Last week I published my guide to the bonus period for members first and then for everyone a few days later.
In there, I suggested that we would see the initial burst for obvious players, followed by a broadening out into some more medium to long term picks. And then a bit of nervousness Sunday/Monday as people worried about a pull back.
Broadly, that’s played out about as expected. If anything, there were fewer signs of nervousness as the bonus period came to an end than expected.
I also said that I did not think any pull back would be too severe. The combination of bigger spreads, and a further 5% bonus to come makes getting out of trades more expensive and gives a reason to keep your money in longer.
I certainly haven’t woken up to a blood bath on the market.
It’s still too early to really judge as I write at 9am and plenty could happen later, but so far whilst we have seen some drops in players, there are rises too (perhaps as people try to make use of the 5% bonus). And even better, the drops are (mainly) in fairly obvious over hyped/rapidly risen players as you would expect.
So, as per the Guide, it was fairly straight forward to avoid such players.
Indeed, much of the money going in this morning is towards some very solid choices so I am actually still making progress personally.
Of course, we should not be fooled. There will inevitably be people who need to take money out and that will happen gradually in the coming month or so.
But, it’s important to keep adapting to what is happening now, not just repeating the same formula that worked in the last bonus period. The market evolves and the circumstances are different.
For example, my key strategy (shared with members) for the end of last season was a storming success, but it’s going to be completely different come the end of this season. I won’t just repeat the method and expect it to work.
One of the biggest changes right now is spreads.
Bigger spreads make it more expensive to get out of trades.
We have to be more thoughtful when clicking that buy button than ever before because unlike the old cowboy days we can’t just get out of that trade for a minimal loss anymore.
There are increased consequences to making a bad decision. Whilst some people hate that, I think it’s absolutely essential for a healthy market.
It’s one reason why over time I believe the market will keep moving more and more towards the real win mechanics of FI.
It feels to me like the market is maturing and I think when the new website comes online, with Order Books all backed up by the reassuring professionalism of NASDAQ, this could get more and more apparent.
And another big factor here is the 5% bonus coming immediately after the 10% ends. This is designed specifically to cushion the blow and avoid a cliff edge. It’s smart and someone at FI had their thinking hat on.
So, provided you prepared well for the bonus period it should be possible to avoid most of today’s drops, and possibly even keep ticking our portfolios upwards.
I’d say fingers crossed but luck has very little to do with it, it’s good risk management.
Risers
Cengiz Under
Under is rising again as he nears return from injury, expected in early October.
Traders love to buy injured players after a dip at the moment, often correctly reasoning that people will buy them when they recover and it’s a “guaranteed” profit.
Is this sensible? Depends. I could write an article in itself about this and maybe it’s a useful addition to the guides section once I have a spare few hours.
It does often work however sometimes it can be a self fulfilling prophecy and it’s often a rise that I do not trust.
If we are buying hoping to cash in when the player returns from injury, and we know that plenty of other people are doing the same, how stable is that price really? It can become a race as to who dumps first.
Over time, people will learn those lessons and the trend burns itself out because once it becomes too popular, people will stop selling when a player gets injured because they know people will pile in anyway.
So, this is only a smart move in my view when a) the player is good quality and b) the price is at very good value factoring in the waiting time for them to recover.
Time is money so if a player is out for the season, buying now, even at good value and an “inevitable” profit later is still not good use of my money. It’s locked up for a long time and that’s not optimal even if I make a profit on his return. I could likely have done better.
However, back to Under.
In this particular case, Under has real quality and showed some excellent numbers in pre-season. He was a player I had high hopes for but the injury stunted his progress.
I expect to see him back soon though and if he replicates his pre-season numbers we can expect some good things.
You can’t say the £1.50 mark (now £1.60) is exactly cheap. However, in this market with what people are willing to pay even for poor quality young players, £1.50-£1.60 for a young player with real potential is not unreasonable.
Fallers
Paul Pogba
Pogba gets more than enough written about him but I think he’s interesting to cover as a good example of the sorts of market moves we’ve seen after the bonus.
Initially, there was a surge of buying and the top of the market and obvious targets tend to get the best of that.
However, it did not arrest the decline for overpriced players that were failing to deliver we saw in the month or so before the bonus.
Instead, that new money largely went to positive sentiment/recently rising/high performing players.
Pogba got an initial rise but has dropped back because the optimism isn’t really there. People expect him to pack his bags come the season end and whilst that remains true, his price is effectively doomed.
If you compare that to players who rose very significantly but have general positive sentiment, many of them are so far this morning holding onto their gains.
Neymar is a notable exception. I think people just see him as the instant target after a bonus because he’s considered “safe” so it makes sense that money comes out there. Overall though sentiment is positive on him so I expect he’ll hold up better in the coming days.