This article is part of our NFL Observations series.
Don't Fight The Fed?
You hear this all the time in financial circles – yes, stocks are insanely overvalued in a real-world economy that's under severe distress, but so long as the Fed keeps rates near zero and bails out failing companies with low-interest loans, who's to say they won't keep going up?
But nothing only goes up, not stocks, not real estate back in the last bubble. In the short run anything's possible, but in the long run, fundamentals matter, don't they? As Benjamin Graham said:
In the short run, the market is a voting machine but in the long run, it is a weighing machine.
The problem for investors is two-fold: (1) We have no idea how long the short-run lasts; and (2) "The market can stay irrational longer than you can stay solvent."
I've found a similar dynamic while doing NFFC (and NFBC) drafts this year. For baseball, people were pushing closers up well beyond any value they could possibly return, but in an overall contest where you need all 10 categories including saves to compete, it was hard to avoid paying the inflated rate. (As it turns out, given how much closer attrition there has been early this year, you probably should have avoided the run altogether and taken your chances on the waiver wire, but that is typically a poor strategy when one bad category sinks your chances at the overall.)
In the NFFC, the same is happening for running backs. You love Michael Thomas this year? Great, but if you take him at pick five, you'll probably be looking at Tyreek Hill or Julio Jones in Rd 2, unless you're willing to take a TE or jump into the Melvin Gordon tier of backs. Either way, while Thomas might be the surest bet to return first-round value at that pick, you have to consider the running backs through which you'll be forced to sift in Rounds 2-6, while the Joe Mixon owner loads up on quality receivers.
The question then is how do we deal with inflation in our drafts. If you hold onto cash in the markets and money printing is inflating assets, your relative purchasing power declines unless and until there's a correction. But what if that correction never comes? What if the Fed prints the dollar into oblivion, and all that's left are hard assets? I've had similar experiences in drafts, waiting for running back bargains to arrive, only to see bargain after bargain at receiver instead for my competitors who had "overpaid" early.
The way I see it you have four choices. (1) Pay up for the best available running backs early even if you think the receiver is a better value; (2) Take the best receivers at a discount and hold your nose for the Le'Veon Bells and Leonard Fournettes of the world in Rounds 3-4; (3) Stubbornly refuse to give in to market "irrationality", load up on receivers and pay up with relatively cheap picks in Rounds 6-11 for PPR place holders (James White/Tyreek Cohen), partial starters who could gain playing time (J.K. Dobbins/Kerryon Johnson/Matt Breida) and high-upside backups (Tony Pollard/Zack Moss/Alexander Mattison/Latavius Murray); or (4) Take one back and one top receiver, stock up on receivers in Rounds 3-6 and gamble on finding the second back later and/or on waivers.
The merit of the first method is you have two solid backs (Nick Chubb and Kenyan Drake), say, and even though you're ceding a lot of points to the Christian McCaffrey and Saquon Barkley teams, you'll be able to get 3-4 quality receivers and can still take advantage in the unlikely event a good running back value appears. The downside is your team is structured like many others in the draft, and you don't have the elite backs, either. (If you take three or even four straight backs, you'll increase the likelihood you have an elite back, but obviously decrease the quality of your receivers.)
The merit of the second method is you have two elite receivers and never have to worry about deciding whether to start them. If the Washington passing game gets off to a bad start, fifth rounder Terry McLaurin vs. a later-round Breshad Perriman coming off a 100-yard game is a tough call. You might sit McLaurin right before he goes off, while Perriman has a dud. That's not an issue when you have Thomas or Davante Adams. The elite WR team leaves fewer points on its bench. And you'll still have high-workload backs in your other slots. The problem is instead of Chubb and Drake, you might have Bell and Fournette, both of whom could be flat tires on bad teams. As we saw from Bell last year, volume, below a certain quality threshold, is not enough. (Obviously, you might prefer David Montgomery and David Johnson to Bell and Fournette, so don't get too hung up on the specific examples.)
The merit of the third method is you're getting excellent projected production from all your top picks. You could have Michael Thomas, Tyreek Hill, Odell Beckham, Mark Andrews and Terry McLaurin at your WR/TE/FLEX and if you get anything serviceable at running back, you'll have a juggernaut. The problem is even the RB-heavy teams will be hunting for RB values throughout the draft, and you will have to get lucky to do better than a PPR- specialist for your second one. Moreover, even if a starter gets hurt, and you have the high upside back-up, there's no guarantee that'll happen in Week 2 rather than Week 8. It's great if you suddenly have a starting Tony Pollard, but it doesn't do you much good if you're team is 2-5 at that point.
Finally, the merit of the fourth method is you're locked into one reliable back, and you need only mix and match/hit on one other RB slot. Moreover, you still have excellent receivers taken for value in Rounds 2-6, and you can reliably start your top two without getting whipsawed by bad lineup decisions very often. If you have Nick Chubb producing nearly every week and good receivers, you can survive Tarik Cohen's 31 rushing yards and four catches for 45 yards in your other slot, while waiting for one of your backups to pop.
Personally, while it's fun to try the zero-RB route, especially when you get lucky on the running back values that fall to you, it requires too many things to go right. The one-RB, one-WR route is a good balance between value and giving the inflated market its due without caving to it entirely. Going all-in on RB early can also work because it increases the likelihood of having at least two high-impact starting backs, but good luck with those WR lineup decisions while you're waiting for your middle-round receivers to establish themselves – it's a recipe for leaving a lot of points on your bench. The worst method in my opinion is to cave on the RB inflation too late, when the choice options are gone and great WR bargains are to be had.
Of course, the easiest and best way to draft is to draw the No. 1 or 2 picks – take Christian McCaffrey or Saquon Barkley and feel great about the WR/TE combo you get at the turn. But those people are like the Cantillonaires actually benefiting most from RB inflation at the expense of late first-round drafters.