Are we feeling gloomier than we did last week? Or more optimistic?
It probably depends on your view of what “good” trading is and what players you are currently holding.
This week I want to keep things practical and I’ll be focusing on:
- What’s really happening on the market;
- What’s driving market prices up and down right now (and what isn’t);
- What’s coming up next.
So what’s really happening on the market?
There are definitely some nice gains available – but that player is usually having to do something to earn it. Players demonstrating strength are being rewarded with bigger blue button prices and/or smaller spreads.
How long that rise lasts? Depends heavily on how much traders believe that player will win again soon.
Kimmich is one of the most obvious examples of a recent success. He’s known to be good and also demonstrating consistency. He’s actually a touch lucky to win repeatedly so quickly but not many know that – they are just happy to pile into a player who looks relatively safe and has clear quality.
And he does have that quality – even though he’s probably teetering somewhere on the edge of getting overpriced by now. That’s the “clustering” effect in action.
But we see this for a lot of players showing consistent strength recently. Tapsoba. Fati. Angelino. Coman. Morata. Son. It’s obvious that good players are being rewarded – but they have to be fairly well known and considered reliable.
Others are getting a big rise after a good performance – only to crash down straight after. Often, incredibly, below the bid price they were before the win! This reflects a large number of short term IPD buyers who then all want to come out at once.
Yazici is a good example of this, going from £1.03 to £1.23 during/after the game he won Star Player. Today? 87p on a bid. People wanted that juicy IPD – but they don’t trust him to win again soon (They may be wrong about this one – see scouting).
They are however probably right in this market not to trust any IPD buyers to stick around very long. If you are going to swim with the in play trading sharks – you have to be the meanest one out there and sell fast – probably not even waiting for the dividend if you can bank a nice price rise.
Maximilian Arnold would be another good example from this week. He bags a big win. Flys in price. Crashes straight back down again. Anyone holding is left with a heavy bag.
Good patient traders will be selling this on the rise all day long if they are holding an occasional winner like this.
Good day traders will be very swiftly into it on the goal and very swiftly out. Bad day traders will be hanging around hoping for those sweet IPDs only to find they can’t sell for what they paid in the morning.
Bottom line – we can get very nice price rises and spreads closing up for consistent quality players. But winners that people don’t really believe in will not get a lasting boost in this market. It’s one reason I’ve been saying we should prioritise those core picks right now and not try too hard to go for hipster punts in recent articles.
The time for hipster punts will come around again. But it isn’t now.
What is causing significant upset for many is some painful price drops particularly at the premium end of the market.
Some of the biggest droppers are Van Dijk (obvious reasons, just bad luck for holders), Cherki, Aouchiche, Sancho, Alexander-Arnold, Greenwood, Alphonso Davies (also injury related). Mbappé and Haaland are dropping significantly in real terms prices but not too badly in percentage terms.
What does this group by and large have in common? They have long been pumped heavily on social media and as scouting readers will know I have generally considered them to be overpriced for a long time now.
There is currently a raging debate about whether this is deserved or whether this is a blip caused by “bad actors” deliberately crashing the price or talking these players down.
In rational terms – there is zero doubt in my mind that these drops are indeed deserved. Only really Aouchiche in that batch had a claim to some sort of reasonable price versus his ability and what was available elsewhere in the market. But he also gets pumped a lot and he has not been immune from this bonfire of the social media cult player that we’ve seen this week.
I see this as very rational behaviour. You have a batch of players who cost a lot of money and return little. Dividends got doubled. We’re seeing more games than ever and people are looking at the regular winners of those dividends with envy.
They want the winners.
They don’t want money sat in highly priced players who are not winning and don’t look like winning. Especially as they drop in price – when the only reason many were holding is because “well they only ever went up before” what happens when they stop going up? They lost the only reason they were interested anyway.
People realise that no player has a divine right to a high price – eventually they have to earn it.
This is why I’ve been urging a focus on the real quality as we approached this glut of match days. I see these drops as largely very predictable – and it’s on individual traders to make sure they are not hanging out beyond a rational value for too long.
The “true believer” gets burned so often. The trader who really thinks these players are definitely the next Messi or is happy to eat up stories of “He could be worth £30 based on his dividend returns last year and if FI increase dividends a couple more times”. This kind of “analysis” is just abysmal.
It makes massive assumptions about historic performances continuing. As we have seen with TAA just one tactical change can scupper things. And for more transfer story focused players – is that level of media continuing after the transfer? Almost certainly not.
The worst thing though about this type of thinking is that even if this person is right – you still didn’t make the best trade. If our hyped £10 player does hit £30 because of two dividend increases… what is happening to our equally good if not better £2 player? £10? £20? The gains on offer would be so much more.
And if one part of the “story” behind why that hyped player is worth £10-£30 unravels… you can make a serious loss. And it will often be very high profile and public and therefore very difficult to get out of early in the world of the Matching Engine.
The fact that FI no longer take unwanted trades off our hands is a big factor in making traders much less likely to take big gambles on hype and speculation. We know now that one day we will have to sell our player to another trader – and that’s going to have a sustained and lasting impact that pushes traders towards higher quality selections.
That’s going to require many to change how they trade – or take severe losses if they stick to old habits.
Whether much of these recent drops are caused by “bad actors” and negative social media opinions – hard to say. It’s probably a contributor. But this is part and parcel of a market and we can’t really control what other people are going to say – good or bad.
We do have some control over whether we hold players that are likely to justify their price or not, though.
This is why I don’t stray too far from rational value – when I hold a quality player I don’t really have to care too much about what people are saying.
If you hold a good player – what do you need to say about him on social media? Absolutely frickin’ nothing. He’ll pump himself by delivering big scores and wins eventually. Pumping players could be viewed as a sign of insecurity.
Another common feature we are seeing is that hype for new players at new clubs has been particularly strong but then can quickly fade if there are no immediate returns.
Reguilon suffering now. Werner. Havertz. de Beek. Jonathan David. These are players we need to watch particularly closely as they start at new clubs.
We are seeing this cycle again with Alex Telles at United. There are good reasons to be optimistic – but if he’s first games aren’t good we shouldn’t expect much loyalty.
This isn’t to say we shouldn’t hold new and exciting players. But I’ll tend to be twitchier on them if the early numbers aren’t brilliant.
Some are doing better than most would think though. Werner and Havertz as per Scouting. And we haven’t even really seen de Beek yet.
My big takeaway from the market this week is that, as expected, wins are now definitely driving prices much more than anything else. And that is coming at the expensive of hype/speculation based players or indeed players who aren’t seen as strong performers.
With dividends increased and a more fearful market people have every incentive to cluster into real quality which is exactly what they are doing. And they have much more cause to be wary of chasing hype.
I expect this to continue.
What causes some deviations is that the market does not have a perfect picture about who is really good or not. It tends to think that the player who won last week is good and “safe” and the player who didn’t win or got dropped last week is struggling.
This is often not the case. The winner may have been very lucky and the player who missed out could be showing exceptional strength which just hasn’t come through yet.
The best traders will have a good understanding of where this is happening and be busy exploiting this.
We want to avoid paying too much for fortunate winners who have risen already and channel money towards players showing more subtle consistent strength that most haven’t noticed yet.
What's driving prices?
Let’s quickly summarise what is driving prices right now.
Perceived poor performances or pitch time struggles
Clearly players who appear to be playing poorly or get dropped are struggling. But I say perceived because there is often a difference between perception and reality. Dybala for example.
He’s dropped because he’s missed early season due to fitness issues. Yet, he could not have shown more promising performance numbers at the weekend. And because Juventus drew the game many will have not noticed that.
This can be exploited. There are many examples of players who are doing nowhere near as badly as people may think. If they look close to a win – they can offer some of the best value around.
We just need a little willingness to go for players who may seem unpopular when the evidence suggests we have good reason to.
In other cases these poor performances are real and we should take swift action when that is the case. Jonathan David is probably one of the most obvious early season failures in Scouting. He looked good on historic numbers but it quickly became clear he wasn’t cutting it at Lille. We have to be ruthless when that is the case.
Perceived good performances
Players who are considered to play well, get big scores, win, or look close to wins are clearly being heavily rewarded. And there is a glut of match days to come.
But again we say perceived because in some cases the win is fortunate and unlikely to be repeated. Or in others we may see a player getting consistently high 180 scores and being bought – yet from scouting we’ll know they have no real chance of making that much higher and putting up a really competitive score.
Another common thing is that a player is easy on the eye and good to watch but actually way off the pace in FI terms. A casual fan may think “woah what a player”. But we will often know that it won’t amount to much on FI.
So we can use our better knowledge of this through Scouting to judge whether a player is the real deal or not and trade accordingly.
When a player wins and we know from scouting this is consistent – it can be very acceptable to buy after the win provided we think it is likely to come again and the price still remains value.
Chasing rises may not be the trading sin it once was – provided we think the player is really worth it. At the moment prices can be so low that even a rise after a win can leave them well below the rational value.
There is incredible value in “IPD players” at the moment. I am frequently refreshing the 30 day windows of a good few players.
This sort of player is regularly bagging goals and assists and may be available for around £1 or even less. Morata. Yedder. Zapata. Andre Silva. Belotti. Lukaku. Many listed in Scouting. And of course Lewandowski lest I forget.
And refreshing them is usually very easy in the build up to big games.
I would mainly stick to these more well known players as you will generally find that even if they hit a barren spell – they will tend to come back into form and fashion again before too long.
An alternative strategy would be to winkle out these occasional and lesser known big scorers like Dia at Reims this weekend. If you buy them cheap and you are watching the games you could cash out when they have their “big day” for a very handsome profit. One for the more active traders but this could bring some very nice returns.
And it’s not much more difficult in terms of research than finding a goals/assists chart for each league and looking for the likely scorers/assisters last season plus this season so far.
Optimism for strong teams/players facing a large number of easy games, particularly in the exciting CL/Europa nights.
These European nights are very exciting – particularly the CL ones actually. They hit a sweet spot where the dividends are decent but there aren’t too many teams competing each day. The Europa with all fixtures on one day can be lucrative but is also a little more chaotic.
In the CL/Europa previews I’ve been pointing out strong teams with kind fixtures because optimism for them can lead to price rises before they have even kicked a ball.
This is useful in general but can be particularly useful for recycling IPD players.
If you want to refresh Lewandowski’s 30 day IPD window for example – you won’t get many better chances than in the days leading up to a CL match.
This is much more reliable than trying to mess around with this during the game where you are beholden to what actually happens on the pitch and are playing fastest finger first with the flippers.
Social media gloom – particularly about drops at the top end of the market (debate over “bad” accounts trashing players etc)
This does have an impact but I am paying very little attention to all this. I have given my views on the overall FI situation many times recently so I won’t go into it in detail again.
Fundamentally, my judgement is that FI are as far as we know a stable company and the value proposition for traders is clearly there with these dividends doubled and prices as low as they are in many cases.
It is my opinion that people will come in eventually to exploit that value. And the best trigger for that will be a period of calm and stability combined with that relentless flow of big dividends.
We do have clear winners and losers though because this renewed focus on dividends and winners is causing drops at the more speculative/hype end of the market. That upsets some, and often some very large whales who can be big twitter account holders.
These old school traders often hold very large numbers of premium players and if they get unhappy they tend to spread that unhappiness around. This can appear on social media and also in the market in a very obvious way. If just one whale decides he’s had enough of Bruno or Sancho that can cause a real impact.
There is little we can do about this. I just focus on building the best portfolio I can – my players will prove their value or they won’t and what other people are saying or not doesn’t overly concern me.
It’s only when your players worth is based too heavily on sentiment that you have to care too much about what others think. I rarely put myself in that situation and when I do it will be temporary.
Perhaps when I see a predictable period of hype for a player that is very unlikely to collapse anytime soon i.e they’ve got a probable transfer but the window is months away and it’s very unlikely to get confirmed/denied anytime soon.
Things that are less of a factor than they used to be:
At the moment we are clearly seeing less love for hyped players who don’t really return dividends now as discussed above.
Another area that is struggling is transfer players where people are speculating about a future move.
I think people are focusing on the here and now and want those big consistent dividend winners. Rightly so… there is still huge value to be tapped there.
But I think it won’t be long before we will want to consider the January transfer window, and indeed the Summer window too.
Because many transfer players are not considered fashionable at the moment the bids on them can be exceptionally low. Moussa Dembelé stands out in this weekends scouting there.
£1.10 now on a bid! Down from a high of £3.09 just a few months ago. He could work his way back in at Lyon and/or easily be linked to a big EPL club. And because of that previous peak… it is easy to see people considering him grossly undepriced if you give them half a good reason to.
You can also find big value in the Dutch league. Players like Neres, Gravenberch, Ihattaren, Malen, Stengs. The focus may be off them now but it is very likely those big links come and they are in demand once more.
This kind of hype is actually easier to predict than trying to predict who is going to win performance. Even if the link is garbage – that doesn’t mean plenty of media outlets aren’t going to make that link anyway!
All it takes is one major outlet to link someone like Gravenberch to United and you could have a huge price rise. And they link random players to United all the time purely for clicks.
To exploit this though we have to be patiently holding already – very little sense in buying after that news story breaks – that is exactly how we get burned.
What we are seeing on the market makes sense to me.
These are logical moves that are panning out as expected. The heavy schedule of games and these boosted dividends are pushing people towards real quality.
That should continue – the pace of games coming up is relentless.
Usually I would have refreshed Key Strategy by now but I don’t want to change it just for the sake. It’s still broadly in the right place and the only tweak I’ve suggested in recent weeks has been a bigger focus on the “core” player type.
We’re still in that pre/early season phase of accumulating the best players we can and we’re still finding out exactly who the best players are through Scouting.
And we’re dealing with the legacy of a tough year as discussed last week – we’re also going to have lots of players that we either need to cut or stay patient with. It’s a rare trader who is going to be 100% happy with their portfolio right now.
We are most likely to get rewarded when we hold players who win and are perceived to be consistent winners and relatively “safe” holds.
It is also a good time to exploit elite veterans – my fear of age is low right now. I generally want to see a contract beyond this season and a settled future but if that is the case I’m happy to make the most of players like Muller, Gomez, Lewandowski or Reus.
And as I say above – we may want to start thinking about transfer windows. It may be a way off… but links for good young players to big clubs are pretty much inevitable in many cases. And with the focus off them the prices can be low right now. Good for patient traders, particularly if you are happy you have enough “Core” sorts of picks already.
One current challenge is rotation and early substitutions. This is throwing another element of unpredictability into a match day.
This has been the case all year though and we have had no problem picking winners. The quality is by and large still shining through and we see that more the more games we see.
However it often changes exactly who wins on a given match day. Lewandowski holders experienced this last week.
By and large, it’s the big CL/Europa teams who offer the best players who are going to be most heavily rotated. They tend to have bigger squads and will be playing games every 3-4 days a lot of the time.
So, it is my view that if we try too hard to dodge players who get rotated or subbed early, we’ll also be dodging exactly the sort of player we want for almost every other reason.
We’re going to lose some wins because of this for sure. But we’ll gain some too if the competition is subbed off early.
I am not too stressed about this overall. But on a case by case basis if there is a clear pattern where a player is being subbed on 60 minutes every game and he’s just not good enough to win in that time we can factor that in.
My overall expectation though is that the highest quality players will tend to rise to the top, buffeted as ever by good and bad luck along the way.
I’ll remain heavily focused on Scouting for the forseeable as it is prime time to be making the most of consistent winners.