State of the Market
I’ve spent the last 2 days with my head buried in stats evaluating the performance of the site scouting and site strategy from June to now.
I wanted to be able to put numbers on it: How good am I really at picking players who go on to rise? Just as importantly, how good am I at highlighting when a popular/rising player is overvalued/weak and due a drop?
For some headline numbers:
The average value increase on a player I considered a strong FI prospect and matched my Key Strategy in pre-season was between 79% to 99%. Incredibly, none of these players would have made a loss if held from June - December.
The average value increase of players I was neutral on (i.e discussed some FI strength but questioned the value) was between 23% and 37%. 33.9% of these players will by now be in a loss.
The average value increase of players I considered significantly overpriced or weak for FI purposes was between -2.82% and 17.88%. 66% of these players will by now be in a loss. Bear in mind, these are popular players that were being bought and commonly hyped on social media.
Here, we are assuming that all we had to go on was my pre-season scouting from June – August including the opening match. And then it assumes we did no trading since August. Obviously, with all the tweaks since we could (should!) have increased profits significantly further than 79% to 99%. But this is purely a measure of how good the pre-season scouting and Early Season Strategy turned out.
I did this because it’s hard to account for every tweak I’ve made since as we see each gameweek go by and prices move up and down. And also, this is all about timing.
Everyone can now sort their historic performance data and tell you Kroos has been amazing. But could they tell you that in August when he was £1.56? Will they be able to tell you early if that’s going to change?
I knew the scouting and site strategy was doing well, the generous feedback from members told me that. But I didn’t know exactly how well, and every few months it’s good practice to evaluate what I’m doing.
There’s some fantastic stats and numbers to share here that will highlight just how good it’s been for those paying attention to Scouting and Site strategy.
I’ll quickly cover the current state of the market and the key points to bear in mind right now. And then I’m going to share more details behind the above stats and some other interesting stuff too.
It felt like a good time to look at these positives rather than over focus on the November gloom!
What should we do right now?
I don’t feel gloomy but from a run through social media I think that many do. I get it. People are used to things always going up and when the market takes a pause people panic. The self doubt creeps in. Am I doing anything wrong? Do I need to sell up? Should I do something different!?
When they feel uncertain, people become more susceptible to the siren voices on social media claiming this or that.
And particularly when a portfolio is dropping people want to take action although sometimes the best thing to do can be nothing. It really depends.
I would not expect a portfolio that is using scouting information and site strategy correctly to be dropping signficantly. I’ve made a bit of progress in November (just over 1.5%) but nothing spectacular. That’s ok at this stage of the season.
Individual players may be dropping, some of which are good and others poor. The two main things we need to worry about are:
a) Are these players good quality and likely to perform well in the coming weeks/months?
and B) do they fit our strategy (my Key Strategy or whatever you may be using).
If the answer to these things are yes, what other people are doing in the short term is irrelevant.
The only other concern is value. For plum Cornerstone 1 “full season fit” Key Strategy players (Kroos being the obvious example) they can carry the high price provided their performance strength and trend fit stays as it is.
I would not be selling them just because of a quiet spell. Factor in spread and commission and the likelihood of wanting to buy back later and it’s a waste of time.
This month really is the last month for general stocking up on “full season fit” players. I would not want to be shopping for Euro 2020 players just a few months away from the tournament because by then everyone will be funnelled in this direction (More through the fear of end of season sells off for others, rather than just the tournament itself).
I might trim a bit off the top of a bit hitter if I feel a player has risen so much they have become too big a % of my total portfolio value (5%-7.5% for me). That’s just good risk management.
For the genuinely weak players who have had an extended period of poor form that doesn’t look like changing (see scouting) or a reason you were holding them has now gone (i.e maybe the hoped for transfer is now fading fast) it’s a different story. Be quick to cut these off.
And be particularly mindful of the Winter Break as pre previous State of the Market updates. I won’t repeat that stuff here but as a guide:
At this stage, don’t try *too* hard to get into EPL players who will be in demand. Many of them are very overpriced so really only go for ones you are sure about. Either a premium with a reasonable price you would be happy to take into 2020 longer term (Van Dijk? Kane?) or punt on some cheaper from Scouting value (Iheanacho? Son? Angelino?).
Don’t worry too much about the Bundesliga/Ligue 1. If you want to keep the player keep them, selling for the winter break alone is generally not a good idea unless the spread is very low and they haven’t been dropping yet. If they have started dropping, but you still like the player, I’d stick it out. The winter break value hunters will be out soon buying back the quality. Speaking of which.
Winter Break Value hunting: There are good opportunities here, probably around the 10-14th of December is when I’d expect the drops to bottom out. By then there will be just 2 games left before the break in the Bundesliga and glumness will be peaking. When the glumness peaks is the best moment to buy any quality players who may have dropped.
I would do any of this buying in mid to late December. I would be very unlikely to be buying any Bundesliga players in January when everyone is anticipating it. Same goes for Ligue 1.
Let’s look at the site stats in some more detail!
I’ll tell you the method first, then we can get onto the tables and the specific players which is where it gets very interesting.
My method was this:
– Find the first decisive analysis of a player in June – August.
– Where I am clear that a player has strong FI suitability for their price their value at the time of the entry is noted and they are added to my “positive” list.
– Where I suggested some FI suitability but highlighted a significant drawback (usually price) their value at the time is noted and added to the “neutral” list.
– Where I am clear that a player is overpriced relative to their ability (hyped!) their value at the time of the entry is noted and they are added to my “negative” list.
– I added an extra filter to the positive list – removing performance suitable/value players that did not fit my Key Strategy (though I kept numbers for the “raw” list too).
– For all these players, I then noted the % increase/decrease in value both at their high and if still holding at the end of November.
– I worked out the number of dividends every player won for comparison. Amongst a number of other fun stats.
Notes to be aware of:
There is a range to the value change estimates (79%-99%). 79% is the price at the end of November where as 99% is if selling at an average high. It’s much more likely to be somewhere in the middle in reality.
Bear in mind – the market (as measured by the FOOTIE) is 37% bigger than it was in June 2019! So, if buying only the popular players I was neutral or negative on it is likely that were the FI market not so kind, that trader would have made a crippling loss rather than breaking even or making a small loss in this rising market.
Only relevant players as covered in Scouting are used. So all lists are made up of popular/FI relevant players and don’t include any random/niche players that would not usually be discussed in Scouting.
These numbers are draft and I’m getting somebody that isn’t me to verify them for accuracy in the next few days, so I expect a few tweaks.
Positive Scouting + Strategy Fit Players
Here is the table of players who I judged to be good performance players in pre-season, at a good value price at the time, and a fit for my Key Strategy. It’s sorted by the % increase at the high and you can also see the % increase if still holding today.
The price in pre-season is the price they were when they FIRST appeared with a clear positive statement from me in Scouting about their ability and value.
It doesn’t account for any changes since, so it’s as if I upped sticks in mid August and went on holiday until now without doing anything. (I hope members agree that I haven’t!).
So, we would have made tweaks along the way in reality, but for simplicity, I’m just assuming everything I liked in pre-season was held until now.
There are some tasty trades in here.
When I judged a player to be good quality, good value, and a fit with my strategy, the result was a profit 100% of the time.
The average profit is 79.5% if still holding at the end of Nov and 99% as an average high these players reached.
But in reality, some of these players would have been sold along the way, and we would have added plenty of new ones. This underestimates the results possible but just shows what would happen if we hadn’t traded at all since August and relied on my pre-season predictions only.
The total dividends these players have won since the season start is £2.72 which is sizable and would be added to profits on top. This is not including any IPD which is another addition. 59% of these players have won at least one dividend and the average is 6p each which is a decent strike rate.
For comparison, players on my “negative” list returned just 2p each on average and only 28.5% of them won anything at all.
Fun fact. The average age of the players who reached the highest % profit is 28!
This was at a time when 18 year olds and under were “the only thing worth buying” back in the Summer if you believed Social Media.
This is not to say that exact thing will happen again. But it does show that sometimes, doing exactly the opposite of what everyone else is doing pays off.
Not all the time. But when you have a good reason to believe the consensus is wrong – go with it. The focus on kids blinded many to the value available in the elite veteran category and spotting this resulted in some huge early season gains.
That’s not to say the kids were ignored at all – the strategy was just to focus on the highest quality ones.
All this means that as a rough average, if a trader was to put in £1k only to picks recommended in scouting that were a fit for key strategy, they would now have somewhere between £1,795 and £1,994 in the balance.
If they had £10k that would be £17,950 to £19,958.
This is not including any dividends.
And assuming they had done nothing since August which of course we haven’t.
Not bad for £3 a week surely?!
This table is the neutral list – players that I considered to have some FI suitability and potential in pre-season but also highlighted some significant weaknesses, usually the price or potential problems with pitch time etc.
There are still some decent trades in here that have gone on to do very well.
But overall, the average profit is now significantly down as we get into the midrange picks – 23% to 37%.
And on the trades that go wrong, we are starting to lose significant money. 33.9% of these trades ended up in a loss, with just 18.8% making 50% or more.
Bear in mind that the market rose by 37% since June so to be truly profiting rather than just riding the market surge, we have to be beating that. In the best case with this group, we’re probably in a loss overall here. And these are popular names.
Dividend returns in this category were almost the same as in the Positive fit category above on average (although Neymar accounts for a very big chunk!). Slightly fewer of them won dividends overall, 47%.
But the average return was around the same at 6p each. This makes sense as many of these are good players – I’ve just questioned their value at the time in most cases.
So, when I say I am neutral on a player, highlighting strengths and weaknesses – statistically speaking it’s a coin flip as to whether they go on to profit or not. Which makes sense.
For those who have read my trading guides when I discuss a “tight aggressive” style and only putting money in my best picks, not the 50/50’s, this is why.
These players can be profitable when you get it right. However I tend to just avoid these 50/50 picks altogether in favour of stuffing my money into the picks I am sure about (where a profit happened 100% of the time in the case above, and the profits were much greater as well).
Ok, this is my naughty list.
Not the worst players on FI by any means however these are the popular/well known players that had been pumped to high prices that I considered to be well above what they deserved.
Not necessarily bad players, and my opinion may have changed since pre-season. After a price fall I may well like some of them. However, the issue is often that they get too pumped on social media and people get suckered in by the hype.
The numbers don’t lie.
Of the players where I reported in pre-season scouting that in my opinion they were overpriced/hyped beyond their ability, 66% of them are worth less now than they were before the season started, despite a market that has risen 37%. Ouch.
Therefore, 94% of the players that I said were overpriced/hyped in pre-season have not risen more than the market.
The average value change was -2.82% or 17.88% up assuming selling at the high, compared to 79-99% for my positive recommendations that fitted site strategy.
On average, they won 2p in dividends each, with 72% of them never winning a dividend. The top 3 in the list account for most of the dividends earned.
And again most of these are one time popular players that were being bought heavily and talked up by their holders at the time, either out of genuine (usually mistaken) belief in the player or deliberately to draw people in to a player they knew was weak.
On Social Media people hate it when you “talk down” players. I understand why. I much prefer to be saying positive things myself rather than negative.
However, in the relative privacy of the members area, I would be negligent if I did not fairly evaluate players so that members can have these weaknesses flagged up to them.
And as you can see above, being able to judge who is overpriced avoids so many losses and means you can make the most of your money. It also keeps you in a good mental state because you aren’t taking these hits all the time.
Not only was it possible to avoid some of these crushing losses, consider the opportunity cost on top of this.
Money sat there even in a stagnating player, never mind a player that is going backwards, is money that could have been put into the Positive selections which have made profit in every instance.
Not only can you lose 25% buying an overpriced player, that money could have been put into a player rising 50% or up to 200% from the other list.
That’s a 75%+ difference in the outcome.
If you ever wonder why some people can make 200+% and some are barely keeping up with the rising market at 37%, these swings are the primary reason.
I’ve spent nearly 2 full days working through all this and I’ve found it really interesting to be able to put numbers on things I’ve been thinking of for some time!
I hope it also gives members a lot to think about too. I’ll talk about these more in the coming week.
It’s really useful to be able to put a number on how accurate you have been at various times, and it’s something I’ll keep tracking.
It gives confidence, and particularly when you are wrestling with a tricky decision, the key takeaway here for me is the reinforcement of my belief that if a player is making me think too hard – letting it go and focusing my money where I am most confident is the best thing to do.
Two health warnings on this piece:
This is a draft and I am getting someone to double check all the workings out behind it for me. But I wanted to share them with members as soon as possible. I’ll issue any tweaks as needed once they have been double checked.
Don’t read anything into how I have categorised individuals here! This was analysis of my views in pre-season and what happened since. Obviously lots has moved on since then, my latest views are as always in Scouting.