of teams and players and those of the bookmakers who set the betting lines.

"The spreadsheets and the critical reasoning provided me with a perfect outlet to engage my mind, but numbers didn't drive my passion for baseball," writes Peta. That passion resulted in an innovative system that the fact that the mechanics of baseball don't mesh easily with the way most sports betting happens — and finds an opportunity for classically American innovation.

Peta uses a combination of common sense and advanced baseball statistics (or sabermetrics) to explain why betting on baseball is a far superior choice to betting on football or basketball — both from a financial and an emotional perspective. He created a complex model for betting on individual games and team win totals during the 2011 season, and this yielded an impressive 41 percent return on his investment.

I turned to baseball-preview publications, various data-packed baseball-analysis websites, and the spreadsheets I began to build myself. Bringing together my love of trading and markets, models and sports betting, I decided to use the findings of baseball's "sabermetric" community to build a model that would beat the Las Vegas baseball line.
Legalized sports gambling is a $3.17 billion-a-year business in Nevada and reportedly represents just 5 percent of the worldwide betting that takes place via illegal sports books, office pools, Internet sites, and foreign markets. In the estimated $380 billion wagered annually, betting on football and basketball accounts for two-thirds of the action — 42 percent on football, 23 percent on basketball — while baseball accounts for just 18 percent.

These percentages are the result of flawed thinking, says Peta, because "baseball betting is a much better alternative." Sports books, he explains, use point spreads for football and basketball games, but not for baseball games. Consequently, a team could be winning in football and thus have no incentive to keep scoring points, which might put them at odds with the people who bet on them to win by a certain amount. This maddening proposition does not exist in baseball, where you're simply charged with picking a winner, and where a team will continue trying to win right till the final out.
Would you ever tie your financial interests to someone who didn't share the same incentives that get you paid? It would be like agreeing to be Adam Sandler's agent and getting paid by the Oscar nomination instead of a percentage of box-office gross. That's exactly what can happen when you bet basketball or football.
Peta says people are reluctant to bet on baseball because they don't understand how it works. Instead of point spreads, baseball typically uses "money lines." If the Yankees are playing the Mariners, and the money line is Yankees (-180) and Mariners (+165), a bettor would need to put down $180 on the Yankees to win $100 or $100 on the Mariners to win $165.

Trading Bases shifts between numbers-heavy chapters that explain concepts like these and sentimental sections that dwell on Peta's personal attachment to baseball; in particular, his love for the Philadelphia Phillies. The lighter chapters offer nice reprieves, but it's no surprise that most readers will be more interested in learning how money can be made by betting on baseball. The key, Peta writes, is in distinguishing which teams and players are lucky from those that possess repeatable skill sets.

Peta describes how he began his first the season with a set budget and separated his investments between betting on "futures" — or the season win totals of select teams — and individual games. The model required constant readjustments, depending on injuries, trades, and other factors. If a team or pitcher lost several games in a row, that was not a good reason to stop betting on them. It was important to look at the context of their performance — something bettors and Wall Street types often overlook. For instance, Peta notes that stock traders are commonly ranked by their overall profit-and-loss (P&L) returns, even though their bottom line might be overly affected by the performance of just one stock.

Peta argues that it's better to identify traders — and baseball players — who exhibit repeatable skills. A pitcher's win total, for instance, is not truly reflective of his overall value, since his ability to win games is greatly affected by his team's ability to score runs. But stable rates — for instance, a pitcher's strikeout and walk rates, as well as his ability to induce ground balls — go a long way toward predicting his future success.
Baseball teams, using the advances in statistical analytics developed via sabermetrics, identify skill sets. They know that it's the possession of specific skills that is the most reliable predictor of future results. They also know, therefore, which results are repeatable. Using P&L or a fund's return as the sole determinate to identify a desk's best trader or a fund's best portfolio manager, respectively, is as misleading as using wins to identify a team's best pitcher.
It's about looking at things in context, which is something financial institutions don't do nearly as well as the average baseball team, Peta writes.

Gambling has become more commonplace and acceptable in the United States in the last few decades; but people's understanding of how to gamble — and what to gamble on — has a ways to go. If you're going to be betting on sports, though, don't waste your money on the seventeen-week NFL season, according to Joe Peta. Baseball — now overshadowed by other pro sports — may seem to some like a relic of a previous era. But it just might be the future of gambling.

Cameron Martin is a columnist with CBS Sports, Comcast SportsNet New England, and Hearst newspapers. From 1996 to 2007, he was a columnist and feature writer for the Greenwich Time and Stamford Advocate newspapers in Connecticut. Email:

Reviewer: Cameron Martin

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Product Details

  • ISBN-13: 9780525953647
  • Publisher: Penguin Publishing Group
  • Publication date: 3/7/2013
  • Pages: 384
  • Sales rank: 450,448
  • Product dimensions: 6.40 (w) x 9.14 (h) x 1.24 (d)

Meet the Author

Joe Peta

JOE PETA was a Wall Street market maker and hedge fund stock trader for fifteen years. A sports bettor for even longer and a lifelong baseball fan, he lives in San Francisco.

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Customer Reviews

Average Rating 3.5
( 3 )
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Sort by: Showing all of 3 Customer Reviews
  • Anonymous

    Posted March 24, 2013

    A book with rare insight, yet entertaining at the same time.  Th

    A book with rare insight, yet entertaining at the same time.  The book was recommended to me by a friend who does not follow baseball and now I see why.
    It's about much more than baseball.  The author's front row view of Lehman's collapse might be the best, most understandable account  of the financial  crisis I've read.
    Mixed in with the Wall Street scenes and the baseball betting (connected more easily than you might think) are some great family stories about baseball.
    It's a really great effort from someone I would bet we'll hear more of in the future.

    2 out of 2 people found this review helpful.

    Was this review helpful? Yes  No   Report this review
  • Anonymous

    Posted April 22, 2013

    Further proof that sports betting should be used to teach statis

    Further proof that sports betting should be used to teach statistics...
    Great insight and analysis as to how an edge can be found just about anywhere. The authors critique of the Lehman Brothers demise was spot on and great to read an insiders account of events. His ability to weave together his personal story with insights into the gambling world made this a quick and easy read and I've already started using some of his modeling techniques for my own purposes. I'm not sure what the other reviewer was expecting, maybe a how-to-model, but what savvy investor/gambler would ever spell that out? Do some research/leg work / homework, don't expect to pick up a book and be handed a golden goose without doing any work. Its a great book for business and any sports lover, especially if you're a baseball stat-head.

    1 out of 1 people found this review helpful.

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  • Anonymous

    Posted March 14, 2013

    A last place book

    Title should be I won money betting baseball but i'm not going to say how! Author constantly refers to his "model" in making selections but never tells you how model was created or stats used. Pre-ordered and wasted my money. Where is B&N truth in advertising
    Tom C.
    March, 2013

    0 out of 5 people found this review helpful.

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