if it seems like qb’s are a good place to look for value, it’s because they are. you need to know why. what happens to tom brady’s price in the marketplace if he gets traded to a losing team with a weak passing attack? it goes down. his intrinsic value wouldn’t change, he’s still tom brady. the reverse is also true. what happens if alex smith is traded to the patriots? his price would rise before he even threw a pass. this is important to be aware of, so you can separate a player from his current environmental conditions and outside influences on the market price, and decide his true value. plenty of mediocre qb’s have had their prices rise as a result of their team’s success and plenty of good qb’s have had their price fall as a result of their team’s failure. here’s an example (2 retired qb’s career stats)…
player a: 197 td’s, 160 int’s, 59.3% completions, 32,838 yards, qb rating 81.9
player b: 212 td’s, 210 int’s, 51.9% completions, 27,989 yards, qb rating 70.9
which player is in the hall of fame? which is the better qb? if you said player a is the better qb and the hall of famer, then you’re right, sort of. player a is ken anderson and he is the better qb, but he’s not in the hall of fame. (not yet, but he will be.) player b is in the hall of fame. obviously, a lot of people think player b’s more valuable than anderson. which qb has more intrinsic value? anderson, he’s the better qb, there’s no way around that fact. player b played on the better team, his numbers should be better than anderson’s, who played on a weaker team. at the very least, their career numbers should be close, but they’re not, so anderson is the better qb. if player b had played for the bengals, he would not be in the hall of fame. if you could turn back the clock and put these 2 qb’s into the next nfl draft, which one should get drafted first? assuming that player b has a higher price, which one would you invest in when you consider the price versus intrinsic value? anderson, because he’s clearly the better qb and his price is lower. all you can do as an investor is decide on a player’s intrinsic value compared to that player’s price. investors have no control over outside influences on a player, but as an investor you can choose which players to invest in and at what price to buy. if you have a “margin of safety” you will be fine even if that player ends up on a bad team. remember, it’s assumed that the market will settle on the correct price in the long run. when the market realizes it’s mistake, there will be a correction and the player’s intrinsic value will set the final price. have players a and b reached this point yet? no, but they will eventually. player b is terry bradshaw. the marketplace values bradshaw higher than anderson based on the team results, not based on the player results. anderson had the higher intrinsic value, he had the better career, while bradshaw simply played on better teams. if anderson and bradshaw played in a vacuum and all outside factors were neutralized, anderson would have the higher price in the market. the reason? anderson had a higher intrinsic value, simply put, he was the better qb.
there are many factors that decide a player’s price in the market. prices rise and fall all the time, take advantage of this fact. many times the market misjudges a qb without allowing for the time it can take a young qb to improve, or the market assumes a qb is bad because his team doesn’t win, or maybe a qb is on a small market team so even when he plays well he goes unnoticed (this happens a lot in baseball). the most common reason given for why anderson’s not in the hall of fame is that he never won a superbowl. that’s ridiculous, however, it shows how important winning is to people. it’s like saying dilfer’s a hall of famer because he won a superbowl. it’s bad logic and winning a superbowl has nothing to do with being a good qb. it is the result of an entire team’s triumph in one single game, nothing more. the hype surrounding the superbowl is just that, hype. the market has placed an unjustified value on “winning a superbowl” and the market makes mistakes like this all the time. there are countless reasons why the market makes errors, study these reasons and take advantage of them. the market is quick to judge a player based on the latest results and it doesn’t account for anything as noble as intrinsic value. at any point in time, the nfl has qb’s that have a good “margin of safety” due to outside influences on their price in the market. there are times when a backup qb is loaded with intrinsic value and he simply needs the opportunity to start before the market will take notice of his value. rodgers, palmer, and leinart are good examples of this. the marketplace lowers the price on players if they’re not playing, regardless of their intrinsic value. this happens a lot with qb’s as they adjust to the nfl. if a qb’s fortunate enough to win a superbowl, his price rises in the market based on that one single game. consider john elway, he was not a hall of famer until he won a superbowl. after that one single game, his entire career became hall of fame worthy, yet elway’s intrinsic value hadn’t changed.
more intrinsic value?
these two cards are both from topps, 1973, and are graded psa 8’s. which card has a higher price? the price for anderson was $15 and $3 s & h and it went unsold on ebay on october 19, 2009. bradshaw was sold for $15.62 and $3.67 s & h on ebay on october 15, 2009. what makes this amazing is that this card is anderson’s rookie but not bradshaw’s.
1971 topps bradshaw rc psa 5
here is bradshaw’s rookie card. it sold for $53.52 and $5.50 s & h on ebay on october 9, 2009. not only does this card have an inferior grade compared to anderson’s, it has an inferior qb. bradshaw’s popularity and demand is a direct result of the team he played on. as a result of team success, the market has placed an incorrect price on bradshaw while overlooking anderson. as an investor, you have to separate a player from uncontrollable factors to decide on his intrinsic value. this is true with any position but qb’s often get false credit and blame for their team’s successes and failures, which can overshadow their intrinsic value.
