State of the Market
The market saw strong early February gains, no doubt helped by hype for the Super Match Day announcement which, as per the live blog, turned out to be a fuss about nothing.
Since, it has gained consistently at a nice steady pace. It’s generally a pretty kind market to be trading in overall.
But, looking at who is rising and falling in February, it’s is really hammering home the importance of being on trend, with a lean, mean portfolio that doesn’t carry any obvious deadweight. That’s Objective 1 of the Key Strategy, and was even part of the last Winter Key Strategy too.
When Scouting all day yesterday, it was really notable how even the most elite veterans were having to battle incredibly hard to keep their price or gain value. They can do it, but they have to be playing out of their skin.
By contrast, a young player just has to breathe on the football and he can be bought heavily.
It’s very difficult to be selling players who are 28 and older right now.
This is very different to earlier in the season where performance strength on it’s own would carry a player to a very high price.
It’s also important to bear in mind though that age is not the only factor in play.
There are plenty of examples of young players at 20-24 who have been dropping too if they are the wrong young players.
And by wrong, I mean they lack the Key Strategy Full Season Fit or sometimes because they aren’t living up to the hype.
Since interest in Cherki and Haaland revived the youth trend, we’ve seen the typical thing that happens when a new trend starts, or in this case revives.
Cherki and Haaland, even though they are grossly overpriced by now, do have some merit. Haaland is likely an awful performance player. But he does look a good goalscorer. And that can be worth £2-3 on FI for the best of this player type.
But, they’ve reached high prices. The best of the rise is gone and most people know it. So the search for “the next” begins.
The problem with the search for “the next” is that traders scrape further and further into the bottom of the barrel until they are paying stupid prices for young players with almost no merit at all.
It starts with the gold rush. Then the gold is gone, the silver runs out soon afterwards, and then before long people are left holding up lumps of coal pretending it’s valuable.
I avoid falling into this trap, particularly if these players have already had a surge on the market. Whilst they can profit from the surge, their weakness is exposed before long.
We’ve seen this plenty of times recently with both the early October youth surge (which was quickly wiped out with the overbought youth end taking withering losses just weeks later) and the “flying fullback” craze too.
TAA led the flying fullback thing. But the search for “the next” led people into buying players like Chilwell too heavily, who then take a hefty climb down not long after because people realise they aren’t that great.
This doesn’t mean we shouldn’t use this trend for our advantage, we absolutely should.
Avoiding the Pitfalls of the Youth Trend
The first thing is to protect ourselves from losses. If we have struck it lucky with a player that is now the social media “must have” and we know they are at a price well ahead of their true value – statistically speaking the most profitable move is to cash in and move on.
A glance at my pre-season results tells you why – 97% of players I flagged as overpriced and overhyped did not outperform the market months later.
In fact, the 3 players of the 58 that defied my predictions when those numbers were taken in December have crashed severely since (Chilwell, Sabitzer, Abraham). Weakness always catches up with a player in the end.
66% of these players were worth less by December than they were when they were pushed as “must have” players on social media. When you consider the market rose by 57% over the same period, that is a staggering failure.
This is why we must not believe the social media hype and let it convince us to hold overpriced players too long. That fights against a lot of people’s instincts because people like to stick close to the pack.
But we must know when to take our win.
For the same reason, it is best to avoid chasing into players after their big breakout moment and a huge price spike.
We also must not make the mistake at thinking that an under 22 player gets a free pass on the market.
They absolutely do not.
There are plenty of examples of young players taking losses this week if they lack late season reasons to hold them, or are being exposed as weak performance players after a period of hype.
Don't Pick Fights for No Reason
The other thing we can do to protect ourselves is to avoid picking a fight with the youth trend.
Trends like this come and go. And they can be very stupid. But we need to respect them even if we don’t agree with them.
We’re not here to be proved right, we’re here to make money.
As per Key Strategy, we should be getting more critical on older players at 28+. It doesn’t mean you can’t hold them, but we need a damn good reason like a full season fit, a long contract, and confidence they will pick up where they left off last year.
28-30 is really not so bad if they are a very strong trend fit otherwise but be prepared to dig in.
It may take a while for that player to turn it around with some big displays, possibly on a Champions/Europa League Gold Day, or in the build up to the Euro 2020.
We can afford to keep a small number of these if we think they are strong enough, but we don’t want too many. A nice average age for our portfolio would be around 24 at this stage.
In early season many of the most profitable trades were in the 24-30 age range.
Profiting from the Youth Trend from here
There is no point chasing into the players that have already risen.
We are as likely to lose money as make it.
The most common outcome after the breakout period is prolonged stagnation before a slow agonising drop.
Unless you are dealing with a genuine world beater prospect that is FI suitable, and they are still in touching distance of £2/£2.50, I just leave it well alone.
But we can find the players that look a little bit like the players who have been rising but do it whilst they are still cheap. They don’t even have to be particularly good for FI provided the trend fit is right but if they are, all the better.
The market is buying young goalscorers who are poor for FI, traders have seen the examples of Haaland or Isak. But they’ve gone. Go for someone like Waldschmidt instead. Or even Boadu with the Europa in mind.
People are buying Cherki as a hot young French midfielder. But he’s over £4 now which is silly. So go for something like Aouchiche instead.
He’s £2.34 which is still quite high but he looks the better performance player of the two – he’s got a higher chance than Cherki of getting a big score when he plays and that can get him attention, pushing him closer to Cherki’s £4.
Or Trincao who is cheaper still. Pasalic. Stengs. Curtis Jones. There are many examples in Scouting of players as good as or better than Cherki for less money with further to rise when/if they breakout.
Know when to Love Unfashionable Players
Another opportunity I am increasingly on the look out for is back in the veteran end.
This is a slight contradiction perhaps but bear with.
It works provided the prices are rock bottom.
Traders are over optimistic on youth traditionally. They also tend to be way over pessimistic on older players. At least until something happens to prove that wrong anyway.
I made buckets of cash out of this logic flaw in pre-season to late November.
If what we are seeing continues, it will make value at the youth end very difficult to find, but could open up extremely good value at the veteran end again.
If the idea of buying older players right now gives you chills – that’s good – it’s exactly why it can be good value.
Once they have taken a big drop and stabilised, there is generally not a great deal left to lose and plenty to gain because they can win Gold Day’s and start to get traction again.
We might not be quite there yet on this, but I’m starting to see a few that might fit the bill. Kroos is getting there, Immobile may be soon. Luis Alberto might.
The low prices can also give us room for short term punts on them for CL and Europa Gold Day’s. Kolarov. Dzeko. Icardi. Di Maria. Mahrez. Dybala. Benzema. All capable of winning Gold Day’s and at low prices or getting there.
Whilst we can lean into these short term events like January silly season and the aftermath we are still seeing, we don’t want to overreact.
It shouldn’t pull us away from the Key Strategy main objectives.
The main immediate events ahead are the business end of the CL and Europa Leagues, and we should be well prepared for that. It’s a good time to revisit the preview articles on this, as it’s really not far away.
And we want to be looking at good potential Summer transfers now too. And we have some good potential players to watch after their January moves as well. Examples of both of these are in last week’s Transfers article.
And we can be a bit more long range with some more under the radar picks like in the recent article on high potential players under £1.50.
I’ll keep these articles coming because they seem to do a good job at fleshing out what exactly I mean in Key Strategy.
I’m planning one on underperformers this week – a look at player’s I’ve liked this season that haven’t worked out and whether there is still value in them.
We also know to expect various announcements and promotions from FI, though we don’t know quite what.
I’d be willing to bet that it won’t be a reward for players poor at performance scoring under 21 though. It’s going to reward players who are good on FI.
We also know that the most likely events to stage promotions around are the Champions League and Euro 2020.
So whilst we can’t predict what any promotions are, we can put ourselves on the right side of probability.
And if there is no promotion, we’re in a good place anyway, we aren’t relying on them alone for success.