The main theme of the week continues to be the wave of hype for (often questionable!) young players. This is mainly due to appearances in the Europa or Champions League especially when they can face a weak team and look good.
Suffice to say, buying suitable players at cheap prices can be smart. Buying and holding them at big prices north of £2, particularly when they have no real strength, is losing trading. You are falling into the trap of traders who rely on you to behave in this way and the good hype traders will take profits on the naive.
Don’t become the true believer who really thinks that player will become the next big thing. Because 99% of the time, they won’t.
All trends do eventually burn themselves out and you can see the youth market getting saturated sometime soon. We are used to hype for some youngsters perhaps because they play for Manchester United or Barcelona.
But as traders get more desperate for targets they are really scraping the bottom of the barrel. The quality of player being pumped gets worse and worse. And then as we have already seen (but will see much more of) many of them start failing and dropping and even the true believers question whether it’s sensible.
Eventually, the player has to deliver for FI scoring or they fade and we have seen a lot of this already.
My advice is this: do not be the mug left holding that weak hype player at a high price. Not only have the best gains gone already, you are carrying the risk of a sizable drop to boot as people take their profits.
Those who want people to stay in the trade will claim they will rise further, but it just makes no sense to stay in when higher rewards at less risk are available elsewhere in the market.
Speaking of trends that can burn themselves out, something that people have asked me a lot about recently is IPD’s and how much more people are paying for IPD players these days. And how much more difficult it seems to be to flip them.
This is my perception too. I made IPD players part of my early season strategy because back in June/July/August in the off-season, many strong IPD players, particularly veterans (Lewandowski, Dzeko, Benzema etc) as well as some small club prolific strikers were at rock bottom prices.
I predicted they would rise because IPD’s significantly increased when the dividends went up last season, much more than other dividends did. But there wasn’t long enough left of the season for that to really sink in with traders.
I think it has now and as a result traders are willing to buy more IPD players, buy them at higher prices, and hold them for longer.
This is exacerbated by the increased spreads which are playing hell with short term traders who like to flip.
This has been great for those who bought them early who have seen capital appreciation and generous IPD returns.
However, for me, once a player goes north of £1.30 or so, they have to offer more than just IPD alone. It’s very hard to come in and out of trades at that price with a profit from IPD because the margins are so fine.
They can however add extra value to players who have other positive FI traits.
Generally, if buying for IPD alone I would want to be shopping under £1 maximum, ideally much cheaper. One particular area to exploit is the veteran category. They are at peak output and the lowest prices. And it’s often in the less fashionable areas of markets that good value can be found.
Risers
Fred
A rare strong performance from Fred as he racks up a 338 and a win.
(Bear in mind though that all the scores this week look much more impressive than they really are because of the x1.25 modifier on Europa/CL games).
This was significantly better than we can normally expect from Fred. Have his fortunes changed and made him a credible FI option?
I strongly suspect not.
Whilst he can be a reasonably high baseline player and get some points for long shots, they rarely go in. Nor does he particularly create many chances (Although he got an assist this game).
He can put up some decent passing numbers in the middle of the park, and this is what drove his score here with an incredible 138 passes. Now, if he replicated those numbers versus decent quality opposition it would be impressive. But this would be unusual for him.
It is much more likely that this score reflects the extremely weak opposition that allowed Manchester United 74.5% possession.
Beware the EL/Champions League performance score.
This week has thrown up many huge scores for unlikely players caused by a combination of a) early competition mismatches where teams can seriously dominate and b) the x1.25 modifier has been making scores look much better than they are.
It has also given strong players a platform to win from. But unless you read the underlying stats you will have a hard time telling the difference.
Fallers
Nicolas Pepé
Pepé was one of the biggest stories of last season. Indeed, he was a player I featured heavily on the site early last season and he certainly brought me huge profits.
He has really strong performance suitability but that does require the right environment in which to flourish. Had he gone to Bayern, I suspect the story would be very different about now.
At Arsenal though, it’s been a struggle so far.
I exited this trade around June at around £2.80 and am obviously glad I did as he has stagnated since. By reinvesting that cash, I have made more and more and the gains snowball.
I sold because I did not fancy him at Arsenal at the price. They are just not the best performance club and there was no way I was hanging around waiting for him to be the next Thierry Henry. I never become the true believer because as mentioned above, the true believer is the guy who gets mugged in trading.
It’s quite similar to the youth hype trend that exists now.
Yes we should buy players cheaply and ride the rise but at a certain point returns need to come to maintain that price. So unless you are convinced of the players strength and ability to rise even further, it makes no sense to hold on and be the mug other traders will take profits from.
Had Pepé gone to Bayern I would have stayed in, though. He does have real quality and could have won consistently there and risen significantly further.
Frustration is setting in for Arsenal fans. But I don’t think it is as bad as it looks on the surface. Whilst he has no goals and last night was his first assist, he is consistently getting shots away and creating chances.
And he has some good underlying stats to create some reasonable baselines. He is capable of a win and I think he will have better days once he settles.
He is still quite pricey though and I think the price may need to drop a bit further before it becomes worth the wait.