*GMs can sell high or buy low on players based simply on their recent offensive performance as measured by overall statistics.* In fact, regression analysis of FA contracts shows that contract AAV is weighted very much like plain-vanilla projection systems (e.g., last three seasons 3-2-1). So every GM has an innate sense of how a player projects based on his last few seasons, _all things being equal_. In order to successfully sell high or buy low on player offense, GMs need to go deeper into the numbers in order to determine which players might over- or under-perform their projections. Note that is possible to buy low on a player coming off a great season (e.g., Adrian Gonzalez this year) or sell high on a player after a collapse, if you have reason to believe he will regress _less_ to the mean than usual. You don’t have to be a “colossal moron” as a GM to have a poor sense of which players are due for unusually strong or weak course corrections, you just have to be one of the sizable minority that does no in-house detailed analysis. Numerous internet savants correctly pegged Nick Swisher as a good candidate to bounce back more completely than usual from his off year.

It is also possible to buy low and sell high because GMs as a whole do not accurately value an aspect of performance other than offense. As recently as four years ago defense was _absolutely free_ on the FA agent market (i.e., adding UZR or Fielding Bible Plus / Minus to a regression model with VORP and age added nothing at all), and it is almost certainly true that it is still undervalued. Baserunning is probably still pretty much free. Chone Figgins projects to have about $12M of hitting value next year, about $5.5M of defense, and about $2.5M just going from first to third on singles and scoring from first on doubles (at which he is the game’s best player). But he is not going to get $20M a year.

*The number of free agents at a position affects the price of free agents at a position*. This is wrong on many levels. Even if free agency were the only source of new talent, it would still be wrong, because supply would always equal demand. In fact, the supply vs. demand situation for any position during the off-season is enormously complex and highly volatile. There will be teams with two above-average players, usually one veteran and one rookie (e.g., when the Phillies had Jim Thome and Ryan Howard), teams with two starting-quality players — one above-average and one below whom they could keep as an exceptionally good reserve, teams whose starter is merely below average but consistent, teams whose best candidate has upside to be above average but projects to be below, and teams with nothing credible. Every GM makes his decision to move or acquire a player based on their own situation and the market. All it takes to turn a seller’s market into a buyer’s market or vice versa is two GMs changing their minds as to whether or not they want to make a change at their position. And every GM is making that decision based on their estimation of what they think everyone else will do. Some may even be spinning their situation in order to influence the market, e.g., Kenny Williams of the White Sox announcing that the newly acquired Mark Teahen will be his starting 3B when he is almost certainly a fallback plan against the failure to sign Figgins, Adrian Beltre, Troy Glaus, or trade for someone better. The only rule of thumb is that the market at any position is unlikely to play out as expected — witness last year, when none of the young catchers on the trading block (Saltalamacchia / Teagarden / Ramirez, Montero) were moved despite catcher being a position in demand. Very few people foresaw the collapse of the market for good-hitting, weak-fielding OFers.

Except once again, if there are 4 free agent starting shortstops, but two of the teams fill their holes with the Alcides Escobars of the world (so only two starting jobs needed), those 4 free agent shortstops have less bargaining power than if there were 4 openings.

And Theo Epstein basically just justified the Hermida trade with saying he was buying low. It’s a result of having differing subjective opinions i.e. the Sawx think Hermida is better than the Marlins do, but it’s still Theo thinking he is buying Hermida at the low point in his career.

-Dayton Moore, on Jose Guillen

“For example, if there are four good shortstops on the market this means that there are also four openings on teams”

Your response ignored that fact that this is incorrect.