There are numerous methods by which one can go about choosing the stocks that will be included in their portfolio. One way is a so-called qualitative approach, which eschews the use of numbers to instead focus on the intangible aspects of the stock. The main problem with utilizing this method is that, inevitably, emotions start to creep into the investor’s decision-making, clouding judgment in the process.
On the other hand, some prefer the quantitative approach to picking stocks or other financial assets. The idea behind this tactic is to forget about emotions and let numbers and raw data do all the work for you. This is an approach that has come into vogue in more and more applications, with everything from marketing to entertainment dictated by the stats. The sports world, particularly baseball, is ahead of the curve in that respect. Those who are looking into investing and think that figuring out the way to go about it is a complicated process might find that, if they are fans of baseball, a lot of what they know pertaining to that sport and its statistics also applies to picking stocks.
Statistical analysis is just one of the strategies performed by crypto robots that can help if cryptocurrency is the preferred asset to be traded by investors. In the meantime, here are some ways in which the stats and terms that come up often in baseball make a lot of sense in the investing world as well.
Since baseball is played out over a long season, the statistics that are accumulated over that period of time can give viewers somewhat of an assumption about the likelihood of, for example, a batter getting a hit or a pitcher striking that batter out. In much the same way, average stock prices are a good way for investors to get an idea of the baseline of the stock and perhaps predict if any deviations from the norm are the beginning of a trend or an aberration before a return to the norm.
Baseball pundits often throw around the term sample size to explain whether or not results that have been achieved can be predictably repeated. For example, if a batter hits a home run once in four at-bats, it doesn’t necessarily mean he’ll hit 25 in 100 at-bats because the sample size is too small to make that leap in logic. In the same way, stock surges one way or the other should be backed up with a good deal of trading volume before they can be trusted.
In the recent revolution in baseball known as sabermetrics, statisticians have gone beyond traditional statistics to find the core results that really relate to what makes a player a successful one. In much the same way, investors shouldn’t get carried away with the face value of stock price, instead of inspecting below the surface for ratios and other calculations that prove how strong or weak a stock may be compared to that price.
These are just some of the ways baseball stats and stock numbers intersect. A working knowledge of one will certainly help you with the other.
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