It’s been an extraordinary couple of days on the market.
Since the Share Split, there has been a feeling of optimism. But there was not an initial rush in any particular direction, in fact, the reaction was pretty subdued.
People wanted to spend money. But they didn’t quite know where to put it.
In those situations I find that the result is that people put money literally anywhere that is rising. There are lots of people following and not many people making their own decisions.
There is pent up buying in this market. These short term rushes for highly priced England players shows that (what are people going to do with them buying at this price, with that spread, in 2-3 days?).
But I don’t want to get caught up in yet another Sancho/Hudson-Odoi debate, most people have their set view on that by now and the chips will fall where they may.
The take away for me is that following the dividend increase, it seems so easy for players to catch fire with the slightest bit of encouragement and good news.
The International Break will be over shortly and after that, all the talk will be of In Play Dividends and Media.
There will be some good short term profit to be made in In Play Dividends, there will be extreme cut price players to be found for skilled analysts who spend the time finding them. But I suspect the excitement for this to fade quite quickly.
What will really drive prices in the coming weeks is the excitement for the April announcement of special media bonuses for the Summer.
Whether this is a straight up boost to media or some kind of specific transfer game we don’t know, but it’s a far bigger deal in reality than a couple of qualifiers.
It could be a big few weeks.
Risers
England Players
The strength of this reaction is pure madness. I really wonder how long it will last. What do we know about these players that we did not know just a few days ago?
I think this comes from a desire to buy something following the dividend increase and chase a rise rather than the true belief in a long term hold. The next few days have media opportunities but after that, it could be messy.
Fundamentally, the next big thing is going to be Summer media opportunities and for many of them, they are not going to have many.
For those with transfer links like Sancho and Hudson-Odoi, well, holders had better hope they happen. The problem with paying this sort of money is that the pay off for being right is pretty low and the penalty for getting this wrong is now very high.
The ability and potential of some of them is not in doubt but this is fundamentally a market place. The price has to be right, not just the player, because the market will find the rational price eventually.
Iago Aspas
Here is an interesting one to pick out. It is barely making a splash at all but he has risen nearly 20% in the last week, eclipsing the gains made at the top end of the market by quite a margin in most cases.
He is returning from injury and expected back for the next game. Buying on Thursday made you eligible for In Play Dividends on potentially 5 matches.
For a goal scorer of his quality, with a price tag in the £1.50 – £1.70 range that’s not a bad opportunity.
And it’s not like he is an obscure pick. I think there will be lots of easy pickings like this initially for those who enjoy this sort of trade. (I tend not to go for IPD specifically myself).
But, from next season at least, I think the best known returners will have been bought up to higher prices and it will get much tougher to operate in this market.
This end of the market is also a trap for people who do not know what they are doing. It’s very easy to get flipped on. And many new traders are attracted to this by the idea that they are mining an untapped source.
But playing for IPD’s at the low end successfully is not an easy or quick buck, it requires strong analyst skills and a fair amount of effort.
Fallers
Last Weeks Big Winners
A fair few of last weeks big winners are dropping. Messi and Mané most notably. Dybala too.
I think this is a normal reaction when players are heavily bought in a frenzy. A lot of people were just following that hype and if you have that personality, chances are, you get bored when it stops ticking up and you want to jump onto the current hype train. There have been no shortage of targets for people with FOMO this week.
In a lot of cases I think it is a case of “zoom out on the graph” and check whether the player remains on trend and has strong prospects for the next few months.
It’s losing trading to let a small drop alone do your trading for you.
Hot Gossip
Philippe Coutinho
It’s been a dismal season for Coutinho. Although there remains some hope that he might recover his Barcelona career and he has had some pitch time recently.
Apparently though, Barcelona are willing to take offers of £90m and that feels affordable for a player of his calibre.
Manchester United are the biggest link and that would be huge, not just for the initial media but for the long term Coutinho vs Liverpool angle too.
Not to mention he is a potentially superb performance player given the chance.
Paulo Dybala
These links are gathering pace, including to the EPL with Liverpool the most likely destination. But he has no shortage of suitors and Real, Barcelona, Manchester United and Chelsea have all been linked.
Given the way he has been frozen out of the side, it feels credible.
He is an absolute top class performance player given the right opportunity. And if the EPL links did harden up, this could be absolutely massive. Not just for short term media buzz but for the longer term too.
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FIT