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Royals Rumblings - News for August 18, 2020

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Kansas City Royals v Cincinnati Reds Photo by Joe Robbins/Getty Images

Greetings! Unfortunately, I have the Rumblings this morning, so if you woke up too early and need something to fall back asleep to, I am just your author.

First, some Royals related links

Fellow Royals Review author - and someone I might even call a friend - Hokius helped contribute to an intra-SB Nation piece about why the Royals have played the Twins so tough this season

The Royals have managed to shut down Miguel Sano and inexplicably see a lot of pitches from the Twins starters. Plus Josh Donaldson is hurt and Mitch Garver isn’t hitting against anyone, so far in 2020

The Royals are scheduled to take on the Reds this week, a team that had two games postponed last week due to COVID positive testing of a single player. As of right now, the series is still scheduled to happen

The Reds didn’t receive a definitive green light from Major League Baseball on Monday afternoon, but they haven’t had any additional positive tests and they are prepared to proceed with their trip Tuesday morning.

Alec Lewis over at The Athletic looks at the current struggles of Adalberto Mondesi at the plate

In the first series against Cleveland, Mondesi struck out four times in eight at-bats. After a game against Detroit in which Mondesi did not run out a pop-up that was dropped, Matheny suggested a source of Mondesi’s struggles at the plate.

“He’s pressing,” Matheny said. “No question. You can see that it’s in his mind about maybe not even wanting to get to two strikes and then getting real defensive. It’s only natural, too, to try to make up for that by trying to be overaggressive.”

Around baseball

What really gives left-handed pitchers their edge? (FiveThirtyEight)

Mark Grace faces justified feedback for calling his ex-wife a “dingbat” on live air (Awful Announcing)

Fellow Kansas Citian Jeff Passan looks around at the league from Mike Clevenger and Zach Plesac breaking team protocol during a visit to Chicago. Also Jeff details the fallout internally from the Cleveland club for the violations

Despite their production, 39-year-old left-handed reliever Oliver Perez said he would leave the team if Clevinger and Plesac returned to the roster in Detroit, sources familiar with the meeting said. Other players, sources said, felt similarly. Shortstop Francisco Lindor, the four-time All-Star considered the heart of the team, was outspoken as well, sources said.

Over at The Athletic, Bill Shea covers how sports-related spending has suffered due to the lack of federal help.

“It comes down to discretionary income. COVID is real and has real impacts. People are losing jobs. They’ve recalibrated the importance of sports and aren’t spending as much. Spending on sport has been curtailed dramatically,” she said. “When there is a limit in income, for most people sports spending will not be a priority.”

Across the pond - western this time instead of eastern - Yasuhiro Ogawa of the Yakult Swallows throws the 93rd no-hitter in NPB history, which will be old news by the time this posts given the time change difference.

Craig Edwards at the sabermetric mothership of FanGraphs rolls out the first ten players in their annual trade value series (no Royals players appear).

Softbank has been terrible when it comes to private equity, so maybe they should stick to just buying ownership in already public companies. As such, they’ve spent almost $4B on such stocks, sticking with mega-cap tech giants (which I fully agree is the place to be, historically).

Former US Fed Chair Alan Greenspan thinks the United States’ failure to handle the Coronavirus puts them at a competitive disadvantage to other countries (and China in particular).

Years ago, passive ETFs started gathering money flows more than their active mutual fund peers. Then, active funds had an edge in some alternative spaces like ethical, social, and corporate governance (ESG for short). Now, it seems like ETFs are winning in that space too given cost, simplicity, and low tracking error (how far a fund deviates from it’s benchmark).

There is probably a term for this but when academia publishes a paper that discovers some inefficiency in something, once that paper is published, that inefficiency is gone. There are a handful of groundbreaking research papers in finance done over the past 40 to 50 years, and maybe the most famous of them (and one that remains a fundamental building block of modern finance) was Bill Sharpe’s Capital Asset Prices: A Theory of Market Equilibrium under Conditions of Risk written way back in 1964. Since then, the alpha (excess return of something) has slowly disappeared. Someone points out “hey, there is alpha here!” and then the market goes and removes that alpha after awhile. Well, the same thing has happened to small cap stocks mostly after the seminal 1981 piece on their returns vs their larger cap peers.

But over the past decade the Russell 2000 index of US small-caps has returned just under 150 per cent, well below the S&P 500’s 203 per cent rise during the same period. So-called growth stocks have returned more than 400 per cent in the past decade, while the technology-heavy Nasdaq 100 has climbed nearly 500 per cent.

I know usually when my occasional rumblings duty gets assigned, I’ve got some long and boring financial tome to ruin your day before it really even begins. Today though, I don’t have much to talk about except for a bit of misanthropy.

I don’t buy into the efficient market hypothesis (I think they are more semi-efficient) but I do believe the market is forward looking and a leading indicator. However it’s tough to see how it is efficient, semi-efficient, or forward looking when despite the US daily death rate rising, dropping a bit, then re-rising, the market has just continued to rise and is close to an all-time high. Obviously, greed is a power thing and it wouldn’t be the first time investors shrugged off something that should be a heavy burden on the market. To be fair, the S&P 500 did go through the quickest 30% decline in history, taking just 22 days to do so March. Since then, it’s been nothing but liftoff despite COVID being nowhere close to being gone and deaths/cases rising again a few weeks ago (and having slowed down a bit since thankfully). Had the trend from May to July held, okay, I could see the S&P 500 rallying like it has because perhaps the US has gotten it mostly under control like many other developed countries. But as you can see above, early-July was just a breather before restrictions were soft-lifted in states, causing either a second wave or a revival of the first wave not yet fully abated.

I have a goal in mind with my investments: retirement. I know I am lucky to have a job that contributes to my 401k, I’ve got a pretty good understanding of how investing works, and I started young enough that I hopefully won’t be playing catch-up like so many other are at the age of 40, 50, or 60. And yet I think this knowledge brings out that maybe it feels like I’m profiting in a way during this? I don’t know, that doesn’t sound exactly like what is happening; I’m simply just putting money into my retirement accounts and letting the market do what I hope it does (go up). But yet, I feel somewhat conflicted that in what should be a period of deep and continuous negative returns due to crippling economic depression...most investors are better of now than they were six months ago and we aren’t even out of the recession just yet.

Every day the market seems to go against the psychological path I feel like it should be on (many thanks to the Federal Reserve) but my interest in rooting for it is the opposite of what I feel like it should be. I’m not rooting for the market to go down but that doesn’t mean I shouldn’t feel like it shouldn’t be going down. I don’t think investors should be apologetic (who are they apologizing to?) for seeing positive returns while the United States approaches 200,000 deaths in a span of less than a year but I do feel dirty about it. But what am I supposed to do? Go all to cash? Well that goes entirely against my long term goals. Stay invested despite feeling like I am profiting while others are dying? That aligns with my long term goals but scratches at my personal ethics a bit. Typically I’d say “go with the ethical thing” but I’m not entirely sure it is unethical to begin with as it’s not like I am jacking up the prices of COVID testing equipment myself. I’m simply just doing the prudent thing in putting away money for retirement.

I don’t know, it just seems like a weird time to be an investor, I suppose.