Ok I think that’s going to be a wrap for the Live Blog! I’ve exhausted my supply of questions and my supply of useful things I have to say right now. (There were a few questions on very specific players etc I didn’t get to and I’ll reply to those individually tomorrow).
I feel a bit lost in details after all the blogging but we should end on the big picture stuff.
What an incredible night for FI.
If you flick to the bottom you can see I was expecting a 25% increase and only thought they would do anything bigger if they were doing it for purely marketing reasons and wanted to explode next season.
We got our answer.
This is the most mind blowing thing for me. A dividend increase was not needed.
I don’t care what some people say on social media. If they couldn’t see the value in the market it is because they either weren’t looking hard enough or didn’t know how to look.
But now? If it was value before and they doubled dividends anyway entirely for the purposes of a marketing push?
Based on pure economics we are going to see £5+ prices become common place beyond the top 25 players. If you are able to pull 30%+ profit from sitting in a player in just one season I cannot see a world in which money doesn’t come in to take advantage of that.
It will take months not days. But people respond to incentives.
And the incentives are just so obviously there now.
Goodnight everyone, thanks for all the questions, and thanks as always for continuing to support the site which 100% could not exist without you.
On the value of IPD players now.
Q: Big thanks for the content as ever and welcome back from your hols. Dividend increase is more than expected and it’s good to see some positivity surrounding the product for the first time in a while.
A: Doubled! Sounds ambitious. I’ll have to have a think about that and that’s going to hurt my head and take time because it’s getting late!
I suppose I should first point out that “IPD player” is a lazy shortcut. I use it to mean “Player you wouldn’t otherwise buy if IPD didn’t exist”.
It doesn’t mean that they can’t win match day dividends occasionally, in fact plenty of them do.
And the biggest problem with the phrase “IPD player” is that almost all good performance players are also IPD players. It’s a goals and assists centric scoring system.
So increased IPDs add value to any players who score goals, assist and get clean sheets and that’s worth bearing in mind. It’s particularly important when thinking about bidding.
If I sell you my Lewandowski after 30 days those Lewandowski shares are worth more to you than they are to me. You’ll qualify for IPD’s and I don’t anymore. So it’s passively uplifting the price of almost all my “performance players” (another lazy shortcut).
That uplift just doubled in strength. So that is good for “IPD Players” and “Performance Players” both.
So why did I think that an “IPD Player” was worth around 80p to £1.50 in the first place?
Assuming you are only buying an IPD player for IPD (shocking) you’ve got to pay your 2% commission. So assuming an equal buy and sell price my £1 striker needs to score twice in the month to break even and then anything after that is gravy.
That’s not uncommon. Ben Yedder is getting far too much attention and it’s not always my fault now – you mentioned him this time! But flicking through his stats here he would regularly bag 3-5 goals and assists in a month so when hovering around £1.10-15 as he tends to do he’s obviously value to keep refreshing.
And then if you are doing really well and riding his occasional spikes to £1.30/£1.40 you’ll be very quietly raking it in and almost nobody is noticing boring old Ben Yedder because they are distracted by the Bruno show or Sancho show or whoever it is that month.
However as we get to £1.50 for our player it’s not quite so attractive. Now we need 3 goals/assists to break even before we’ve even started to profit. So in a good month he gets 4 and we’ve made a penny per share. It’s starting to get less fun.
Above £1.50 we wanted a bit more. Lukaku is a great example here. Yes most of his value is IPD but he brings more to the party – occasional wins and a great trend fit with the CL/Europa/Euro 2021. So as he goes out of fashion and drops off I’ll be happy to pick him up at £1.60 or £1.70. But £2+? Meh.
But this is all old money now.
Let’s say our “IPD Player” hits 5 goals and assists in a good month which is ambitious but not ridiculously so. That’s a 10p dividend. Clearly at £1 we are loving life. An 8% profit assuming an equal buy/sell price which can go either way on us.
Commission hasn’t gone up. And In theory… with 5 goals you can still make 4% after commission on a £2 “IPD Player” in that month buy and sell price being equal. He only needs to score or assist twice to break even on your commission.
So. You are basically right. Doubling IPD does make pushing up the rational price of an “IPD player” viable and you’d certainly be able to go up to £2 now, maybe £2.50. Before I say £3 I’d have to double check my working out when I am slightly less tired.
It seems extreme to me. In theory that may be the rational value but I think in reality we are a long, long way from needing to pay that much. It’s available so much cheaper as things stand.
As a practical conclusion to all this theoretical talk – I see no reason to be going above £2 right now when seeking IPDs. We should try to stay under £1.50 because we can.
Of course – this all needs to go into context. We’ll want a reasonably stable player that isn’t going anywhere anytime soon because we need him to hold his value or near enough whilst we are messing around with IPD windows.
On what to do with new money.
Q: Hi, thanks for doing the live blog. I’ve been able to free up a cash balance so my question is – Spend the cash now on quality players highlighted in scouting or wait for scouting updates on pre season research before committing funds?
Q: If you were considering a 25% uplift in your investment after that surprise would you wait for sell orders to be implemented before investing all or some of it?
A: Tough first question.
Taking myself out of the equation for a second, should we ignore value targets that are there now or wait for any other value that may appear in pre-season or as we see squads for the new seasons?
I would say if you see very good value now just go for it. Especially because there is a limited break between seasons this time. It’s not going to be exactly like a regular year where we see lots of pre-season matches, a clear cut transfer window, a new squad, and lots of changes.
We’re going to see fewer pre-season games, fewer immediate changes, and coaches are going to have much less time to make radical changes. So that would lead me to believe that lots of teams are going to be starting next season in a similar sort of shape to where they finished.
In Ligue 1 we’ve seen lots of changes but they’ve had a longer break. Will the Bayern we saw last week be much different when the Bundesliga restarts though? Not likely.
More likely, we’ll see some new signings being introduced just before or in early season.
If you’ve got players you think are really good value now, I would just go for it. There will undoubtedly be new talent emerging and I’ve got a huge schedule of scouting up ahead in advance of the new season.
But we can always juggle later if we need to. I think letting too much balance sit on the sidelines in such a time would seem a bit passive.
As a general rule, (a rule which I have not been able to keep to in this rough year) I like to keep at least 5% of my balance free at most times so that if I spot a good player I can get them without having to sell something else first.
That’s something I’ll want to restore as soon as possible but right now, with so much clear cut value available, I have just put all of my portfolio value out there on the pitch to work for me.
I’d have a similar view on the question about whether to wait for Orders.
I understand that some may be wary of a bump after this. It may happen. But my overiding view is that there is just so much slam dunk, screaming in your face value right there that as long as you are buying players that aren’t overpriced you don’t have too much to worry about.
I would however avoid any hyped up players who have prices way above rational value that currently appear very popular but may be volatile. If any players take a hit because people get upset about Orders it will almost certainly be the ones who have been irrationally pumping recently.
Another on Offers and also the current market reaction which is well worth taking a look at.
Q: Hi FIT, I’m enjoying your blog as ever, good work. This is clearly an amazing announcement and of course, absolutely no complaints whatsoever. However, I still can’t help but feel that many people remain nervous about depositing until we see what Offers or the next phase or Ordersbooks looks like. That is certainly how I feel about it anyway. We’ve seen good rises today, particularly if you own Mr Messi, but nothing like what we used to see prior to the Matching Engine. Wondered if you had any thoughts on that?
A: Thanks! I really enjoy these Live Blogs mainly because it’s more interactive than usual. I’d like more back and forth but I also know it inevitably attracts the wrong sort of person who uses the platform to pump their players so I am yet to find a good way to do it regularly! Maybe one day I will find one.
Looking at the market, certainly we veterans who remember previous dividend announcements might feel a little underwhelmed given the scale of this announcement!
We’ve got nice rises sure. In fact it’s been a while since we’ve seen this many rises on Blue Button prices. But it’s less than has been in the past and the Matching Engine is definitely the reason for that.
More accurately – it is this current half breed system we have right now which is half Matching Engine half original system. These prices are just never going to get on well together.
The Red Button better reflects current opinion, although is on the negative side being the most someone is willing to pay. The Blue Button is a bit of a mess – a legacy of what people thought a player was worth many weeks or months ago.
When Offers come in – those two prices are going to naturally come much closer together as they will both reflect current opinion.
Not only that. Hitting that Blue Button feels like a bit of a mug move right now right? Most people understand that instinctively. You want a bid. You want to feel like you’ve got a player at a discount. It’s a little thrill.
So what I actually expected to see is spreads getting eaten up as people up their bids, rather than large Blue Button price rises.
That’s definitely happening – but generally only for players that are currently popular and probably had a reasonable spread anyway!
This doesn’t surprise me. I think certainly this soon after the announcement and particularly in this off-season period we are always going to see the most obvious/popular targets get saturated first.
Once people are done with that, they will get a bit more thoughtful and start looking further down the value chain, particularly as thoughts turn to the new seasons etc.
There is a reason actually why I have left it until a full 2 hours and 45 minutes after the announcement before I even looked at the market.
That reason is this: it really doesn’t matter.
Yes, we all like to see an immediate bump but this is a dividend structure that is going to support the entire season. Who rises tonight is not the ultimate winner of that long term game.
The ultimate winners will be the players who consistently show strength and desirability throughout the season to come.
So for me, Key Strategy is still Key Strategy. I haven’t made a single trade tonight and not just because the blog keeps me busy, I didn’t want to. Anything I wanted to buy (and could buy!) I bought already in advance.
But tomorrow I expect to have another look and see how spreads are. If I can now sell some players I wanted to move on for a better price I will and I’ll take that money to reinvest it.
The most important thing from tonight is what I discussed below about what a rational value now is. It is rational to say that lots of good players are going to be worth, really worth, £4-7. On pure economics if that kind of value is there then the money will come into the market to take advantage of it eventually.
So again – if we are wondering what to do the answer is simple. The same thing we did yesterday. Continue our never ending search for the best players at the best price.
Two questions I can cover together, which encourage us to look for the traps which is always a sensible thing to do at a time of mass hysteria. You are never more vulnerable/reckless than when you have just won after all. Klopp will say the same!
Q: Do you think this dividend review is extra good to soften the Offers (Matching Engine) which presumably are going to follow very soon?
Q: FIT, have you got any negative thoughts about the announcement – anything that we need to be cautious about? It just feels like a win-win situation. I don’t want to fall into my own trap.
A: Yes! To both questions. By profession I am a risk manager (or at least I was before this site enabled me to live the lifestyle I want!) so I tend to spend a lot of time thinking of ways things could go wrong and then trying to make sure it doesn’t happen.
In this case. It is a win-win. There is no point trying to find monsters under the bed when there aren’t. They’ve just given us more money for our existing investments. So nothing has immediately gotten any worse. It’s got better.
I’ll look at the market in a bit but I expect spreads are being eaten up and prices are increasing. And it’s all perfectly rational because the value is there to support those higher prices (for most players).
There are some that are still not brilliant value however and it shows how grossly overpriced they were before if this dividend structure still can’t rationally accommodate them.
Some people on social media will try to say that an already overpriced player is now worth even more but this is absolute b*llocks (can I swear on my site? It’s over 18’s so I think I can. Good to know). At best, they might just about be entering a reasonable price range again but by very definition that means that the players who were already underpriced are now even more so.
I think if there are negatives they are psychological.
Firstly – for bad traders – everytime they get bailed out by a big dividend increase they are then very unlikely to face any visible consequences of their awful decisions. This hurts them all the time because they will be getting lower profits than good traders. But as far as they are concerned, their social media pumping, youtube highlight reel following, 75 IQ trading is making them money.
And in these circumstances it’s very difficult for people to a) realise there is a problem and b) fix them before a tough time arrives.
And tough times will always come around every so often. We’ve had one recently but, fortunately, FI’s control of Instant Sell allowed them to switch it off and prevent a widespread panic.
I am also mildly nonplussed that FI have appeared to cave to social media whinging about “only” a 25% dividend increase. The problem with this is it’s like feeding cats. They’ll gobble it all up and be back the next day demanding more.
FI have just taught FI Twitter that the more they moan the more money they get. And that’s not necessarily a good thing. In a month’s time this increase will be forgotten by these people and they’ll be asking “What have you done for me lately Mr Cole?”.
I don’t like this attitude because it’s a losers mentality – we are the Captain’s of our own ship and we must look to ourselves to improve our results – not rely on FI to bail us out.
And as we see from the other chap’s question – the Offers end of the Matching Engine is just around the corner.
There is no doubt in my mind that this is an exercise in buttering us up for another bump which is going to be the introduction of Offers. It’s a good thing in terms of opening up liquidity and new ways to trade. But unless FI do something very creative (dodgy?) it is going to drop on paper portfolio values. And you can imagine the reaction to that.
In terms of what to do about all this?
We should feel confident overall. The dividends are massive and the value is there. But just don’t let hysteria tip us into stuff we wouldn’t do anyway. There is absolutely no reason to change strategy or do anything other than what we do anyway – sign up high quality players at the best possible price.
Question just in on Team of the Month. This is why questions are good because this is not something that immediately occurred to me.
Q: Interesting to note TOTM remains where it was. Still a nice thing to have, but effectively worth 1/3 of a Star Man Gold Day win. What’s your take?
A: A good point. Team of the Month did not take a hit. It’s exactly like Goalkeepers below. It’s a new thing that has very recently become a new source of substantial dividends.
However, in comparison, Team of the Month just became less important and there are no two ways about that.
So for example. A TOTM #1 player is getting 10p which is basically the same as winning a Silver Day. And the runners up are getting less than winning a Bronze Day.
When you lay it out like that… Yeah. TOTM now looks in comparison underwhelming. But that’s not to say it’s bad. I like the concept and the thing is it is not something you play specifically for. It is going to be the players who are winning Gold and Silver days that are also bringing in Team of the Month dividends.
So it’s a snowball effect. Get your big hitter into a run of CL/Europa/League games and cap it off with a Team of the Month? Lucrative.
It’s basically additional money that is flowing to holders of good performance players so I won’t complain. I would expect this to be bumped up later on though because it now does seem soft in comparison. This might be a little misstep from FI.
So. Rational values in the new structure.
In advance of the last dividend review I did a spreadsheet exercise. I started with an average of the level of dividends players of different levels of ability can realistically win over a season.
So for example I think it’s reasonable to expect a player I consider to be or in my performance rankings to pull in somewhere around 50-75p in performance dividends in a season under last seasons dividend structure.
These are after all the very best players on FI. And I was looking for perhaps 2 Gold Day Star Man’s out of them, plus a couple of silvers or maybe 5 Silvers and a Gold. Basically reasonable, conservative estimates.
Then I factored in additional value for media for those who can reliably get it. And added a value penalty for players as they get older, which got particularly harsh as they went over 31 to account for limited resale value.
I then worked out a “minimum rational value” for a player, assuming nobody sane would hold a player who was likely to return less than 10% a year in a market like this. And a price you’d need to expect very generous returns perhaps 30%+ per season.
This is all very dry and took me an entire day but the end result is something like this:
Last season we rationally could pay around £3-4 for a good or better performance player who was around 25 or under. But it wasn’t ideal. Ideally we’d want £3 and under, closer to £2 is better to really expect great value.
If that player could pull in heavy media and performance and was damn near perfect like Bruno has been, £9 could be stretched to.
Higher than that and you start to get into assuming future dividend increases. (Which is actually a bad thing to do despite the hysteria of today – we will always profit more by holding undervalued players ESPECIALLY after a dividend increase).
But what about now?
With a 100% dividend increase from last season to this one we can comfortably start paying £4-5 for a high quality + player. Or perhaps £4 for a + player.
But of course we don’t want to. We can do even better than that and many of them are available for bids under £2 now. That’s insane.
In fact, such players don’t start to get irrationally priced until they are £6 or £7 if they are really of that standard or there abouts (I define as being able to challenge seriously 7-10 times per season for dividend wins).
If we then add in media, for really regular winners in the premium end, we can start justifying up to £16 but really we wouldn’t want to pay more than £12 if we want really good value.
All these prices are for the Under 25 range – basically players in their prime that are known quality and don’t come with much risk. As players get over 28 I start knocking serious value off, maybe as much as 30-40%. And then 31+ gets punished with at least a 60%+ price penalty because of lack of resale value.
This is all in theory though. It’s still going to be good trading to buy older players ahead of particular events even at slightly higher prices than seems rational. This is ok provided we stay anchored on rational value and don’t forget about it.
So, if £3-4 was a baseline figure for your “good” performance player at 25 or under last season. I expect that to get closer to £6-7 assuming that new money comes in to find that value. Which, given that people like money, it should. It will take time though.
It could even get higher than that for some overhyped players because lots of people ignore rational value and maybe in 6 months time will again be speculating on another dividend increase.
But we don’t need to worry much about that. In the mean time – we just focus on doing what we do. Finding the highest quality players at the best possible prices.
In terms of specific winners/losers that’s about all I’ve got on this one. It is after all a straight up “Here is a lot more money traders, enjoy” announcement.
Rather than last time where there was a bunch of unexpected stuff dropped on us like Goalkeepers.
Next I think it will be interesting for me to share some stuff on what a rational valuation for a player looks like in the new structure.
How much can we expect our players to grow assuming new money comes in to take advantage of the rewards on offer? Give me 10 minutes! (And no I am not doing it on the back of a fag packet – I do prepare for these things in advance you know!).
Oh and send some questions in if you have them, there are fewer than usual perhaps because most of you are just bathing in champagne.
So we did get a sustained boost to IPD! Not quite 5x but a doubling ain’t nothing.
This feels right. 5x is too much and encourages too much short termism. But a doubling of them just keeps pace with where they were last year versus the other dividends.
The difference from last season to the upcoming one is that until prices catch up with the new dividend table (that could be a while) those IPDs are going to be very generous versus the purchase price of the player.
Eventually, that will dry up a bit as player prices get higher. But for now, that 75p to £1.75 “IPD” striker is going to look very attractive.
Particularly because the doubling combined with the current 5x boost from 12th Sept > 30th Sept for a period of pure madness where you can get 10p per goal and 20p for a defender goal! Not to mention assists.
That is madness. And it should spark a flurry of IPD player buying.
Site favourite Ben Yedder will ride again!
Goalkeepers. I had to catch myself here because that 300/200/100% increase headline looks huge. However, this is the increase we got already from July!
Comparitively, goalkeepers got nothing from this review. Nada. Zilch.
But that would be an ungenerous view. They have only just had a huge increase and as per my previous analysis there is strong value in this category.
In this structure an elite Keeper (see my player ratings) can hold £1.20 to £1.40 fairly easily. I’d be wary of going much beyond that if I wanted really great value.
But in the £1 and under range certainly there is good value there and 1-2 keepers are a good addition to the portfolio now in my view.
They did naturally of course get extra from IPD today as that was increased for all players.
Gold Days. Sweet mother of mercy.
A 28p dividend on a single match day for a Star Player.
A £4 player can return 7% of their price in a single win. Utter madness. This is how £5-7 price tags will become common and even unremarkable over the coming season.
Not much to say about that other than this is a huge bump for big hitters who can consistently challenge for those Star Players.
Particularly midfielders who just score higher than the other positions.
Bronze and Silver Match Days.
Bronze Match Days are a damp squib usually. Silver may get people a little bit excited. But not anymore. 8p on a Bronze Day for a Star Man is not to be sniffed at and 16p for a Silver is not far off what a Gold Day used to be.
This could prove particularly important because we will have a very odd schedule next year where we could have a small number of games throughout the week rather than just huge Super Saturday’s/Sunday’s.
FI are heading this potential problem off nice and early. Bravo.
We may be able to make more of this when we see more detailed fixture calendars. It’s going to benefit all good performance players obviously.
But until the market prices catch up with the dividends (that could take a while because prices have to rise a lot to catch up with this whopping increase!) there could be some extreme value in targetting low key players who may nick a win on a soft day.
Alright let’s talk specifics.
Media. This helps out holders of big premium media players, who were a casualty of the last dividend review. Next season the huge number of match days really squeezes media. So this is a smart move from FI.
They probably aren’t going to be paying out much more in total as there are fewer media days.
But having stuck a big increase on the media winner on Match Days they have given people a reason to care about media even when matches are on. This is significant given the heavy match day calendar next season.
Also of note is the 100% increase to the 3rd place media dividend and the 33% increase for second on media days. This is a big boost for media players in general, both big and small.
Make no mistake though – overall it is performance that is getting most of the love and you can’t change the fact there will be fewer media days next season. But these changes have helped media keep pace and lots of people will welcome that.
I’m sure people will want me to get onto winners and losers quickly! And I will.
But one wider thought first. Is it a waste of time to stress about “rational value” as I do when Adam Cole occasionally comes along and just smashes what “value” is into a million pieces?
After all, lots of players who were obviously overpriced are now probably underpriced.
Someone remind me to talk more about this later. But the answer is an emphatic no, it is always worth worrying about!
If a player who was overvalued before just became reasonable value, what has happened to the player who was undervalued now that dividends just got doubled?
That said, if there ever was a time to let your hair down and buy that one player you always secretly wanted but could never quite justify. This might be the moment. Just this once.
So reading the Adam Cole commentary this is clearly a move designed to put turbo boosters under FI for the season ahead.
I guess we finally have our definitive answer to the question “Is it too late to invest in FI?”. Anyone who already joined now knows that is an emphatic no.
I’ll go into this more shortly but we can expect £7 players to become very common. Interestingly, a £16 player is still pushing it when it comes to justifying a rational value even assuming they are pulling in strong media and strong performance.
But that middle and lower end should really close the gap because if we are used to a £2-4 range for solid player at the moment that, almost inevitably, is going to become £4-8. I jest not.
This is just frankly incredible. I will dig into the details of which type of player may be the biggest winner but essentially all players and all kinds of trader are just going to love this.
It’s EXCEPTIONALLY generous. Especially when you factored in that you could get great returns under the old structure already.
The mind boggles at how much value there is going to be in that £1-4 price range for really solid players now.
You have to note the important point these percentage increase numbers also include the other recent increase so we are not getting a 100% increase on the existing table but we are getting a 100% increase from last season.
This doesn’t matter – there is nobody on this earth that has cause to complain or can ever say this is anything short of incredible. Clearly, FI want to surge again this year.
Wow. Looks like fake Adam Cole undersold it. He should have added more rockets. At face value those increase numbers are just incredible. Will start collecting my thoughts to share!
Ok this is embarassing. I have been suckered in by this fake Adam Cole account. I’m just going to leave it up rather than delete it which is perhaps even more shameful! Be careful out there on social media, kids.
He knows exactly what this does. It ramps up expectations. This leads me to believe it may blow expectations away. Interesting.
The thing is – it almost doesn’t matter how much the increase is when we consider what we actually need to do.
If we are holding players who are good value under the existing structure, as we should be, anything at all is gravy. And anything bigger than 25%? Wow.
I’m going to take a 10 minute break now and get the world’s biggest coffee. You’ll next hear from me as soon as I have anything to say after we see the announcement! Hyped? A little.
A question on spending money before or after the announcement.
Q: I’m still away at the moment and not due to land in the U.K until a few hours after the announcement unfortunately! It came out a day or so after I left. I know you generally think it’s a good idea to spend your balance before the announcements so any advice as I can’t?
A: With this announcement, particularly since it’s hard to imagine anything too wild happening (ok I said that last time but that was an exception!) I’ve said it is best to spend any money you plan to spend sooner rather than later.
Ideally, I will read the announcement in 20 minutes and then feel I have to do precisely nothing. If you hold good players at value, even if they don’t get an immediate bump, they will as and when they do well.
What you really, really, do not want to be doing in my opinion is joining the mugs who sit there waiting to buy things after they read the announcement. First of all – it’s hard to do. The FI system usually crashes. And prices have already risen in anticipation in recent days anyway.
Occasionally this works out but ONLY when FI do something wild like they did last time. This is rare and given the whole point of this further announcement is to soothe things rather than stir them up it would be really surprising if they pull anything strange.
It’s fairly easy to predict who rises in these things. First up it is the highest profile and currently most popular premiums and big name players. Then as the hours and days go by things get a bit more thoughtful.
But as I said below this isn’t just about one night and the winners and losers are not determined tonight. It’s a dividend structure that will be there all season.
So there is no sweat on spending money if you don’t want to or can’t. There is zero shortage of targets at the moment and I am sure many of them will slip under the radar because people think they are unfashionable or they are not aware they are good. Yet.
I do not expect finding ways to spend money will be a problem in the coming weeks, even if some of the more obvious ones may get a bump before/during any announcement.
Here’s a question on Messi that came in a few hours ago I thought might be useful to share since he is very much the man of the moment!
Q: Hey Fit… loved your Portfolio clinic.
I have way too many ‘small bets’, probably not enough standard bets, and 7 of my 45 holds I would class as ‘big bets’ but are probably too big.
One of my biggest bets that I probably need to trim is none other than Messi. Good in a way as I’ve just received a massive boost with his price rocketing over the last 24 hours.
Now of course I’m sweating on whether to trim, sell completely or sit back and enjoy the wave for a few weeks. It would be great if you could take 5 minuets, either in scouting or your blog to talk about Messi… views on the benefits v’s risks of still holding.
A: Ok I’ll bite on the excuse to talk about him! I guess the obvious questions are “would I buy now at £6.74?” and the second is “Would I sell if I’d just got a big rise out of him?”
One point I was trying to get across yesterday was that all of us are starting from different points and whether you should buy or sell a player or not can be very different depending on your current position.
In your case, you are sat on a fat stack of Messi which is a pretty smug place to be right now. But you are also (rightly) concerned that Messi was already too big a part of your portfolio. And he just got a lot bigger. So this part of the decision would be easy for me – I’d probably wait until tonight, anticipating a possible further surge around a dividend increase.
But I would absolutely cash some of that out and at least take him back to a sensible 5% portfolio value level. That will free up a nice chunk of cash and you can reallocate that elsewhere – there is no shortage of great targets right now.
What you do with that remaining 5%, or indeed, for the person considering whether to buy in at this point, is a harder call.
We have some certainties: he’s almost unquestionably the best performance player on FI. He’s going to rake in bags of media in the coming weeks at least.
But we have lots of unknowns. We have no idea where he will be playing next season. He could waste one of his perhaps 2-3 remaining seasons held hostage at Barcelona not playing at all. He could go to City and be the greatest ever performance/media magnet FI has ever seen. And anyone who says they know what will happen on that at this point is a fool because I doubt even Messi knows.
For me, the answer is clearly it isn’t. There is so much value out there just waiting to be picked up that I’ve got other things to be doing.
Lots of people will I am sure and I think this may be the best thing to do. Most likely, the situation isn’t changing significantly for a week or so. So that’s the “safest” point to hold.
When it gets to crunch time and a decision on his future can be reached that’s the danger zone you want to avoid holding in unless you are prepared to take the rough with the smooth. Exactly why I was content to hold Sancho in early 2020 but didn’t take the hold into the actual window.
Let’s indulge in a little speculation.
How much are we expecting? You’ve got to put the expectation at another 20-25% again surely? The other half of the dividend increase we were “entitled” to before right!?
That’s my expectation. Given that a dividend increase isn’t really needed to create value at all… anything bigger than 25% would seem insane.
The only reason you would possibly go bigger than that is as a pure marketing gesture. If you really wanted to explode this year and grow very aggressively you might do it. It’s not impossible.
But I think Adam Cole is pretty sensible and I would think 25% or so would do the job. Less than that and the grumblers will probably be out in force.
Last time we had fairly simple expectations. We thought there would be a big increase around 30-50%. I certainly did not see Goalkeepers or Team of the Month coming. Or 5x IPD. These were all left field things.
All welcome things, in hindsight. I’ve even come around to Keepers now I’ve analysed them more.
But none of these were changes that were needed. It did strike me as odd they chose that particular moment, when what people just wanted was certainty, to do a bunch of weird stuff that nobody expected.
I expect therefore that this time, given I think their goal is to sooth the market and get it pumping, that we will not see surprises.
The one thing that I suspect may appear is some kind of extension of IPD as that has proven very popular (giving people lots of money generally is). I’m basically 50/50 on this it’s a hard one to predict. There are strong arguments on both sides as to why it’s good for FI (creates more activity and more commission) and bad (they have to pay out a lot more money).
It’s also a bit of an odd fit for the longer term nature of FI. And for the health of the platform… IPD really does need to remain a nice add on rather than the main focus. If I had to pin it down I would say I do not expect 5x IPD to be made permanent. It’s just too generous.
I am expecting an easy time tonight that won’t hurt my brain like the last one. But the last two FI announcements have left my jaw on the floor so. We’ll see.
Afternoon folks and welcome to the latest Live Blog!
Unless you have been hiding under a rock for the past week you will be aware FI are due to announce the results of yet another dividend review at 5pm London time.
Throughout the afternoon/evening I encourage you to send in questions to email@example.com or via Twitter DM. I’ll include the best of them here.
The last review was considered disappointing by many as it did not hit the social media inspired expectation of a 50% increase. We got something closer to 25-30% and that left some people very upset.
One of the things I mused about was that part of the reason for that relatively modest increase was so that FI could keep their powder dry for another increase later on.
They did indeed – but I was thinking more around October. A further increase so soon feels like something unplanned.
In the circumstances though, it isn’t a stupid thing to do.
They have a stressed market. Covid plus the Matching Engine has been rough, Change always is. Some people have dealt with that better than others. But the ones who don’t tend to be very loud on social media.
As much as FI may just want to throttle these ungrateful wretches who complain loudly and often – it is inconvenient for FI to have this kind of atmosphere just before a new season and before their biggest ever advertising spend.
To really make the most of that they need a bouncing market and a positive social media timeline.
So they are buying that with another dividend increase.
Is it needed? No. But also, kind of yes.
On purely logical grounds it is absolutely not needed and it’s bonkers to suggest it is. Ahead of the last announcement I ran some numbers on what rational values would be for players of various ages. How high can a players price be to get a rational dividend return out of them? How high can it be if we want a generous return?
On many good players you could still expect them to return 20-30% of their price in dividends in one season even before the increase.
That was primarily because lots of good players are available on very cheap bids.
A player I rate at for example could reasonably be expected to return 40-70p in performance dividends if they are in decent form and playing consistently. So even paying £3 for that player you might get 20% back per season. Maybe 30-40% if paying £2.
That was before the increase we already had. And before Team of the Month. Those yields are even higher now.
Essentially – the Matching Engine dropped prices to the point where extreme value was already available on the bids. Possibly more value than I have ever seen before in fact.
Given that the purpose of a dividend increase is to ensure continued growth in the market by making value available – it’s obvious that a large dividend increase was not actually needed.
The only people who did need one were people who held overpriced players that relied on a large future dividend increase to justify the existing price. These are likely to be the bulk of people who ended up upset. Well. Boo. Frickin’. Hoo.
However right now FI do need everyone happy and co-operating and, if they have the ammunition in the locker I can totally understand why they want to spend it now ahead of a new season and to ensure a bouncing market ahead of a big advertising campaign.
We also have the Offers side of the Matching Engine coming in. Whilst this is a good thing in my view for the long term as it opens up more liquidity and value… it’s likely to come with a bump. On paper portfolio values may well take a good 10-15% hit as the Blue Button price should logically come down with Offers and line up more with the Red Button price.
FI may come up with some way of glossing that over but there is no doubt that introducing Offers is going to be a tough thing to do. Doing that in the atmosphere of a bouncing market with traders who are feeling good will be easy.
So. For those who hold overpriced players on speculation? This is good news, sort of. Daddy Cole to the rescue again.
For those who hold players who already great value? Even better. If overvalued players become reasonable value, what happens to those players who are already undervalued? They become grotesquely undervalued. And that is likely to happen to many players.
Unsurprisingly, the real eventual winners from a dividend increase are traders who hold players who are likely to win lots of dividends. But, on the day, a dividend increase often fuels whoever is currently popular or rising as much as anything and today should be no different.
I would suggest a medium to long term mindset on this. The dividend increase sets the terms of trading for an entire season. It’s easy to think that whoever rises tonight is the “winner” but that’s not the case. We’ll only find that out over the next 6+ months.