Outlook
Optimistic
State of the Market
Lots to think about after the dust settles on last week’s fantastic announcement.
The overall impact we have seen and should continue to expect is a renewed market focus on the genuine dividend returning (and potential) players. Naturally, this has the opposite effect on a lot of the hype/speculation players that were overheating.
Site strategy was doing well anyway, on account of many of the players from pre-season Scouting killing it in the performance scoring. As they win and score highly consistently, the prices crept up and up over the season start.
Regulars from pre-season Scouting like Depay, Gnabry, Griezmann, Ruiz, Coman, Insigne, Werner, Suso, Kroos were in high demand already on the strength of their performances, and the announcement that the dividends were increasing put rocket boosters under them.
These seem like obvious players now but check back just 3 months ago in pre-season Scouting and look at the prices of those players back then (pre-season Scouting is archived – link on the Scouting page).
Today I want to cover a bit about what to now do with those elite but now fairly highly priced players (I will flesh this out in the Key Strategy for the next phase of the season, November to end of January, which I aim to start working on tomorrow).
And, I’ll discuss the changes to the trends following the announcement.
This is a bit of a precursor to article to the new Site Strategy which will be out when it’s ready in time for November.
What to do with high performing elites?
If anyone has been paying attention to my Scouting they are probably well stacked with some elite performance players who are winning consistently and have acheived a high price, and likely sitting on some nice profits as a result having been able to pick them up way ahead of most.
But what do we do with them now? Have we got our price rise and should we move on? Or should we stick with them?
In the main, where they have the “full season” Key Strategy fit and continued performance strength, there are two main reasons why I see them as still being core holds to the November – January strategy.
Firstly, the large 57% dividend increase. These elites, particularly the big hitters who can put up 300+ and blow away opposition on a Gold Day or two, can rise further. Provided of course they keep winning. They won’t rise quite so dramatically. The higher the price, the more money it takes to move the price.
So, Kroos with his victory again last night, rose a relatively modest 20p (7.5%) and brought home a dividend. That may not be the 25% gain we used to get in a break out player but it’s a very solid increase even still. And, come November the dividend return will be much tastier too.
The second reason is that the trends will increasingly push traders towards players of quality with late season CL or Europa involvement and a Euro 2020 place. This is beneficial not just because they get all those extra games, the primary reason is that they will not have the same level of fear around a late season sell off as other players. They will hold value longer into the season, and keep increasing for longer on a) the strength of their consistent wins and b) the trend fit of this season.
So, I see no reason to be selling the crown jewels just yet, but I will definitely be revaluting that come February onwards, and I have not yet decided what I will do then. But I’ll keep members informed as my thinking develops as always.
There are some circumstances in which I would sell though. Chiefly, if any of the reasons I have outlined above stop being true. So, say a player of Kroos’s quality had a fundamental change that scuppered his performance chances (Zidane sacked, different playing position?). That might be a good reason to sell.
Or, if he lost his starting spot for Germany. Or picked up a major injury. So, these aren’t quite “fire and forget” options. They still need weekly monitoring. But broadly, my intent is to keep them whilst the reasons I’m holding them remain true.
This will be part of the Key Strategy for November – January but there are going to be other elements too, I think of the performance elites as a “core” that we will build around.
The Trends
17-21 Year Olds
Was:
Was:
The hysteria for unproven youth kids miles away from the first team has settled down, and should continue to do so. With the focus now very much on dividend returning players, this takes the spotlight away from them.
There is also only so much money in the market and if people want to shift towards strong dividend returners, the money has to come from somewhere. And it will come from here.
However, we should not think that youth players will not continue to attract interest and a price premium. They should attract some kind of premium, just not as much as in the past, there is nothing crazy about this per se.
It’s the massive over enthusiasm and the increasing desperation to scrape the bottom of the barrel for weaker and weaker targets that is crazy.
But, there will still be significant profits available in this area of the market and it remains a strong trend at 70%, just no longer overheating.
Much as I do anyway, it is more important than ever to stick to the ones that have a) real dividend potential and b) aren’t too far away from first team appearances (Perhaps 1 year away rather than 3).
24-27 Year Olds
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Now:
I now expect traders to be a little less negative on age, particularly the 24-27 age group which is actually the true optimal age for an FI Player in my view – developed enough to be playing regular football, young enough to retain long term value.
29 -31+ Year Olds
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Now:
Older players will continue to have a negative drag on their price, which is sensible since the risk of decline/retirement is real as is the lack of later resale value.
However, I think traders will become a little bit less concerned about age as a negative factor, particularly with elite veterans who bring home IPD and performance wins.
This has been part of my early season strategy anyway and it’s been another profitable avenue. I expect it to continue to be so.
My plan as per early season Key Strategy was to make money from elite veterans in early season but to look to move them on around November.
The dividend increase means I think holding elite veterans is possible for longer, particularly where they have the full season strategy fit including the Euros.
It may be we can get away with this until early 2020 now, and I’ll keep that under review.
European Championship Involvement
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Now:
I’ve long considered this important and it has been part of strategy even since the Summer. Some people said that was too early, I think it’s been exactly right.
It’s an important factor even now due to the qualifiers – I think it will become more and more important as the tournament gets nearer.
One key difference from this and the last World Cup – traders have seen eligible qualifiers now so will be using the historic performance scores from qualifiers to judge who is best for the tournament.
This means: it’s not as easy for the pump and dump merchants to overhype poor quality players as it was the ahead of the World Cup – there is some data to disprove it.
But crucially, there will be only a limited sample of games in the qualifiers, especially as there tends to be a lot of rotation at international level. People will read too much into these scores. Good performance scores in qualifiers now are important because they should result in buying later.
However, it opens up opportunities as through Euro 2020 Scouting, site members will have a much better handle on who the real quality is for the tournament.
January Transfers
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Now:
January transfers will start to pick up as a factor in the coming month or so.
It can be a big deal but this is a small window and it will be more likely that a small number of targets get significant speculation and rise – it’s not quite the big deal the Summer transfer window can be.
Most players will tend to move on at the end of a season if they are going to.
But, for those who do move, you can see strong market movements.
I’ll be spending more of my time on the Transfer Centre which has just been revamped in the build up to that.
Other Trends
Performance players are the main factor on the market right now, as they have been for a while. That’s great news for Site Strategy.
These players can continue rising but they will need to put up strong scores in order to do so. Particularly where they have a high price already, they’ll need to prove themselves consistent.
There should be a move to find value in the £1.50 and under range of the performance strength market ahead as I said on the Live Blog and when I have money to spend, that is where I would go at the moment.
There will also be a big premium, again as I said on the Live Blog, for the real big hitters who can consistently put up 300+ as we are seeing with Kroos. The ability to win Star Player on a Gold Day now and blow away the competition is a major pull factor. Other players like Parejo are benefiting too so any player who can not just win but win big will be in hot demand.
IPD players will probably have an average time since they did not benefit in quite the same way as others. That is not to say there is not value here, but I would really not be wanting to pay much more than £1.20 for an IPD player.
Finally
That’s a wrap for this week’s state of the market.
I still have a very positive outlook. But it’s important to note that we are beyond hype for a dividend increase now, we have one.
So, we need to refocus efforts on Scouting because we now need to continue getting consistent winners as we have been doing throughout this season. Players need to deliver.
That means monitoring our elites to make sure they will keep firing. And finding the value in the £1.50 and under range who can emerge as strong performance players too.
I’ll be working on the next Key Strategy in the background this week which will broadly follow the themes above so there should be no surprises. This one will be an evolution of the strategy we are using rather than a total change.
This is right and the continued focus on strong Scouting for our key advantage is where we want to be for now.
Come late season, I usually make some dramatic trend shifts but each year is different and I don’t just repeat the same formula in every stage of the season.
So we’ll deal with that then, I’ve got a strong idea of where Site Strategy should go from here until January and I’ll set that out soon.