A huge day for FI, no doubt.
The Matching Engine is scheduled to launch at 10:00 am as most will know.
It might not be an overstatement to call it the biggest practical change to the platform since performance scoring was introduced.
I’ll be running a Live Blog this morning probably until around midday.
Nothing specific planned – I’ll be watching the market, playing with the new Matching Engine and sharing thoughts as and when I think there is something useful to say!
This article is run in Live Blog format - so start at the bottom and work up!
As I sit here looking at my portfolio, I’m trying to follow my own advice from yesterday and get a clear idea of I want out and who I want in.
The “who I want in” part is actually easy. Well, not easy exactly. It took me dozens of hours of research! But it’s done. All the articles over recent weeks and months plus the Scouting has turned up plenty of targets.
My problem was that I didn’t have enough liquid cash to buy as much of it as I wanted to.
It’s frustrating to have players you think are great picks but not be able to get them – and that’s a feeling that’s going to be common to a lot of traders right now I suspect.
That may be about to change but in order to do that I need to sell, and that is where I have difficult decisions to make.
Coming from Key Strategy where I felt we needed more than ever to have a core of solid picks that can weather uncertain times (and with my usual tight selection criteria anyway) I don’t actually have many I think are outright bad or past their sell by date.
Around 10% of my portfolio I’ve flagged as players I want to move on, fairly straightforward.
Ideally I’d like to sell another 10% to give myself plenty of free cash to bid on players with.
But this is what I discussed in the Q+A yesterday – I’ll be having to sell decent players in order to buy players I think are better. Upgrades, basically.
And these are tough decisions.
For this bunch of players, given I am not desperate to sell them, I think it might be smart to spend at least a few hours looking at the bids that are being made.
It will probably be easier to make the decision when I can see the actual sell prices.
This is a mental struggle though even for experienced traders – this is new and it will be a learning curve for everyone.
For people who have stuff they are desperate to get rid of it is in theory easier but in a lot of cases they may find that player doesn’t move for anything like a reasonable price – if you are holding some real trash there is no guarantee that anyone will take it.
On the other hand, opinions vary very wildly and we may see some absurd bids for the most random of players!
I’ll be back to watch the market and experiment with the Matching Engine at the new launch time of 12:00pm.
To quickly recap – I think there are two main points to understand about the Matching Engine.
The first is that from a business perspective, FI Head Honcho Adam Cole has likely pulled off a masterstroke here. Ending their responsibility for buying unwanted players is heaven for them.
It may be the reason their credit score as a business is now better than ever, as I shared the other day.
And they’ve managed to capitalise on the corona virus circumstances to do it in a way that has caused minimal fuss and even turned it into a positive for many people.
Why do we care? Because in the end what is good for FI is usually good for us. We need a stable platform, and when it comes to things like dividend increases (which is reasonably likely perhaps in July/August time) it might mean they can be more generous than usual.
Again – this puts us on the right side of “lucky” if you own players who are strong dividend returners as they will naturally benefit heavily when and if a dividend increase is announced.
It’s another reason, apart from just the dividends, why I think having a “core performance” chunk of our portfolio as per Key Strategy is important.
The second thing about the Matching Engine is that this market is desperate for liquidity and we may be about to get it.
This could herald the start of what I have been dramatically calling “judgement day”. But judgement day will actually be a period of weeks.
What I mean by this is that we currently have a market that doesn’t really reflect how people feel about players. Values are stuck in places that people may have agreed with a month or two ago and life has moved on. But prices haven’t because nobody has been able to sell anything.
This means that we are very likely about to see winners and losers. The players that are unpopular will drop and the popular ones will attract even more money and rise even higher.
I deliberately used the word “popular” rather than “good”. Because it is often not the same thing! The level of awareness out there about who is really good or bad for FI is pretty damn poor.
This creates gaps that a good trader who really understands what things are worth and the trends ahead can really exploit.
There can also be a bit of frustration – we may know a player is good but not many others might, particularly in the absence of football because they haven’t had many chances to prove their quality.
So I expect mostly the bad to be sold but there will be some good sold along with the bad in my experience.
We are about to get more opportunities than ever before to exploit good player, trend and value knowledge. And by extension, we will have more opportunities to screw things up if we get it wrong!
FI is about to get a bit more complicated but good traders should have nothing to fear and everything to gain.