Topic: Moneyball, Soccernomics and Liverpool's transfer policy

[TSC]

The problem though is that the players we brought in to create those chances Adam, Downing and Henderson ended up creating chances for a team that got relegated and for two managers that are no longer with their respective Clubs. It isn't the number of chances that you create it is the quality of the chances that you create that counts as Jermaine Pennant proved.

Not much wrong with some of the chances we've wasted this season, esp at home.  Call it poor finishing, bad luck, great goalkeeping and prob combination of all 3.  Fact is we've created more than enough to have comfortably won most of those home drawn games.

[Rouge]

I am talking about why we didn't simply hold onto the Torres money until the summer and allowed Newcastle to hold us to ransom.

especially as he was injured and unfit for the remainder of that season

[Rouge]

Not much wrong with some of the chances we've wasted this season, esp at home.  Call it poor finishing, bad luck, great goalkeeping and prob combination of all 3.  Fact is we've created more than enough to have comfortably won most of those home drawn games.

would of, should of, could of!  The fact is the teams above us have the players which take these chances, when they are playing bad (see Chelsea), well (Spurs) or indifferent (the Mancs).
The main difference is the quality they have on the pitch

[Kidspen]

When did Tottenham sign Modric/Bale ? Top class footballers. They weren't in the CL ?

We just need to be better with our scouting and selections. There are plenty of good players across Europe who do not play in the CL.

Bale came from Southampton as a 17 year old and Modric took a season and a half to settle. Neither were signed as top notch at the time but are now very good players. Hopefully the young signings we are making will turn out to be like Bale we have to trust Comolli.
It's the quality player now I'm talking about.
Everybody knew Silva and Aguerro were class. We were interested in both but never had a chance because the cancers wouldn't back Benitez and Aguerro wanted Champions League.

[TSC]

would of, should of, could of!  The fact is the teams above us have the players which take these chances, when they are playing bad (see Chelsea), well (Spurs) or indifferent (the Mancs).
The main difference is the quality they have on the pitch

That was my original point.  Comments here are lamenting the loss of two midfielders when in reality its the finishing that has let us down, not the creation of chances (in most home games certainly).

[Sangria]

That was my original point.  Comments here are lamenting the loss of two midfielders when in reality its the finishing that has let us down, not the creation of chances (in most home games certainly).

I'm lamenting one of the arguments that were used to shift Aquilani in the way we did. I'd like to know if we still hold that attitude.

[BazC]

I am talking about why we didn't simply hold onto the Torres money until the summer and allowed Newcastle to hold us to ransom.

Better still, just told Torres to stay put. He scored 4 goals for us in the January, leading up to his transfer. He actually scored more goals for us in 2011 than he did for Chelsea... he wouldn't have played shite. Sulked around, maybe, but he'd have scored goals. And with Suarez around and with the money floating around, who knows, he may have regained the belief that he'd win things at Liverpool again and stayed put.

[Eeyore]

Not much wrong with some of the chances we've wasted this season, esp at home.  Call it poor finishing, bad luck, great goalkeeping and prob combination of all 3.  Fact is we've created more than enough to have comfortably won most of those home drawn games.

Adam, Downing and Henderson have all been played as attacking players and have three League goals between them. Adam has a penalty against WBA a deflection against City, Downing hasn't scored and Henderson has the one goal against Bolton. You need more than one trick ponies who will create half chances if given enough of the ball.

We put all our eggs in one basket and went out and bought players who had good stats for chance creation without realising that they only had good stats for chance creation because the teams they played for gave them plenty of the ball. We bought three players who dominated the taking off corners and free kicks and getting crosses into the box then when we put them together we expected that to continue.

For me Henderson is the only one who has the potential to be a starter for us if we are to challenge at the top end of things.

[Eeyore]

That was my original point.  Comments here are lamenting the loss of two midfielders when in reality its the finishing that has let us down, not the creation of chances (in most home games certainly).

You are not comparing the same thing a Aquilani or a Meireles cutting open a defence is completely different to a low percentage Adam, Henderson or Downing swinging balls into the box. The shorter the pass the more chance you have of converting it, that is what we have missed players finding the killer pass.

You can swing as many aimless balls into the box and complain when the keeper saves them or you direct them narrowly wide as you like but it is just masking the fact that we lack quality in the final third.

[Sangria]

Adam, Downing and Henderson have all been played as attacking players and have three League goals between them. Adam has a penalty against WBA a deflection against City, Downing hasn't scored and Henderson has the one goal against Bolton. You need more than one trick ponies who will create half chances if given enough of the ball.

We put all our eggs in one basket and went out and bought players who had good stats for chance creation without realising that they only had good stats for chance creation because the teams they played for gave them plenty of the ball. We bought three players who dominated the taking off corners and free kicks and getting crosses into the box then when we put them together we expected that to continue.

For me Henderson is the only one who has the potential to be a starter for us if we are to challenge at the top end of things.

Any views on the currently injured Bolton pair?

[bigbear]

Bale came from Southampton as a 17 year old and Modric took a season and a half to settle. Neither were signed as top notch at the time but are now very good players. Hopefully the young signings we are making will turn out to be like Bale we have to trust Comolli.
It's the quality player now I'm talking about.
Everybody knew Silva and Aguerro were class. We were interested in both but never had a chance because the cancers wouldn't back Benitez and Aguerro wanted Champions League.

Modric was deemed to be a very good player when he came. He was talked about a lot. There are others around now who could move to us and grow as players as Alonso did here and as Modric did at Spurs. We just have to identify the right ones.

We already have the basis of a decent side and with a quality midfielder (like say M'Vila, Martinez) to strengthen us centrally and a class forward (Cavani perfect) and wide player we would be in good shape. Hopefully Raheem can give us one of those options

We have enough defenders and depth there to last us 10 years at the back. It's the rest of the team that needs surgery now and we are only 3 players short from a good side.

[lionel_messias]

I am talking about why we didn't simply hold onto the Torres money until the summer and allowed Newcastle to hold us to ransom.

My view on this was that the January transfer window 2011 was the last window for which spending would NOT count towards FFP regulations - I think that is right?
So we wanted to bring another striker in and not dent our net spending power in subsequent windows AND presumably Kenny and the team thought Andy Carroll was a great prospect over a 5 year contract. Add to that maybe we saw the £50 million windfall for Torres as a one shot opportunity that was not likely to return....blimey we were right there!

[Eeyore]

Any views on the currently injured Bolton pair?

Kevin Davies and Tyrone Mears Nah not for me


I know you are a big fan of Stuart Holden's and I think he could be a good fit alongside Lucas but I don't know whether he is a big enough of a step up. Who's the other injured Bolton Player you had in mind ?

[bigbear]

Kevin Davies and Tyrone Mears Nah not for me


I know you are a big fan of Stuart Holden's and I think he could be a good fit alongside Lucas but I don't know whether he is a big enough of a step up. Who's the other injured Bolton Player you had in mind ?

Chung Lee or whatever his name is I guess ?

[Kidspen]

Modric was deemed to be a very good player when he came. He was talked about a lot. There are others around now who could move to us and grow as players as Alonso did here and as Modric did at Spurs. We just have to identify the right ones.

We already have the basis of a decent side and with a quality midfielder (like say M'Vila, Martinez) to strengthen us centrally and a class forward (Cavani perfect) and wide player we would be in good shape. Hopefully Raheem can give us one of those options

We have enough defenders and depth there to last us 10 years at the back. It's the rest of the team that needs surgery now and we are only 3 players short from a good side.

But do you really think that any of the three you mention, all good players agreed, wll come unless we get Champions League football which was one of the points I was making.

[bigbear]

But do you really think that any of the three you mention, all good players agreed, wll come unless we get Champions League football which was one of the points I was making.

Don't know - Suarez did. The first two will be on peanuts where they are and would probably double their money here. Cavani may fancy helping his mate out. There's only one way to find out.

Liverpool are still a big club.

[Kidspen]

Don't know - Suarez did. The first two will be on peanuts where they are and would probably double their money here. Cavani may fancy helping his mate out. There's only one way to find out.

Liverpool are still a big club.

Yes we are a big club, no doubting that but the best way to find out if they want to join us is to offer them Champions League football then there can be no ifs or buts. They either want to play for Liverpool or they don't.

[Coolie High]

Bale came from Southampton as a 17 year old and Modric took a season and a half to settle. Neither were signed as top notch at the time but are now very good players. Hopefully the young signings we are making will turn out to be like Bale we have to trust Comolli.
It's the quality player now I'm talking about.
Everybody knew Silva and Aguerro were class. We were interested in both but never had a chance because the cancers wouldn't back Benitez and Aguerro wanted Champions League.

Modric was top notch when they signed him, don't you remember his performances against England, he was a quality player from the go.

[Gnurglan]

I don't see Fenway as having some Machiavellian plan to leverage the Club or to look to sell it on for a massive profit. I just see that as safe staid owners who want  to try and grow the brand and the Club organically without risking their own cash. I see them as someone who doesn't want to deficit spend and wants a safe stable investment with a bit of sport thrown in for good measure.

I just don't see them having the balls or the drive to take the tough decisions and take the educated gambles that will get us back to the top. 

to be honest, I just want FSG to be the solid owners we can rely on. Owners who don't risk the club's future. The club will have to generate its own money. In our case with one exception - the new stadium. We need their help with that one.

If I bring this back to our player investments, I think it's fair that they have given us (= the club has generated) around 40M for player buys. That is a for us good level of spendings. We rarely spend more net. Our mistake so far has been that we have not bought well for the money we got from player sales. That comes back to our management. Only Suarez and Enrique are guaranteed first picks when everyone is fit. Add Bellamy, but the rest offer nothing unique. Harsh it may seem, but I think not too far from the truth. That's the key. FSG are not the main problem. They came in, all of a sudden we had money available, and we happily threw it away. That is the recepie for failure. That is what we need to fix first, then we can ask them to open their own accounts and gamble. Should they offer another 40M this summer, I reckon that is more than we can hope for, given our success rate in the transfer market so far.

[Kidspen]

Modric was top notch when they signed him, don't you remember his performances against England, he was a quality player from the go.

I concede that but Bale was only a youngster.
The real point I am making is that we will have a much better chance of buying quality players if we can also choose from those who want Champions League football.

[Gnurglan]

My view on this was that the January transfer window 2011 was the last window for which spending would NOT count towards FFP regulations - I think that is right?
So we wanted to bring another striker in and not dent our net spending power in subsequent windows AND presumably Kenny and the team thought Andy Carroll was a great prospect over a 5 year contract. Add to that maybe we saw the £50 million windfall for Torres as a one shot opportunity that was not likely to return....blimey we were right there!

What I don't understand is why having 50M in the bank would have been a problem. Wouldn't that have put our finances in a very healthy state, which would have allowed us to spend more in the next window?

Agree about the once in a lifetime thing. That was obvious, even back then. We don't make too many 20-50M deals.

[TSC]

Adam, Downing and Henderson have all been played as attacking players and have three League goals between them. Adam has a penalty against WBA a deflection against City, Downing hasn't scored and Henderson has the one goal against Bolton. You need more than one trick ponies who will create half chances if given enough of the ball.

We put all our eggs in one basket and went out and bought players who had good stats for chance creation without realising that they only had good stats for chance creation because the teams they played for gave them plenty of the ball. We bought three players who dominated the taking off corners and free kicks and getting crosses into the box then when we put them together we expected that to continue.

For me Henderson is the only one who has the potential to be a starter for us if we are to challenge at the top end of things.

Surprising you fail to make any mention in all that of our two strikers whose primary job is to finish and who are hardly prolific at finishing.  You may be correct in assessing only Hendo will make good longer term, time will tell.  But lets not gloss over the fact collectively we've missed loads of chances to put teams away this season - this isn't simply down to Downing and Adam - to simply name them in isolation is something of a scapegoat comment.

[B0151?]

I think in hindsight everyone would agree that we paid too much for Carroll, regardless if he does turn out to be a revelation. That's just too much money.
However, it shouldn't be forgotten that we wouldn't have held out for 50mil for Torres had Newcastle not kept on pushing up the price for Carroll. (Or so we're lead to believe) We got caught up in transfer day madness and the shock of one of our main names in Torres wanting to move. I don't think it's as simple as saying we should have spent the 50mil better when we might not have got that much but for our pursuit of Carroll. Bidding on deadline day allowed Newcastle to hold us to ransom and allowed us to hold Chelsea to ransom, it shouldn't be forgotten that the inflated prices for Carroll and Torres were for the same reason.

[Abrak]

I am talking about why we didn't simply hold onto the Torres money until the summer and allowed Newcastle to hold us to ransom.

Just from a theoretical point of view.

It was bleeding obvious that Torres was not worth 50m. We might have got 30m for him in the summer. So to the extent we felt he was say 15m overvalued we should sell him.

In order to replace we had a choice of all the forwards in the world. To the extent we felt that Torres was overvalued by 15m we would find it hard to buy another forward at a price that was overvalued by 15m. Unfortunately we did.

But theoretically if we felt that Torres was overvalued we should sell, instead of hoping that he will be equally overvalued 6 months later. If we feel that we cant buy a forward at a better valuation because they are all overvalued all it means is that we dont understand what value really is.

[Smug Cassandra]

Great thread. I think a massive focus needs to be put on Comoli now. FSG and kenny I am comfortable with. Comoli needs to be treated with massive caution. I think he did well clearing out but I am pretty worried by him. No evidence to suggest he will transform the club or even do a competent job. He should have been the guy saying don't buy Carroll by cavani instead and the guy saying dont buy Downing buy Oxlade Chamberlin. Eyes open people this guy should not be trusted.

[Devastatin' Dave]

To this day I still don't understand how something used in baseball can translate just as well to football. There are far too many variables which exist in this sport compared to one man standing at home plate with a bat facing a pitcher.

I've genuinely never understood why it's been accepted as something which would work, and signings such as Andy Carroll for £35m are the complete opposite of this anyway. I can see why it would work in baseball, and I think that's been proven, but in football it's a load of nonsense as far as I'm concerned.

I would agree, in fact the only team in the league which you could argue use a Moneyball-esque approach is Stoke.

I think to use something like this approach you have to try and create as many repeatable situations as possible (which is already there with baseball), which Stoke endeavour to do. So their style of play allows them to use statistics in a more meaningful way, i.e the loathed 'percentages football'.

[Nessy76]

Just from a theoretical point of view.

It was bleeding obvious that Torres was not worth 50m. We might have got 30m for him in the summer. So to the extent we felt he was say 15m overvalued we should sell him.

In order to replace we had a choice of all the forwards in the world. To the extent we felt that Torres was overvalued by 15m we would find it hard to buy another forward at a price that was overvalued by 15m. Unfortunately we did.

But theoretically if we felt that Torres was overvalued we should sell, instead of hoping that he will be equally overvalued 6 months later. If we feel that we cant buy a forward at a better valuation because they are all overvalued all it means is that we dont understand what value really is.

Are there really that many people who would prefer us to have Babel and Torres instead of Suarez and Carroll? Because that, in the end, is the end position of the deals we did then.

[Abrak]

I would agree, in fact the only team in the league which you could argue use a Moneyball-esque approach is Stoke.

I think to use something like this approach you have to try and create as many repeatable situations as possible (which is already there with baseball), which Stoke endeavour to do. So their style of play allows them to use statistics in a more meaningful way, i.e the loathed 'percentages football'.

Look the deal with Carroll had nothing to do with Moneyball and is a reflection of Henry's trading philosophies. The way he trades is totally automatic on the basis that you cannot predict price. If Torres is overvalued and you are offered 50m for him it is not the 50m that is interesting. He inherently does not think you can predict price. If Torres is overvalued by 15m you should trade even if you buy someone who is 10m overvalued because there is little evidence that price trends towards value over the short term.

So you cant sell your goal keeper if you cannot find a replacement because a) you do not know the value of the aggregate and b) you do not know that because you sold your keeper at an expensive price a replacement will be cheaper in the future (as an example if you take gold and sell it because it went up 3x it would likely cost you more to replace it).. If you find his investment theories irritating at least they are backed by stats as opposed to say Wenger who doesnt buy players because they are too expensive and hasnt done for many years.

BTW Wenger's theory I imagine is based on the incredibly high correlation between value and price over the long term. Still it aint much good if you have a team without a goalkeeper for 10 years because you think goalkeepers are overvalued.

[drpepe]

Are there really that many people who would prefer us to have Babel and Torres instead of Suarez and Carroll? Because that, in the end, is the end position of the deals we did then.

to just consider that pair of transfers is reducing the argument too far imo. It is the almost wholesale replacement of last seasons attacking players that appears to be the cause of the problem (the lack of goals problem, that is). Especially when a) attacking players have been sent on loan (and we pay most of their wages) and b) a good player has been sold to our competitor for 4th place. Is this 'moneyball'?

Not many a management team gets the opportunity to spend ~90-100m quid on 6 or so attacking players of their own choosing within a year, to fit their own ideas. You would expect them to reinvigorate the attacking lineup rather than actually being the part of the team that is most malfunctional - especially when these are 4 internationals (plus 2 relatively inexperienced players with big pricetags.)

[lionel_messias]

What I don't understand is why having 50M in the bank would have been a problem. Wouldn't that have put our finances in a very healthy state, which would have allowed us to spend more in the next window?

Agree about the once in a lifetime thing. That was obvious, even back then. We don't make too many 20-50M deals.

Its not the money in the bank that is the problem, it would have been the £30 million spend on a striker which would have been put against our revenue had we held this back until later windows if you see what I am saying. The famous -£15million transfer for Andy in that window would become SAY a £25 million deficit in the next one.

[Devastatin' Dave]

Would this then infer that our procedure in valuing players is rather off? As such our interpretations as to what is over or undervalued are incorrect?

[SkinHimHesShite]

Are there really that many people who would prefer us to have Babel and Torres instead of Suarez and Carroll? Because that, in the end, is the end position of the deals we did then.

id have took suarez and babel over suarez and carroll, plus i would have spent 35m on someone who was worth it.

[rola]

... a fit Aurelio every time....

That's an oxymoron, that is. 

[Nessy76]

id have took suarez and babel over suarez and carroll, plus i would have spent 35m on someone who was worth it.

Comedy gold.

[Nessy76]

to just consider that pair of transfers is reducing the argument too far imo. It is the almost wholesale replacement of last seasons attacking players that appears to be the cause of the problem (the lack of goals problem, that is). Especially when a) attacking players have been sent on loan (and we pay most of their wages) and b) a good player has been sold to our competitor for 4th place. Is this 'moneyball'?

Not many a management team gets the opportunity to spend ~90-100m quid on 6 or so attacking players of their own choosing within a year, to fit their own ideas. You would expect them to reinvigorate the attacking lineup rather than actually being the part of the team that is most malfunctional - especially when these are 4 internationals (plus 2 relatively inexperienced players with big pricetags.)

Erm, talking about last January. Keep up, la. 

[Abrak]

I wish you knew how intelligent and confident Henry is to make such an incredibly stupid trade as to buy Carroll for 35m. I know Comolli wouldnt or Dalglish. Only Henry would.

You have to understand his investment philosophy which is very famous and has been very successful. Essentially it consists of a number of  issues but 1) prices do not correlate with value over the short term and 2) over the quite a long term they actually trend (often away from value)

So for instance you cannot in the short term predict price. So he trades automaticallly. He doesnt say Torres was 15m overvalued so I wont buy a replacement because in 6 months time all the replacements might be 20m overvalued. He doesnt say well although Torres is 15m overvalued I cant find someone undervalued because in 6 months time Torres might be worth his value and others might be say overvalued by 5m. So he has to trade if the trade is to his advantage. In other words if we view Carroll + 15m as better than 50m we must trade even though Carroll + 15m doesnt look good value (but if we cant get better at the time we go for it.)

Essentially if prices dont correlate with value over the short term but actually trend you can only trade the differential not the price unless you are incredibly long term orientated (we all know there is a very high correlation between price and value in the long term.) Essentially what Henry explains is the irrationality of say the gold price movement.

If anyone made it this far I will admit it is very boring. But what you have to see is the fundamental difference between Wenger and Henry. Wenger believes in value and so will wait forever for prices to get cheap. Henry  believes in price. The value of Henderson to Henry is what we paid for him. People say we overpaid but is that because they know the market value? which is exactly what we paid for him? Or is it because they know the value of Henderson? And how? And why?

If you think about it how do you buy a player too cheap? Why would a club sell a player too cheap? All I would say is that we have owners that believe in doing things at the market price relative to value. You might not think Henderson is worth x and if we pay x+20% you might think we have overpaid but we 100% havent overpaid or we wouldnt have bought him.

So if we go back to Torres and Carroll, Henry's philosophy is that the two most stupid things you can do re Torres is 1) sell him,keep the money and reckon everything will turn out alright and you can 1) buy a CF cheaper in the summer (and BTW not be told that if you own a football team you should have a CF) and 2) assume that your overvalued CF will be at least equally overvalued at the end of the season.

And he also knows something else. If you think you know the value of a footballer you dont actually know what value is. Honestly would someone like to tell me the value of gold. And if there is no short term correlation between price and value, wenger is simply wrong, because the long term correlation is irrelevant. And that is why is you look at how we do business, we do business at pretty much any price while Wenger is waiting for the price to come right. And Henry has stats on his side - it was him that showed that prices were irrational.

[Abrak]

Would this then infer that our procedure in valuing players is rather off? As such our interpretations as to what is over or undervalued are incorrect?

I have no idea what quote you are refering to so I cannot say much, However I would say that Henry's natural inclination is to say that 'market value' is a very dodgy concept. Market price is the price at which the transaction takes place. The value we place on the player I would guess that FSG places a degree of confidence in our management. I very much doubt they are interested in what the market thinks the market value of a player is.

If you think about it if the market's value of a player was 10m and the market price was 10m how could you buy him at 8m. By definition you must pay above what is the markets valuation of the seller is stupid to sell him to you. And clearly you value him above the market or you wouldnt buy him. I would hope that we wouldnt buy a player at 8m that we valued at 5m because the market price was 10m. And I would actually be incredibly disappointed if we didnt buy a player we valued at 20m for 13m just because people felt the right price was 10m.

All it actually implies is that there is no such thing as market price apart from the price at which a transaction takes place. And there is not such a thing as market value only the value we place on something. And if we believe in the market we are simply being irrational.

[Giono]

to be honest, I just want FSG to be the solid owners we can rely on. Owners who don't risk the club's future. The club will have to generate its own money. In our case with one exception - the new stadium. We need their help with that one.

If I bring this back to our player investments, I think it's fair that they have given us (= the club has generated) around 40M for player buys. That is a for us good level of spendings. We rarely spend more net. Our mistake so far has been that we have not bought well for the money we got from player sales. That comes back to our management. Only Suarez and Enrique are guaranteed first picks when everyone is fit. Add Bellamy, but the rest offer nothing unique. Harsh it may seem, but I think not too far from the truth. That's the key. FSG are not the main problem. They came in, all of a sudden we had money available, and we happily threw it away. That is the recepie for failure. That is what we need to fix first, then we can ask them to open their own accounts and gamble. Should they offer another 40M this summer, I reckon that is more than we can hope for, given our success rate in the transfer market so far.

Agree. That is the type of ownership I expect we will get. I think the key is not the amount of money but how it is used and when. We bought before we cleaned house. Ya, the net was not huge, but they funded Kenny's buys first before selling on the deadwood.

As to how Kenny spent the cash, true that Enrique and Suarez are the only automatic starters. But Henderson wasn't bought to be one this season. He is the future. I think Carroll was expected to be an automatic starter, but he is young and only had short experience of premeirship football. Whether anyone rates either Big Andy and Henderson, the fact the owners supplied the cash quickly for two unproven youngsters is a good sign.

I would argue that what makes the spending overall seem a waste is the performance of Downing. He was bought at a steep price because he filled a glaring hole in our squad down the wings. He has failed and we still lack a wide player. It could be argued that we wasted 20 mil for Downing and got no return on that at all, while with Andy we got a 15 mil player for 35 mil. Getting nothing for 20 million for Downing is the bigger waste of cash. If Downing had performed near his value this summer's spending would be talked about in a much different light.

[DanA]

Really interesting post above by Abrak.

I would argue that what makes the spending overall seem a waste is the performance of Downing. He was bought at a steep price because he filled a glaring hole in our squad down the wings. He has failed and we still lack a wide player. It could be argued that we wasted 20 mil for Downing and got no return on that at all, while with Andy we got a 15 mil player for 35 mil. Getting nothing for 20 million for Downing is the bigger waste of cash. If Downing had performed near his value this summer's spending would be talked about in a much different light.

Truth be told from the start I thought Carroll was bought as a 20m player (performance wise) with 30m potential (future performance) plus marketing rights. We overpaid and there is no getting around that but if he becomes England's no.9 I wonder how much is that is worth in terms of marketing? A good looking English man as the face of the three lions has got to be worth something. 

[Driver 8]

You have to understand his investment philosophy which is very famous and has been very successful. Essentially it consists of a number of  issues but 1) prices do not correlate with value over the short term and 2) over the quite a long term they actually trend (often away from value)

So for instance you cannot in the short term predict price. So he trades automaticallly. He doesnt say Torres was 15m overvalued so I wont buy a replacement because in 6 months time all the replacements might be 20m overvalued. He doesnt say well although Torres is 15m overvalued I cant find someone undervalued because in 6 months time Torres might be worth his value and others might be say overvalued by 5m. So he has to trade if the trade is to his advantage. In other words if we view Carroll + 15m as better than 50m we must trade even though Carroll + 15m doesnt look good value (but if we cant get better at the time we go for it.)

Essentially if prices dont correlate with value over the short term but actually trend you can only trade the differential not the price unless you are incredibly long term orientated (we all know there is a very high correlation between price and value in the long term.) Essentially what Henry explains is the irrationality of say the gold price movement.

Either you've just posted something really interesting and insightful, or you're talking complete gibberish. But I have no idea which!