In Defense of Buying High and Selling Low
Taking advantage of the market, by diminishing yourself in the eyes of your opponent
Hey folks,
Original plan was to do a 3rd RB column this week with some film analysis to supplement the Hitchhiker’s Guide. That plan changed, largely because between the Sunday Drive and the Streamer Stock Watch, I’ve done quite a bit of micro-RB Analysis, and I figured it might be a little more helpful to send out an impromptu post (and maybe two — check back tomorrow AM) for my fellow dynasty virgins.
In Defense of Buying High and Selling Low
One constant we come across in the early-season, are major shifts in the buying power (i.e. market value) of a few players who either perform far above or below our pre-season expectations.
Two that stand out from Week 1 are Jameson Williams and Isiah Likely, but there are some others — the ‘late 1st’ group of Xavier Worthy, Brian Thomas Jr., and Ladd McConkey, all stick out to me as particularly big winners from Week 1. (Keon Coleman was too, though that’s been somewhat dampended by his Week 2 gooese egg)
In the early season I’m more inclined to buy high and sell low than the opposite — at least when it comes to young players with a lot of unknowns attached to their future dynasty value arc. Here’s why:
Changes in the Market
Years ago, the ‘Dynasty Bean Counter’ came up with the ‘face planter’ theory, which is that if a rookie’s dynasty ADP is lower by 12 spots or more on June 1st after his rookie year, compared to June 1st prior to his rookie year, they are a ‘face planter’ and you want to sell that player for at or near market value.
Historically, face planters are horrific bets in year 2 and beyond. And at the time of the Bean Counter’s initial writing on this subject, they were fantastic sell candidates because they often carried a lot of value relative to their outlook. A few years ago rookies were priced far lower in all formats, which suggested a consensus in the fantasy community that rookies should not be expected to produce much in year 1. If they did, they would sky-rocket up boards, but if they didn’t, they’d generally sit close to their rookie-year ADP. If you think back even to the 2020 draft class, players like Bryan Edwards, Jalen Reagor and Denzel Mims carried a good chunk of value as rookie year faceplanters entering their second season.
Generally speaking the fantasy community has gotten sharper about how to handle rookies, and they’re now valued far more heavily prior to their rookie season, which naturally lowers the floor for rookie from a value retention perspective. Additionally, the ‘faceplant’ theory has become such common knowledge in the dynasty community, that it’s become a bit of a Goodhart’s Law candidate: i.e. dynasty managers know that face-planters are poor bets, and are thus trying to off-load faceplanters because they are face-planters, which creates an compounding drag on their ADP, beyond what might have occured years prior, when these players were being valued based on the market’s perception of their performance in a vacuum.
Therefore, the nature of how the sophomore class is valued in a given year has materially changed. It used to be largely valued in two groups: those who excelled as rookies and saw their value increase to a large degree, and those who did little, and saw a minor fall.
Now, there are — broadly speaking — three groups: Group 1 is the studs, who accrue a ton of value from year 1 to year 2 (including some players who were already valued at an elite level entering year 1): think Puka Nacua, C.J. Stroud, Anthony Richardson, Bijan Robinson, Jahmy Gibbs, etc. Then we have Group 2, which are the players who flash enough in year 1 to hold or mildly accrue value, but who are not yet solidified as studs: think Jordan Addison, Jayden Reed, Jaxon Smith-Njigba etc. Lastly, we now have a Group 3 of outright busts who the community leaves largely for dead: Quentin Johnston, Michael Mayer and co.
In this environment, when it comes to rookies (and to some extent other young players we have limited data on), the incentives oddly favour buying high and selling low — something we’ve constantly been told not to do for most of our lives.
Buying High
When it comes to buying high, this is a classic case of ‘assymetrical upside’ I always preach about. Setting aside the Caleb Williams and Marvin Harrison Jr. type prospects, most rookies start the year with a valuation no higher than a Base 1st. This includes of course some prospecs who were pure dart throws, valued at a 3rd or a 4th. There is a degree of acnhoring to this valuation that is helpful in two ways:
First, when a rookie (or other young player) succeeds, there is a psychological desire that a lot of managers have to lock in a ‘profit’ from their draft choice. This is especially true of players who were viewed as more speculative assets. Additionally, there is always a lag in the fantasy market to value rapidly ascending players where it’s actually efficient to do so, where people often break ties toward those who have ‘done it’ over a larger sample.
Here’s the thing: it’s one thing to be skeptical about Alec Pierce going for 125 and a TD week 1 as being overly representative of who he is. To some extent, that’s even true for Jameson Williams (who is probably the most clear cut case of a Week 1 riser who has wide error bars on either side of his valuation). But it’s another thing to be skeptical of a rookie who — in his first few NFL games — starts putting up legitimately impressive production and/or peripherals. We should be rapidly shifting our priors upward on that player since the new information is so much more important than anything we previously had to evlauate them by.
The other benefit from this lag effect is that since so much caution is typically priced in to a young asset as they gradually move up consensus rankings, one or two weeks of a slow down typically doesn’t crater that player’s value: the lag effect works both ways.
So take for example Worthy, Thomas, and McConkey. It’s only been one week, but we now know they are going to be full-time players in Week 1, and have already demonstrated a certain level of aptitude in the NFL. Even with just one week, it’s almost certain that their trajectory is on an entirely different path than the likes of Reagor, Mims, Johnston, Skyy Moore etc.
This creates a floor at or near their off-season valuation going into next year. The fun thing with these players especially (and you can throw Coleman into this mix to some degree albeit it’s been a less impressive start), is that there is no obvious glass ceiling on their value. Worthy plays with Pat Mahomes — who can clearly support two elite young dynasty WRs if they are worth the tag. The other three all play with well-regarded young QBs, and have a plausible path to being the clear cut number 1 WR entering the off-season on their teams. If any of these four players hits a 99th percentile outcome over the next four months, they could be worth 2-3 Base 1sts of value in dynasty.
Meanwhile, the likely floor on their value is the late 1st valuation they held back in May, in the event they stagnate.
This is a very clean case where the impact if you hit on the bet is quite high, and the floor of the bet is rather secure. Go prioritize buying each of these players for 20-25% profit margins over their pre-Week 1 cost, and see what you can fetch. Even if in some cases you’ll watch that boost slowly atrophy, you’ve antied in cheap on a chance for massive, immediate accrual.
Selling Low
On the contrary, while I’ve long been a proponent of buying high, a recent change due to market forces is that I’m far more willing to sell low. As I discussed above, it used to be the case that you could more or less free roll an entire rookie season, and decide to sell after the fact. Clearly, that’s no longer the case: (see Johnston, Quentin). It’s a delicate dance, but by around Weeks 4-6 (it’s highly circumstance specific so try to value each player according to their own environment) it will likely become evident that some players are not going to be rookie year stars. At that point, the likelihood is that you have yourself a member of group 3, and while they may still join group 2, that keeps a capped ceiling on that player’s value for a while. At this point, I’d try to see if I can sell at 15-20% ‘loss’ from their pre-Week 1 value to someone who thinks they’re taking the long view.
Strategic Self-Diminishment
The helpful part of this strategy on both sides is that you are making a well-calibrated series of bets, but in each individual instance you come off as the reactionary party, and are presenting an opportunity to your leaguemate to present as the shrewder, more patient manager.
It’s difficult to offer a trade in dynasty without disclosing your intentions, which often puts you on the back foot of a negotiation. Many times dynasty managers are weary of looking foolish, and will often err on the side stasis when presented with a trade offer, fearful that perhaps you know something they don’t.
There is a certain benefit then to presenting a trade in which your intentions do not appear overly suspicious at all. “Hey, I’m the guy who wants the guy who just scored a TD last week” is pretty clear cut. In actuality, you’re displaying a keen insight that today’s price is not yesterday’s, and your ability to overcome the anchoring effect many fall victim to is actually to be admired. However, many leaguemates will instead view you as the village idiot who falls in love with the last nice play to pop across their TV screens.
Whether appearing to ‘panic’ on a poor performing player, or fall head over heels in love with the new hotness, you’re not presenting yourself as a shark to feared, but as a whale to be harpooned. It’s counter-inuitive, but in my experience it’s easier to buy an ascending player at market value than a descending one, since opposing managers think they’re taking advantage of you, rather than getting defensive, fearing they’re about to be taken advantage of.
Perhaps your plans for Friday night and Saturday afternoon invole grass touching. But if not, hop on sleeper and see if you can’t overpay someone for Brian Thomas Jr.