Issue 001 | Winter Break, Premium Players & The Transfer Window

Welcome to the first ever FI Blog! I’ve used up all my creative flair this year, so we’ll call it the ‘FIB’ for now. The FI newsletter may make a resurgence one day, but for now- the thoughts of Liam, FI trader and myself will be found here on medium!

We’ve seen some sublime amounts of money funnel into the index, particularly into the top 200!

I’m back and feet firmly planted in the UK until next year, taking over the scribe role from Liam!

Winter Break

Liam:
The effect of this one could be quite interesting, especially with the new in pay dividends only being valid for 30 days, which is a time constraint many appear to be taking very literally. Only the premier league doesn’t have some form of break starting between now and New Years, with the English teams playing another four fixtures between now and 03/01.

In comparisons, some other teams have significantly less. Barcelona, Real Madrid and PSG have just one fixture in that time and the German League enjoys a 24 day period of rest.

This could potentially see money move more into premier league players, not only for in play dividends but for reduced player pools for the regular performance dividends, potentially being easier to predict. Besides the Premier League, the Italians’ break isn’t until later and specifically AC Milan and Lazio have four games between now and the 29th making those teams to potentially look out for.

Another point to always note is that obviously, these fixtures need to be played at some time and in the future there will be periods where the foreign leagues look more favourable than the English ones, especially considering 30 day periods, and also keep an eye out for injuries in the Premier League, with this congested period often being the worst for sidelining players.

FI Trader:

The winter break has a significant chilling effect (see what I did there?) on prices particularly for performance based players. It stops people buying now, as they will want to wait for any drop to happen first. And it causes people to sell, fearing a drop.

This has also come at the same time as the January transfer window, and the share split mania, so it is little wonder that traders get some itchy feet if they want to chase some rises. As I will explain below though, whilst this can get you some quick wins, it sets you up for all kinds of risks later on.

But back to the winter break. Players will be dropping here whether they are any good or not. So whilst it is uncomfortable, provided we are confident in our selections, we don’t need to soul search too much if our foreign league performance players have been dropping recently.

I do not sell players I am happy with just because of a winter break. However, I will take it as an opportunity to offload any I have lost confidence in. For me, it is more of a buying opportunity. I never chase rises so it may be that players come back to a price that I consider good value.

It is possible to grind a little profit around the edges by selling well before and then buying back after, particularly if you have a lot of time to monitor everything closely. Because of the share split hype, this would have been particularly effective this year (but do not apply the rule to every break, not every break sees a drop, particularly when confidence is high). But it is far too late to do that now.

Because these drops are caused by a specific issue (the break) which will resolve itself rather than a lack of confidence in the player, it is reasonable to judge that the buying action will return once the breaks near their end. Particularly because many of these quality players are now available at a discount, and that will likely coincide with a time when the premium end of the market is saturated and people are looking elsewhere.

In short, these break related drops seem severe but they do not make me sweat at all. A good traders gotta have ice in the veins (second winter pun nailed). Chasing your own tail can be an expensive waste of time.

FIG:

I think it’s strange we’re discussing this really. We’ve had three international breaks in this season already, and therefore it’s all due to market sentiment that people are having doubts about buying X player or Y player. Uncertainty breeds doubt, but more importantly it gives traders a reason not to invest. Everyone has been victim to not being brave on the Index, and so those who use the winter break to accumulate (my plan) could be rewarded, but it’s most definitely at your own risk.

The phrase ‘self fulfilling prophecy’ certainly gets banded about frequently these days but I think it’s becoming more and more prevalent in the index community. The heard mentality, or almost a Chinese whispers effect seems to take place now in the FI community. You can say _____ will happen, and suddenly if enough believe it, rightly or wrongly _____ will probably happen. That’s what I think we’re seeing with the winter break. It could be a really good time to pick up some players that people are either binning off, or just haven’t seen much love. I can understand people selling their players of course, and I’ve certainly sold a few that don’t have kind fixtures. Then again 2–3 weeks is a long, long time on the Index…..when we return in a fortnight

Premium Players

Liam:
This is a subject we covered extensively in today’s Pod recording so I won’t completely repeat myself but it’s been a good period for many over the last week or so. I think there are a few questions most people questions many may be wondering:

Why now?
Well, it’s no coincidence it’s coincided with the share split announcement. Many are trying to stock up on those who are expected to benefit most from that announcement, which is primarily the most expensive players. I also think Adam Cole confirming there’d be no deposit bonus helped push money that was maybe being held back in speculation into the index.

Is it a good thing?
How beneficial it is for each individually initially depends on who they own right now. Those who own mainly cheaper players may be having a rough time at the moment as their players are being sold to fund the more expensive ones, but I think long term it’s a good thing for everyone. Historically, increasing ceilings have always resulted in those further down being pulled up eventually too, it has also seen money come into the index as you can see from the FOOTIE rising so much over the last week or so, meaning it’s not all just reallocation of funds, which again, long-term is always good.

FI Trader:

The Fear of Missing Out is in full swing here as people chase premium players ahead of the share split.

There is some logic to it because the share split is at heart a psychological trick to make top end players appear more affordable. Over time, that should lead to more buying but it isn’t an “instant win” and has zero effect on real value.

Many of these players are quality and deserve their price tag (although some really don’t). You aren’t going to be getting 100%+ returns as you can elsewhere, but you can be buying a hassle free solid income stream.

Problem is, if you are chasing these rises after the fact, you are just way, way too late. You might get a perceived quick win but you are setting yourself up for a host of problems in the coming weeks and months.

The spreads on some of these players are just crippling, and that is on top of the 2% commission. If you want to sell, it is likely you will be instant selling because demand will decline as the price climbs even higher.

You may want to sell in a week or two because it is very common for prices to dip after a big spike, and many will be using the expectations around the share split to flip these players. At that point, you will be seeing the value drop but feel locked in by the heavy penalty for spread and commission. That is an uncomfortable place to be.

Furthermore, this will likely be happening at the same time people will be wanting to get back into performance players (who now look excellent value) as the winter breaks come to an end. So many will need to free up funds again for that.

People will also realise that if Neymar looks cheap at £5 post split, your Suso’s, Thorgan Hazard’s and others who have been taking a kicking look even cheaper at £1 or less. It is not just the premiums who will benefit from the share split’s psychology.

The absolute worst thing you can do right now is sell good players who are dropping at their low to buy players reaching a high after a value spike.

A week or two ago, swapping those players would have been clever if you saw it coming. This week, it is lunacy. And even if you get a win from it (and gambles do sometimes pay off) it forms bad trading habits which will bite you eventually.

FIG:

I agree that whilst there’s no material reason these players should rise, once trader sentiment goes in a certain direction….it’s like a snowball, but a massive one that really causes carnage-devastating everything in it’s wake. It’s actually really interesting to see how far Neymar went without any money going into the other players. Take Messi for example….I would have presumed many would have compared his price to Neymar’s, and the two have risen/fallen historically together, so it’s almost strange money didn’t go into him at the same time.

The money has been taken out of the lower end because, it’s cheaper to do so- and I don’t blame traders for doing so. When people see green, they get greedy- that’s why I don’t think we’ll be surprised to see more than one £20 player, or even a £25 player on the index……you may scoff at it, but I scoffed at £15 and £20! So it remains to be seen where it goes.

What it does do however, is create a) comparative value with the index lower down and b) gives traders lots of opportunities considering some of the sell-offs are huge and in bulk. Is it time to go shopping? Maybe- I think in times like these it’s just good to take emotion out of the equation, trust in your own ability and stick to your plan. Accumulate those players that you believe will return dividends or rise, and keep on doing so!

Transfer Window

Liam:
Last January we were blessed with tons of transfer talk and even at least three huge moves. Van Dijk became the most expensive defender in the world, the Sanchez saga dragged on and Coutinho said adios to Anfield resulting in lots of media attention and therefore lots of index interest. However, considering we’re just two weeks from the market opening we have very little to get excited about right now.

Whilst rumours are inevitable, and often that’s enough to make a quick buck, I can’t see any huge moves coming off. I think Aaron Ramsey could be the closest we come to a saga that may result in a transfer as Arsenal look to cash in before he leaves for free. Pogba, of course, could see a lot of attention too, and if he continues to be frozen out the team may look to force a move but I can’t see him going in January.

Having said that, being in the media all of January then staying until summer could be great news for those hoping to hold and see a move in summer, attracting more media. I would just be wary at his current price because it is so media based, that if he does come out and confirm he’s staying or if he does actually go, the media could dry up and see him worth considerably less.
For now, a lot of this is of course speculation, and we will see what surprise January has in store, but I will certainly be keeping an eye out for any news as it will certainly cause some movement in the market somewhere!

FI Trader:

This is another factor contributing to the need to free up cash in certain areas to chase potential rises. This is quite normal for this time of year though and most will have anticipated it.

There are basically two things I do to profit from this.

First, I secured likely transfer targets from early season onwards, I don’t wait until December to pick them up because most of the value is gone. This works best when you can pick them up at a low price where there is little prospect of them falling much, but every chance of a big rise.

Those following my site will have seen me pick out players like Denis Suarez, Dennis Man and Cristian Pavon in this category early on.

But you can’t know all of them ahead of time. If a huge story like the Pogba transfer firms up, jumping on relatively late is no bad thing, provided you have the discipline not to hang in too long for those last few dividends. This only really works for the very big transfers though that will create a week or more of media buzz wins.

For the lesser transfers, I’d be very careful about jumping on late. You are just asking to get flipped on. If you didn’t get it early, just let it go.

FIG:
This is a weird one actually, as there hasn’t been a great deal when it comes to rumours. If you think about the top clubs in the EPL, they all need players bar City, maybe Liverpool? With Arsenal it’s defenders (3 or 4 would be great!), Chelsea clearly don’t fancy either of their current strikers, and have two aging wingers, United…..well, they’re a) linked with everyone anyway, and b) have a shocking squad currently and finally Spurs didn’t spend a penny in Summer, so maybe they’ll dip their toe in? So I think when it comes to transfer windows, my main advise is to look at the big teams, and look at where their gaps are. Then have a look at players they could target, and try and predict the rumours. It’s either that, or reacting really quickly when you see them such as Cristian Pavon (as mentioned by FI trader above). Also, if players leave certain clubs- look at their replacements internally! That can be really successful tactic.

Looking at Germany, Bayern are probably looking for the heir to Lewandowski, a centre back as Jerome Boateng doesn’t seem to fancy being there long term, and maybe a right back depending on where Kimmich’s future lies positionally. Dortmund as well…they have a real lack of depth in the forward areas if you look at them on paper. They’ve often started Gotze up top, as well as Guerreiro at LW so you’d think they’re in the market for some sort of attacking player- especially if you take into consideration Reus’ injury history! One thing to note is that the German transfer window is a lot shorter!

In Italy, I don’t think you’ll see Juventus dip their toe in, probably the same with Napoli (unless there’s any outgoings). I think eyes are on Milan, who have big injury concerns and only 2 strikers, whilst playing a 4–4–2….yep, that’s not the brightest idea! Roma have Monchi at the helm they probably won’t spend, and I think Inter had lots of incomings in the summer.

In Spain, well Barcelona need defenders….they’re starting Vermaelen this evening….enough said! They could also do with another striker, similarly to Bayern- it’s tough finding the right heir to your main number 9. They tried and failed with Alcacer! I don’t think Atleti will buy anyone, but Real Madrid…..well don’t be surprised if they throw the kitchen sink, but then again they may not trust the manager and perhaps wait till summer?

In France I think FFP will stop PSG buying anyone, and Marseille spent a lot in the Summer. Monaco, well they have about 1000 injuries so it wouldn’t surprise me if they looked for reinforcements! I don’t think Lyon will add anyone unless they have a major departure a la Fekir, Ndombele or Mendy.

Research, Resources, Tools & Tips:

• I made a Beginners guide thread on Twitter. Share it with friends who are on the fence about FI!
• Check out my video about order books and what they could look like on Football INDEX!

Content, Reading & More:

• You can watch a brilliant video from the FIG discussing share splits here
• Ep 60 of the FigCast- Index Legend and big Flipper Jay Gatsby rejoins the show
• Ep 61 of the FigCast- Football Index SOTD and our very own newsletter contributor Liam joins the show!
• Finally, Ep 62 is now out with FI CEO Adam Cole, CMO Mike Bohan and Product Lead Ciaran Rowan!
• Gambling firms agree ‘whistle-to-whistle’ television sport advertising ban: Article
• Stefan Kiessling’s Wife used to pass fitness tests for him haha!

Liam:
I’ve been working on a new venture of football Index content over the last few months with Football Index Edge founder Joel, which will include the launch of a brand new site from him, including a football Index section. There’s lot of content to keep an eye out for over the next few weeks including a football Index beginner’s guide ebook written by myself. Hopefully it can help compliment the great work FIG does for the onboarding process! For now though, a couple of the early articles have been released via Tipstrr that you can see here

FIG:
Let me know what you guys thought of the blog format! It will have some teething issues, so please give me any feedback you feel fit- even if it’s harsh! I will keep you updated on whether or not I find a newsletter alternative, but for now- this is where our thoughts will be!

Thanks so much for reading! More for you in a fortnight.

Have a great couple weeks trading.