Reply To: Effective Value Calculations Using Ownership Projections

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I think any serious DFS player has considered ownership in relation to valuation. I have started several models to project ownership….several failed attempts. Which makes the “rouge” FD employee even more infuriating. I offer the following considerations:

The Efficienct Market Hypothesis(EMH) states valuations in a market are always correct as all known information is baked into the price of the asset. Of course this theory can hold true as the term market indicates that pricing is dynamic and of course determined by supply and demand. DFS pricing offers a near inverse situation. Pricing is static and salary algorithms are simply linear performance models that do not consider all possible pricing factors. In this environment demand is totally forgotten and supply is infinite as theoretically ownership of a given asset could be 100%. Which is a long way of saying the pricing algos are highly simplistic and sharp money can leverage variations. The 1st step in leveraging the prices is to understand implied value in relation to a given model’s EV. The 2nd way to leverage static pricing is to understand what other factors should have been considered in the assets valuation. For example a hitter got moved recently to the 2 hole or an NBA player has been playing with a bad wrist. Both situations will be missed in near term pricing and mostly undetectable in a model’s EV and valuation calculations. The 3rd is to monitor on-going news and make adjustments accordingly as late as possible till lock.

To answer the initial post, it is impossible to be successful at DFS without a sound understanding of game theory. 2 years ago making your own numbers and having an idea of implied valuations was all that was required to be +EV. Today with sites like DFSDoctors, quality numbers are available readily to the public, as such game theory, lineup construction and being able to leverage static pricing are the new keys to being truly +EV.

Lastly, YES simplistic point/cost valuation models are not as holistic as they possibly could be. They still, however, hold great value in beginning to find the +EV players in comparison to implied values.

  • This reply was modified 6 years, 10 months ago by mlbmodel.
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