State of the Market
This week I am going to focus on two things: how January is shaping up so far, and the big picture of strategy for the coming months.
I’ll summarise the key points at the top for those pressed for time, with the detailed discussion below.
January So Far
The general expectation was that January would be a big month because of the increased advertising spend. I was/am optimistic for the month too but so far we are not seeing the free cash bonanza that many expected.
Last January was incredible, driven by the “Try January” offer. FI do not seem to be repeating that, if they were, they’d probably have run it for the whole month.
In expectation of January, we also saw a lot of people flood money into the market in late December, so it may be that a lot of spending was just brought forward as people tried to get ahead of the rush.
That rush has not materialised yet, and frustration may start to set in for some. However, I think the new traders are coming in from my personal experience. Certainly, in terms of twitter followers, emails and new joiners to the site, it feels to me like there is a lot of interest in FI right now.
As expected though, it’s a volatile market. The factors we discussed last week are responsible. It’s the transfer window. There’s very little real football until all the leagues spin back up from winter breaks. It’s been the FA Cup. New traders are coming in.
Without much real football to focus on, traders tend to get bored/chase their tails/fly off in odd directions chasing vague transfer rumours or Korean Messi or whatever it is. And if you are a social media pumper, this is your prime time as you expect new traders to come in and be easy to hoodwink.
All of this adds up to volatility – and there are some absolute garbage players rising in price in the last 7 days, it’s a poor quality bunch across the board on the whole. Although good players can be found. This isn’t unexpected as discussed last week.
Balancing this out, there are also plenty of players dropping, the majority deservedly so, some not.
Avoid Being Sidetracked
The main thing to be aware of in times like this is that we all should stick to our own strategies and our own analysis of the players. Whether they are rising or falling in a week like this tells you almost nothing about the quality of the player by itself, or how they will be doing in a month or two’s time.
The biggest mistake right now would be to outsource your decision making to an impulsive, short term minded market by overreacting to these movements.
As far as I am concerned, if the player is performing well as discussed in Scouting, and they fit Key Strategy, we’re good.
Hanging onto our money is key, so we need to make sure we are not taking avoidable losses. Older players have been dropping, this was foreseeable towards Christmas. It’s something I discussed as early as August in Early Season Key Strategy and Winter Strategy.
High risk transfer players like Haaland, Kuluveski. Piling into these when they were already popular was bankroll suicide.
Pogba is another example – his price is doomed as long as leaving the EPL rumours persist – price falls in him could have been easily avoided.
These are bad losses that we would need to cut out of our trading game.
If I lose a bit on a player like Kroos, Isco, Mahrez? This doesn’t matter to me at all provided I am happy they justify their price. They aren’t mistakes just because other people chose to sell this week, it’s what we think that matters.
The Rest of January
The chances of a January bonanza are looking less likely than they did a week ago.
It could still happen, I think new traders are coming in from my own experience. But we haven’t seen an instant spike and it will make people a bit twitchy.
Last week, my suggestion was to maintain an overall focus on the Key Strategy without getting too sidetracked by chasing short term January transfer or punts on well known EPL players (on the theory that new traders buy EPL players that they know – I called these “mug punts”).
The reason for not getting heavily involved with this stuff with a large portion of bankroll was because shifting strategy is expensive and it’s a bad time to do it. And in case January wasn’t as good as we thought it might be.
But a bit of transfer trading or early mug punt buying seemed sensible, in case we did see a rush in January.
After seeing the first week of January, I would now be calming down this sort of transfer/mug trading. A transfer trade which doesn’t have many bad outcomes (Like an Eriksen) is fine. But a punt on a player that has no value outside of the hoped for transfer is generally not at this late stage.
Likewise, if I am holding an EPL player I know is weak just because I think new traders might buy them, I’d probably be looking for a graceful exit right about now.
The Main Objectives
Months like January are tough to call even for the most experienced and skillful traders. All the uncertainty factors discussed last week make it very unpredictable for the short term.
More predictable are the longer term trends, so when I am uncertain of the short term movements, I will tend to focus on my strategy fundamentals.
I will be maintaining the focus on the Winter Strategy – which if you can boil down to one line is this:
“By the end of January, the majority of players in my portfolio should have good prospects for the rest of the season and have a reason to keep them beyond the end of the domestic season”.
I want at least 60% of my portfolio to be “Full Season Fit” players.
These are players with week in week out League performance strength who generally have Europa/CL action and Euros on top, or at least the prospect of a big transfer at the end.
I do not want any players that are particularly vulnerable to an end of season sell off. This is any player that has no reason to be kept over the Summer.
Very long term traders may say “I don’t care if they drop, I’ll still be holding when they come back next season”.
They will probably start to care a bit when the shorter term minded people start selling. Very long term holds like this are really only suitable for very passive traders, I think most users of this site (but not all) will want to optimise their results a bit better than that.
The elite veterans are particularly vulnerable to this, as I have been discussing in scouting.
Whilst I am quite firm on my “at least 60% full season fit” rule for optimal results, exceptions can be made.
To take Scouting examples from this week. I may decide Immobile has another month or two to run because of his strength and still reasonable price, even if he lacks European football.
I might give Chiesa a free pass on his poor domestic chances at Fiorientina because his price is reasonable and he has good Italy and transfer prospects.
For Curtis Jones, I might make an exception because he’s such a combination of actual FI talent and trend fit that I think a long term hold is actually the right thing.
There are always borderline players that can make us think a bit, but as long as we have a good justification for it we can bend these rules a little.
I think the best opportunities right now are away from the noise.
For me, the best transfer trading was stitched up a month or two ago and has probably been sold already as I discussed back then.
Mug punts can be fine but in truth, I don’t love the prospect of being lumbered with an unwanted player that I know is poor if nobody goes for them.
My main expectation for the next few months is what I call a “funnelling effect” where players who don’t have a reason to be in a portfolio after the season ends will start being sold early in favour of those who do. In fact, we have already seen this start slowly. It will likely get more obvious.
January is probably the last time this season where “full season fit” players can be found at good value, barring individuals fluctuating due to injury, extreme changes in form etc. Our main buying for this should have been done already as per Key Strategy.
But there is still time to buy some at value prices in many cases, with winter breaks, temporary losses of form etc keeping some prices down.
As examples I’d include Insigne, Ruiz, Goretzka, Brandt, Chiesa, Eden Hazard in this category but there are others too.
We should also think of what I call “combo” players. If having Euros OR a big transfer prospect at the end of the season is desirable – having BOTH is fantastic. This combination could really drive a price later on.
Bruno Fernandes would be a good example (forgiving him for an ineligible league, he at least has Europe), Ruiz is another. Milinkovic-Savic potentially too. Chiesa probably squeaks in here. Werner as well, he is now pretty much a premium option but he does justify the price tag.
These are all just examples – others exist for sure. The important thing is that I would not see myself going into the second half of the season without my portfolio having this sort of player at the core.
To do otherwise would work against the trends and we do not want to make life hard for ourselves.
I think it will also be more fruitful to think of the “next thing” rather than what is happening today. Next month we have the Europa and CL in action, and there will be a focus on both the big hitters as well as the talent from ineligible leagues that may one day get a transfer.
I’m planning a members article looking at some good player prospects for this shortly.
It’s been a quieter than expected start to January. That doesn’t mean it won’t change, I am still optimistic because I think new traders are coming in.
I still think there is some scope for a bit of transfer trading or speculative punts if we like that sort of thing, I do a bit of this with 10-20% of my portfolio at most times.
But overall, I think the big profits are not in chasing the market around in times like this. Rather, my focus will be in thinking about what will be happening a month from now.
The main objective is to prepare our portfolio for a great second half of the season.
If we end the month, as per Winter Strategy, with a portfolio full of players with every reason to hold them throughout the season and beyond, and have weeded out any that don’t, we are in a great position for success in the months ahead.
This will be the jumping off point for the next Key Strategy which will come at the end of this month.