Buying Low on Underachieving Players for Profit on 1-Week Fantasy Football
Warren Buffett is famous for once saying, "Never overpay for a tight end in a head-to-head league on DraftKings," and I honestly couldn’t agree more with that statement.
A lesser-known Buffett quote is this one: "Be fearful when others are greedy and greedy when others are fearful." It’s even better than the first one because, not only does it fit in perfectly with the context of this article, but Buffett actually said it, too, which is a major bonus when crediting quotes to people.
Be fearful when others are greedy and greedy when others are fearful. Buffett was referring primarily to the stock market with that quote, which is relevant since weekly fantasy football is very much a version of a stock market. Stocks (the football players) have prices based on their perceived worth, and it’s your job to identify when perceived worth doesn’t accurately match up with actual value.
That’s why it can make sense to be greedy when others are fearful, and vice versa. Since the players have salaries attached to them and the price tags change as we gain new information, those salaries drop as the result of poor games early in the year. When the players do well, the prices rise.
When other DraftKings users are fearful on a player, it means he is probably underachieving. In a vacuum, that’s bad, but we aren’t dealing with things inside of a vacuum; instead, DraftKings compensates for underachieving players by changing salaries, which means the real value of a player isn’t only tied to how well he’ll perform in the future, but also how appropriately DraftKings is pricing him to do that.
Early in the season, there have been numerous situations in which DraftKings has been quick to drop the salaries for underachieving players (see Aaron Rodgers as the seventh-most expensive quarterback and Jamaal Charles as the sixth-most expensive running back in Week 2). It can be difficult to jump on players who aren’t performing well early, but the numbers suggest it’s the smart move if they’re dropping too far in price.
This situation is very much akin to Josh Gordon’s 2013 suspension. Prior to the news that Gordon would be suspended early in the year, he was priced pretty accurately in season-long leagues in terms of average draft position. He might have been slightly undervalued, but it was close.
Once Gordon was suspended, you’d think his value would take a tumble. Instead, it shot through the roof because his average draft position dipped way too far. The market overreacted to the suspension so that Gordon’s cost dropped much too far relative to his actual worth, giving him more value after a negative event.
On DraftKings, the player salaries are "the market," so we’re looking for situations in which the market overcorrects itself. I think we can find that on underachieving players on whom we were high to start the year.
The reason that buying low on underperforming players can be advantageous in weekly fantasy football is because there’s so much variance involved with the sport on a week-to-week basis. Even over the first month of the season, players will have just four opportunities to produce for you. Imagine grading a baseball player on his production just four games into the season.
When we go away from the crowd on players who aren’t producing – when we’re greedy when others are fearful – we’re basically saying, "Okay, it looks like there’s something here, but there’s so much randomness inherent to these early results that I’m guessing things will get better in the future."
The same is true for bypassing players who have overachieved early, too. A player like Julius Thomas might seem like a must-start right now, but that’s only the case if his cost – in terms of his DraftKings salary – doesn’t exceed his worth. If it doesâif the market has overcorrected due to factors that are at least somewhat random (like three second-quarter touchdowns in one game) and not entirely repeatable – then he’s not going to offer value.
Remember, we’re not looking solely at production, but production minus cost. When the market is quick to correct and costs are very much influenced by randomness, we need to be bullish on players who haven’t actually produced at a high level thus far (assuming we have good reason to believe that’s going to happen in the future).
There’s a lot of value in having a unique lineup in tournaments; with low-usage players, you leave yourself "outs," so to speak, so that you can recover from a not-so-hot start. If you have a poor start and you have only high-usage players left to play, you have almost no shot to win since other users ahead of you likely have the same players in their lineups.
Even though much of tournament strategy isn’t about pure value, it still makes sense to buy low on underachieving players. Not only do you get the benefit of a reduced salary, but many times those players are also low-usage, too. Other DraftKings users see poor play over the first couple weeks, get fearful, and overlook those players. Knowing that much of what we’ve observed through two weeks is just noise, you can and should take advantage of that fearfulness to not only obtain value, but also to create a unique high-upside lineup in tournaments.