Second Most Powerful.

During the Kokuyo Arc the one with the least fighting experience of Tsuna's group is considered to be the second strongest in all of Namimori Junior High School. He's stronger than Gokudera, Kusakabe, and Ryohei all of whom have more, a lot more fighting experience than the baseball obsessed Yamamoto. So why is he second? Let's analyze his competition.

Ryohei, the fifth most powerful is a boxer, he practices every day and is constantly sparring with the other members of the boxing club. While Ryohei isn't skilled in real life combat, he's had a lot of practice and can defend himself. Kusakabe is the most powerful of Hibari's disciplinary committee and is pretty strong. He beats up delinquents and rule breakers on an everyday basis. Gokudera grew up in the mafia and has used his dynamite since he was a child, he's also had a whole lot of practice in both sparring and actual combat.

So, why is it that Yamamoto is ranked above all of them even though he's only used a sword when his bat transforms into one and has no actual combat training? It stems from something Reborn says later in the Varia Arc, about how Yamamoto is a 'natural born hitman'. Yamamoto doesn't need a whole lot of training because he's able to learn by watching others fight and through his experiences while fighting. So, while Yamamoto hasn't been seen as a fighter it is his natural abilities and talent that are recognized in Fuuta's rankings and have him listed so high as a fighter.