As we head further into the second half of the season, let’s quickly recap on the story of the season so far.
And check in on on how the Winter Strategy turned out 3 months on.
I always find this a good starting point for thinking about the next strategy.
At the start of the Winter Strategy, in November, we had just come off the back of an incredibly successful October and early season in general.
Most people had a good time during this huge rise for the market.
Let’s face it, to lose money in October, you would have had to make some very special decisions indeed.
But a Key Strategy portfolio would have had a much bigger rise than most.
Key here was the focus on identifying the best performance players first, through Scouting, and nailing the trend of performance suitable, big ticket players with Euro 2020 involvement before it was widely discussed.
In fact, many on social media back then would have told me this strategy was wrong.
For a week or so if I recall in early October, it felt like the only thing you could sell to anyone was a 16 year old Eredivisie prospect 3 years away from a competitive appearance.
That week made even me sweat a little.
In the end, from pre-season to October, it was the strong performers and particularly the elite veteran end of the market who had blown the kids away when it came to actual returns.
My Early Season strategy seems obvious now, it’s now the common mentality most people adopt. But back in early season, it wasn’t.
There were many who focused too much on youth, neglected the importance of dividend wins, and thought it was too early to focus on Euro 2020.
The market very quickly came around to my way of thinking due to the dividend increase, and the Euro qualifiers highlighting the extra value in these players as I thought it would.
The dividend increase, which was unexpected, could be called luck. I disagree – when you stick reasonably close to the actual win mechanics of the game, you tend to make your own luck.
This happens time and time again through the years because FI announcements and changes to the platform tend to benefit players who are actually good in FI’s scoring system, rather than players who are living on hype.
There was also no substitute for hard work on good Scouting analysis – identifying the best performance players before they started winning and everyone knew about it.
The difference in results when you are the person who sees the big score coming, rather than being the guy who buys because of a big score, is huge.
There are many examples in the analysis of pre-season predictions that show how successful site Scouting was at this. But Kroos is perhaps the best – he was the only midfielder that I awarded a to in my site ratings when he was priced at just £1.56.
We must also remember how crucial it has been to avoid the players who are clearly overhyped, or just hit an early big score that is unlikely to be repeated.
Again see the pre-season analysis for many examples of players who would have been all the rage on social media back then but have resulted in huge losses since. Brewster, Vinicius, De Ligt, Wan-Bissaka, De Jong, Moise Kean. All popular players pumped on social media at the time as “must haves”, all bankroll suicide in reality.
All of this meant that when the market realised that overpriced youth was the wrong place to be, and that they needed dividend returners ideally with Euro 2020 involvement, a Key Strategy portfolio was already there waiting to collect a massive pay day.
Strategy wise, that’s about as good as it gets.
But by the end of October, we needed to inject a bit of fresh thinking. The Winter Strategy had some key changes.
The big decision I had to make here was whether to continue as we were with a large core of strong performance players with what I called the “full season fit” or to try something different.
After all, there is nothing more satisfying than selling up your portfolio that has just reached a high, then moving onto something else that rises more later.
That worked in the sites very first strategy as we prepared for Summer last year.
But it doesn’t always work. Sometimes, when the market catches you up and buys your players up to high prices, there is no good trend shift to make and we don’t want to do that just for the sake of it.
That was the case here, and my decision to remain with “full season fit” players with performance strength as around a 60% core of the portfolio feels like the correct one a few months down the line.
Many of them have continued to rise nicely, and often for the right reasons like consistent performance strength, which means they are less likely to crash back down again.
But these weren’t players we could just buy and forget about either.
The best “full season fit” players look a bit different to November – we’ve had months of match data to evaluate since and plenty of things change.
That’s why I’ve spent so many hours on Scouting, carefully refining down to the very strongest full season fit players, adding new ones as they emerge like Brandt, and dropping any that fall by the wayside due to extended poor performances or a tactical change that hurts them.
There was a very important change that I made here though that turned out to be key.
Elite veteran players, with performance strength or at least IPD appeal were a powerhouse in early season, as discussed above, blowing away the youth end of the market on the whole.
The reason was simple: this over pessimism on age blinded people to the value the elite veterans offered, especially when the dividend increase hit. The over excitement for youth led to people paying too much for often weak players.
And when the penny dropped with most traders on this, they had to take expensive losses in order to chase the gains enjoyed by Key Strategy type players. This was the best moment of the season so far for me.
But, from October onwards in Key Strategy and State of the Market, I advised becoming much more cautious on elite veterans and starting to cash in on them as we headed towards Christmas.
Anyone who did this will generally have been able to exit these positions in elite veterans at or near their highs, before the savage drops the majority endured in late November and December.
It’s avoiding these predictable losses and knowing when to sell that can make the difference between a great season and an average one. Big profits are not just about who you buy. It’s about who you don’t buy and who you sell, too.
Full Season Fit players were just one part of it, though.
Early Season was a great time to just concentrate on this area of the market. But for Winter Strategy, broadening out seemed sensible.
I suggested a pick and mix for the remaining 40% of the portfolio, from the following areas (I’ve pasted the examples of each category I gave at the time below for interest).
- High potential youth, with genuine prospects
Stengs, Curtis Jones, Dani Olmo, Pedrinho, Aldulkadir Omur, Alphonso Davies, Martin Terrier, Leon Bailey.
- Quality underperformers
Brandt, Havertz, Eden Hazard, Thorgan Hazard, Corentin Tolisso, Suso, Cengiz Under, Calhanoglu, Demirbay, Dybala
- Transfer Prospects for January and Summer
Federico Chiesa, Bruno Fernandes, Insigne (maybe?), Moussa Dembelé, Kai Havertz, Sergej Milinkovic-Savic, Fabian Ruiz, Rodrigo De Paul.
Dost, Andre Silva, Belotti, Quagliarella, Paciencia, Plea
- 1-3 Premium Holds
Neymar, Messi (with a note about age), Sterling, E Hazard
The 60% Full Season Fit players I felt were essential, and I’d never have recommended anyone deviate from this if they wanted the best results this season.
That still feels right months later, it’s been key throughout recent months, and I expect it will continue to be so in the months ahead.
But this 40% is a lot more flexible and there are a lot of options here, with a wide variety of examples provided.
Looking at the examples now, they’ve mostly aged pretty well! (Special mention to Mr Fernandes since I’m enjoying watching him bounce again today!).
But these were just a handful of examples I used to illustrate the strategy discussion, plenty more options were covered in scouting and the various articles along the way like the October wonderkids series.
Performance in November to January
With 60% in the core coming from our full season fit performance players, and 40% coming from other areas of the market, it was very possible to make a good profit during November to the end of January on this basis.
But, January aside which has been a bit volatile, it’s been very much a “steady as she goes” period where some good progress has been possible, but not to the crazy extent we saw in October.
For the first time in a while, it has actually been a quiet and difficult market particularly during November and December, picking up only in January (but even that has been a tough time to navigate as it has been very volatile).
This has been a good test of trading ability. Any mug can profit in a month like October when the market is flying, though good traders will make more than others.
But the tougher times are when we can find something out about our ability as traders.
Are we still making some good progress in these tougher months like December?
Or are we taking losses that could have been avoided and then complaining about bad luck or the scoring matrix being wrong on Twitter?
We make our own luck.
When the market is tough, that is when the importance of avoiding predictable losses becomes very clear.
Think of our portfolio like baking a cake. We need to use as many high quality ingredients as possible for the best results.
If we used sawdust instead of flour and made the base out of Party Rings instead of digestives, we can add in some sugar to make it taste a bit better, but it’s still not going to be all that great. (I actually love Party Rings).
The point is, the difference between amazing results and average results is usually minimising losses by having a tight, focused portfolio that contains only your very best selections.
Two things were key to avoiding predictable losses in this period.
Firstly, using the Scouting information to sort the strong from the weak, knowing who has real quality and is worth their money and who is a one hit wonder or being over hyped.
As the analysis of pre-season scouting showed – this is crucial to making gains and minimising losses.
Secondly, the Winter Strategy advice on the full season fit and the end of season sell off fear.
Whilst I haven’t seen much direct “end of season sell off” chatter online, we have been seeing it creep into trading since November, particularly hitting the veteran end of the market.
I expect this to intensify in the months ahead, and hit all players too regardless of age if there is no reason to keep them around in late season and Summer.
The main objective of the Winter Strategy was clear – hit the end of January with a core portfolio of performance suitable players with a “full season fit” i.e reasons to hold them in late season, which can often be Euro 2020, a Summer transfer, and ideally European knockout involvement too.
This has allowed us to keep making gains in a tough market, as people increasingly move towards many of these players. It’s meant we’ve been able to avoid a lot of losses too.
And, it is the ideal position to be starting February 2020 in as we look towards the next phase of Key Strategy for February and March.
I aim to have this written up by either late Thursday, or possibly Friday morning and I’ll send out an email notification when it’s released.