So final thoughts.
We asked for liquidity. We got our wish. Sort of. Like asking for boxing lessons and then immediately getting punched in the face.
What they’ve announced today is a good thing. I think FI are right to just let traders trade and remove the stabilisers. I’d have preferred them to get on with it sooner if they were going to do this. Perhaps too often we see them getting to the right answer a month or two late. But that’s better than never.
I think they probably tried to get more market makers engaged and just found it wasn’t possible. This is the next best thing. The worst outcome was more of what we’ve experienced in the last couple of months because it’s been miserable.
You can even see a bit of acceptance and relief on social media, mixed in with the disappointment and the rage.
I think that acceptance will be tested for all of us in the coming week as it could get worse before it gets better. As tough as we may like to think we are – nobody likes to see our numbers going in the right direction.
It’s hard mentally – and I tend to return to the True Value concept here.
I have more reasons to believe my valuations of players are correct than I have to think the current red/blue button prices are correct. They simply reflect current opinion. And we know that can change fast, positively or negatively.
It really is only the on paper value that is changing – which has little to do with the real worth. If our players are good enough and we’ve made good choices we’ll mostly get rewarded for that. Although we won’t get every trade right but nor do we need to.
Once we get over this next week or so though we will be able to trade freely again, which will bring options and I am really looking forward to that.
If you have any more questions please send them in – I’ll provide more thoughts on this in the next State of the Market.
Thanks for joining me for another Live Blog – and I hope you enjoy reading them as much as I enjoy writing them.
Question: Hey FIT are you at all worried following this announcement? No mention of liquidity or market makers will make so many existing customers jump ship and I feel all this marketing they’re planning on doing is just going to be a waste of time in a downward spiralling market? New customers wouldn’t touch this product with a barge pole atm
FIT: First of all they did mention market makers at the end – that was my fault if you think that – I corrected that below!
To your question: I’ve got mixed feelings and I am sure many do.
I find myself, perhaps very strangely, looking forward to next Thursday.
It’s going to be a Blue Button Bonfire.
The change to the way portfolios are calculated may soften the blow. And there is a background hope that FI use the market maker LP001 to try to ease the pain. It is possible it isn’t as bad as feared.
But overall I’d expect it to be pretty bad. There is a gulf between those red and blue buttons that just cannot be ignored.
These falsely high blue button prices are just unsustainable though. I say false, many of them are actually lower than they have a right to be. But when the spreads are this wide this market is just never going to function.
I feel a little bit like we’re about to embark on some kind of juice cleanse. It’s going to be grim but at least once it is done we will be able to move on.
It comes fundamentally down to the True Value discussion below. If I am right and these players are indeed worth what I think they are worth then I am sitting on shares in players that are going to yield far in excess of what they are currently trading for.
Obviously we get new information all the time and we aren’t married to the players we hold. But in order to be able to trade and take advantage of that new information we need tighter spreads.
Scouting recently has revealed lots of new information but I have often felt very hamstrung in actually being able to do anything about it. And I am sure members feel the same when they spot good targets too. Or notice one of their players going off the boil for that matter.
If this is what it takes to end this zombie market then I can accept that. What I really don’t want is to be sat here in 2 months talking about the same things. I want to focus on trading and scouting and helping members do the best they can rather than endlessly discussing FI announcements.
On marketing and new customers I agree with you. If I was Adam Cole I would just can all this until the pain was out of the way.
From a savvy trader perspective this is EXACTLY the moment you invest. It’s textbook stuff. But as a new person coming into FI and looking at this bonfire you’d probably steer well clear. Unless you were well versed in market mechanics etc and most people have zero need to be really.
I think this is what FI are relying on. There are enough loyal/stubborn/patient/possibly informed people out there to keep things ticking over so that by January/February at the earliest things can start to feel good again. We know how fast the moods can change on FI. And the prices too.
When positive sentiment returns – that’s when you want your big marketing campaigns to hit.
So am I worried? Well yes but I have been all year you would be a fool not to be. But I’ve always maintained overall confidence just because the value proposition is there and I agree with the overall direction of the platform.
I definitely feel better this afternoon than I did this morning – even though I know I will not enjoy seeing portfolio values dip. I am looking forward to being able to trade freely again.
I think FI have made a bold move here that I am choosing to interpret as a sign of strength.
Question: do you still think 40-60 players port is the right amount for the current season? Obviously the more players we have, the smaller the win when they hit that score, but wouldn’t this balance out given how much uncertainty there is around fitness etc? Given schedule and covid, players are dropping out like flies so perhaps it might be better to “cover more ground” to have more “active” players?
FIT: I’ll always take the chance to go back to talking about trading rather than market mechanics!
I do still think 40-60 is the right amount for most people, yes.
Clearly, this is a very unusual season. More games in a short time than ever. More rotation than ever. More early subs. More injuries. It’s a recipe for chaos.
Yet – clearly we have zero problem picking winners throughout 2020. The better players do tend to win and we get lots of good winners in Scouting and the Europa and CL articles and the even narrower Explosion Imminent list even now.
However it does change who wins on a particular day and sometimes we will lose because our player comes off early – and other times we will win because a rival player was hooked too.
It’s all filed under “background noise” unless there is a really obvious pattern where we can say “ok – this player is always coming off on 60 minutes and he’s not good enough to win in that time”.
I think the key is the portfolio management advice I’ve given in the Portfolio Clinic article series and also the “Strategy and Portfolio Management” guide accessible via the front page of the site under guides.
We don’t want to have too great a % of our portfolio value in any one player. For a big buy, where I am really confident in the player I might start at 5% and if it goes well and hits 7.5% of my total pot I will trim him down back to 5% even if I am otherwise happy with the player.
Those big buys may be 4-6 players total. Most of the time I’ll be making a “normal buy” of around 2.5% and not letting them creep up above 5%.
This is plenty of diversification – if one of these falls over it will be a blow but nothing terminal. I do not think it is a good idea to be running around with our trousers down holding 10-15% in just one player. No matter how taken we are with a player – anyone can break a leg. Yes even site darlings Bruno or Curtis Jones.
Equally – the more passive we get and start spreading too thin we can hurt ourselves that way too. We spend a lot of time winkling out the very best selections so why not use them? There are never more than 40-60 absolutely slam dunk bargains on FI even now. The wider we cast our net – the weaker and weaker picks we are going to go for.
Not everyone will like this but I think it is true – very wide diversification into 75+ players is for people who do not know what they are doing. Or very passive traders at best who don’t pay too much attention.
Well informed aggression based on research is good. But in moderation. 40 is a good target for most (although the guide gives options for more aggressive/passive styles too). In these times which are a bit more uncertain I would indeed tend to flex closer to 60 rather than 40 but I have a long term goal to return to 40 when this madness all settles down.
Further thought on Average Offer Price. This actually may make a significant difference psychologically.
A big portfolio holder with 900 shares in that £10.36 player can decide he wants out and can singlehandedly tank that price from £10.36 to £10.21 instantly if he wants.
But that Average Offer Price will probably not move much – so people can mentally adjust a bit there and think “ah well. That blue button price is thin and as soon as those shares are cleared – it will go back up to the average”. Good for confidence. And. With market depth data we’ll be able to see how many people are really behind that price drop or not.
You will also note in the below example the spread is really tight. As it should be.
So in the coming week when you have spreads as wide as 50%+ those drops are going to be absolutely savage as just one person can drop that price a lot. However, once we get through that cleansing – one person won’t actually be able to drop it all that much because the spread is naturally tighter.
In a well functioning market spreads will just naturally stay much closer together without the need for mass liquidity providers.
Speaking of which, I just noticed that FI did indeed include mention of liquidity providers in the note at the end.
“This will encourage organic liquidity, and LP001 also continues to provide liquidity. We continue to recruit liquidity providers, and are building out tools to allow easy access to the market for such participants.”
So – that commitment to keep doing this through the mysterious “LP001” is there. (Which I would guess is some FI employee on short term leave with a cheque book and some kind of firewall from the company!).
And they are recruiting more but as I’ve said recently this is really not as easy as many may assume. And there is a hint that is the case there – they are “building tools” for them. I think any firms they approached must be saying “Mmm. How on earth do we do this on this basic platform?” They’ll need beefier tools and would probably prefer to wait until it operates on NASDAQ.
Just my guesses but this would fit with why it’s taking so long – this is not something you can just order off a menu.
Average Offer Price.
I like this. The Buy Now price of £10.36 here is still the average price of the cheapest 900 shares offered for sale. They have answered my prayers and done away with the horrendous term VWAP.
But we can now also see below this Average Offer Price – the average price of all shares offered for sale by traders.
This given example seems messed up to me, shouldn’t the average offer price be higher than the cheapest 900? Hm.
Anyway. The Average Offer Price is the same number that will make up our portfolio values by default.
And it occurs to me that there is a shenanigan opportunity here. If I were a trading group of questionable reputation and I wanted to make my player look good why could I not buy a ton of this player and then just make lots of unrealistic offers?
If I bought the above player at £10.20 I could just place a ton of unrealistic offers at £12+, pumping the Average Offer Price and making all holders feel good and increasing their portfolio values producing apparent positive sentiment around this player. That would appear on Market Depth too.
Something to be aware of as unless I have made a mistake or misread something this seems like an obvious shenanigan.
Circuit Breakers. Not much new here. It’s helpful. We have had these but I think the change is that when a players price crashed someone manually had to step in and pause the market. This will now be automatic.
It’s good – particularly if you aren’t the sort of trader who watches every single game. A bit harder to sell on that horrific injury perhaps depending on how sensitive the circuit breaker software is.
I think this reinforces something I speak about often – don’t be holding those players where that one event, be that a failed transfer or a leg break can really collapse the price with no hope of recovery.
A 26 year old player can break a leg and if needs be you can hold him for the year. But can a 34 year old get away with that?
Equally when speculating on transfers – I tend to do it early outside of the window. Do we want to be holding a Sancho or similar as the window is in full swing, dependant entirely on whether a single event outside of our control goes our way?
Smart traders knew to avoid these all or nothing gambles anyway – but the more painful lessons we get like Sancho recently – the more people will learn not to hold these things too long at irrational prices.
Circuit breakers to me are just one more minor reason not to do this even if you are very active and think you keep on top of it. That option to sell might not be there when you want it. Missing it by a few minutes could be the same as missing it by an hour.
Market Depth. Check. I had thought they might soft pedal on this – delaying it until the market looked a little healthier. I was wrong – FI are being bolder than expected and just getting this information out there. Again, brave stuff.
Be prepared to see some shocking lack of depth on some players which could spook some. But also, some may take reassurance from the fact that not many are willing to sell for the prices that we are seeing right now.
Overall this is a great addition for the long term and we’re going to be able to trade better because of it. Perhaps it’s worth a feature on how to use this soon I’ll make a note.
But shorter term… well. The truth can be ugly.
Portfolio Benchmarking. A.K.A portfolio values.
There are now going to be a bunch of ways to value your portfolio – you can pick your version of the truth. I have to say I just don’t like this – there was a single portfolio value – it was massively flawed and over optimistic but at least it was consistent.
Average Offer Price: I mean. Sort of – this would be useful information by way of market depth. But is it a useful way to value my portfolio? No. Because why do I care what the average offer is when I am looking to sell or see how much people are willing to pay right now. This information belongs in Market Depth.
90 Day Traded Average Price: Again – this is useful background information. I can use this to get some useful insights into how the portfolio has really been traded in the last 90 days. But it’s an odd way to value a portfolio.
These two above basically seem to be “ways someone can make themselves feel better”.
And indeed – the fact by default we are being set to “Average Offer Price” is going to soften the blow of the portfolio drop, on paper. Which let’s face it is the only reason this is happening.
It probably is, overall, the right thing to do for this reason and if I was Adam Cole I’d do the same thing. But we are basically trading one imperfect measure of value for another.
I think as long as you are aware that this isn’t what you can really sell your portfolio for this isn’t a problem – we’ll just get used to this. It’s not like the current system is perfect either.
Alright I think we’ve nailed the main issue here. Let’s have a run through some of the other stuff that came in the announcement.
Question: I have a cash balance and clear targets in mind. I’m struggling to decide whether it is better to pick players up on bids now or keep a cash balance for Thursday. Some of my targets may well go below the current bid floor (many have no instant sell price) but 2% bid commission will come in on Thursday.
FIT: Mm good reminder on the bid commission. I would say the bigger issue is confidence – are we going to see a further crash in anticipation of portfolio drops? Or will people wait and then see portfolio drops before panicing?
I think the portfolio drops are so obviously coming and will be widely publicised on social media – I think anyone who wants to panic will have the opportunity to do so now rather than waiting for next week.
Which would lead me to buying sooner rather than later. Not paying 2% commission is a sweetener on that approach. In your situation with a balance I think I would wait for this to sink in over the weekend and consider making your bids on Monday.
I think waiting until afterward the 17th… well maybe there is a secondary wave of panic when they actually see the drops and nobody will want to go first.
It’s tricky to predict exactly how people will behave on this to be honest.
I think as a decisive answer I’d say this:
If we know we are getting an absolute slam dunk bargain, and we’re picking up a player we think is worth vastly more than we are paying in terms of true value – then let’s just go for that and not stress too much over whether we are able to get an extra few % off.
Particularly as you say where they have no bid price at all – just put in some insulting offers here and see what you get. If you are going to get silly bids matched it’s going to be in the next week or so.
And, if in real doubt… I wouldn’t rush either. I don’t think we are going to find value hard to come by anytime in the next couple of weeks. Having cash puts you in a really strong position so just don’t move unless you are really happy with the price.
Question: Given all the changes FI has made to the platform in the past 6 months, you think having a large portfolio is still viable? My view was as long as you followed your approach of not investing too much in one player as a % of your portfolio it was, but given all the uncertainty I am now thinking a small, rapidly changing port is the way to go?
FIT: I have seen this theory swimming around lately and I think what is happening here is people are mistaking “what works now” with “what will work in future”.
It’s really dangerous to execute a wild strategy change based on short term events that are just not normal.
This isn’t how FI is going to be because either it will fix itself or alternatively it may die but it will not stay like this – it’s a mess.
This short term strategy is working at the moment and indeed I have incorporated some elements – the great value available on great IPD rotation options is a good way of leaning into this trend for example.
But particularly if you are selling up a raft of great holds at rock bottom just to get on this short term wagon? That would be bankroll suicide.
The portfolio that is best placed to bounce back with a market recovery is in my opinion one based heavily on those genuine quality picks that are both likely to win consistently and be easy sells – players people will naturally want to buy.
In Key Strategy I had around 50% of players in this sort of category anyway. At the moment I might bump this up as high as 65-75%. But that still leaves plenty of room for other options including IPD, longer term transfer picks etc.
So in summary – I’d lean into this as it is currently suiting the market but absolutely would not shift my long term strategy based on what we are experiencing right now. I think this would be a disaster.
One thing I think is important to look at right now is the work I did on Guide Prices and True Value back in October.
For our “template” core player below (24, big club in Europe, starts for a big Euro 2020 team, high likelihood of dividend returns) our rational value in this dividend structure can go up to £5-7 at the Upper End, with £3.75 to £5 being a good value pickup.
That’s for a really, really strong player mind, at least in my ratings with a great trend profile and no penalty for age.
Good players like this can earn enough to support those prices. Or they should, on average – heavily buffeted by the good and bad luck of rotation and game winning goal etc. Yet many of them can currently be priced anywhere between £1 and £5 right now.
That puts 100%-400% capital appreciation profits back on the board – something we haven’t seen for a while. Plus the dividends. That’s crazy.
So nobody can say the incentive isn’t there. It’s really about whether you trust FI to ride out this storm. And with portfolio values set to drop I think it will be a worse before better scenario.
But if I have done this math then you would hope FI have – and this may well be why they are making this bold statement today.
They are at the end of the day right – by also demanding millions injected in liquidity on top of this offer we were asking a lot. They are already providing a fantastic offer – probably more generous than anyone else out there.
I think they still will inject significant money via market makers – but shifting this into the background where it belongs and throwing the gauntlet down to traders? It’s probably correct.
I think the expectation that if traders just hold out then one day the Market Maker will save the day? This never really helped anyone.
It would be better if traders did it and then market makers quietly helped it along and nobody knew they were doing it.
If we’re happy enough that the risk of the doomsday “FI is dying” scenario is low, and we subscribe to the basic economic theory that “low prices + big dividends = growth” then we can have an optimistic outlook.
I have those views.
What I think is a real danger is just assuming that the market will grow back the way it was. I eluded to this below – there is a definite trend shift recently. All the trauma has clearly caused traders to value quality more than they did. They are naturally less willing to speculate wildly on 17 year old wonderkids or no hopers. Much more willing to put cash into winners or players who look like winners.
It’s good – these are often the types of player I’d be targetting anyway and really, away from the hype, they have always been the most profitable in percentage terms.
So that’s my overall plan – make sure we are holding the sorts of player that a) can win in these hectic fixture schedules but b) are just naturally attractive players people are going to want in the event of a market recovery.
Often, to get the best profit we might need to dip into some obscure Eredivisie players or pick out some random Atalanta hipster pick. Not necessary right now.
When you can pick up England key players or Bayern/PSG/Barcelona key players for peanuts – we should absolutely make the most of that.
There is still wild variation in the quality of those players – as covered in scouting. We can definitely lazer target on the absolute best – but I see no need to be too clever right now.
When establishing the bulk of our portfolio – pick the likely winners. Pick the players who are going to be popular and easy to sell when the market recovers. Don’t think too hard.
For the bulk of a portfolio I’d recommend this. There are of course definitely great reasons to hold some veterans and IPD rotation picks or some transfer picks too.
It’s just that the further we deviate from that template core player from key strategy (24, big club in Europe, starts for a big Euro 2020 team, high likelihood of dividend returns) the less we want to pay.
This is a moment to make the most of that luxury of being able to acquire some of football’s biggest global stars for peanuts. It will not be there forever.
Now. If we get through that period in the next two weeks where we see on paper drops, some misery, but also some freedom to trade again. What will the world look like?
We’ll feel upset our portfolio values have dropped. But we’ll also have freedom to trade. No shortage of amazing bargains to be had. Doubled dividends. A huge match schedule where players can win those dividends, with up to 9 games in 30 day windows for big teams.
Objectively speaking – it looks like a classic sort of “creative destruction”. Things burn down a bit but it leaves a fertile field for growth. If prices are cheap and dividends are high – people come and get them there is no question about it. Basic economics in play there.
How does that not happen? Well, if FI fall over. Are they unable to ride out a few months of this financially, where trading commissions may not have covered their dividend payouts? I mean. Who knows, it’s not like we can go through the books and pick at them.
We can see the credit reports as previously discussed, and FI’s balance sheet has been improving if anything in 2020.
They have a closed loop system where money can’t really leave the market. A trader can, but they have to be replaced before they go. It’s like a nightclub where you can only leave if someone else queues up to get in.
They do have to cover dividends paid with commissions.
But doubling dividends recently. Coming out with the bold announcement where they are saying “forget third party liquidity providers, come and get all this value we’re offering”. Are these the actions of a nervous company on the brink?
I don’t think so. It feels to me like the actions of a strong one who knows they have a good offer.
Unless they really are on the brink and you think these are the last gasp desperate moves? I mean you can never say it’s not possible but that just isn’t my feeling.
So that’s the headline. I’ll cover the details in a bit. But I always like to get drag these things back to – “what can we actually do?”.
The expectation now has to be we’ll see lots of speculation about what will happen, and some uncertainty, leading up to next Thursday 19th when the 1p limit is taken off.
Then that stabiliser is removed and blue button prices are going to drop. And people will be unhappy and some will panic. But spreads will tighten and that’s going to make it easier to trade – there will be no more odd incentive to try to “sell and buy back cheaper” or similar.
Psychologically, people will be more likely to sell players cheaply on the red button – because they no longer have that expectation of them being worth more because the blue button said so.
For example, if I have Player X at a £2 blue button and a £1 spread, then selling for £1 feels miserable. If that drops from £2 to £1.10 though and the spread is just 10p – I’ll be more likely to do that. I no longer have an illusion that he’s worth £2.
So we can expect people to take up cheap bids more in this period, both before and after. A great time for anyone with spare cash who wants to use this period to clean up. I would be doing this probably next week, although now is not a bad time either.
What you’d be looking for is any further panic – which could come either in the lead up to November 17th or possibly after as portfolio values do start to drop.
These are the absolute text book classic examples in trading of the time you want to be buying (assuming of course that you have longer term optimism for the platform, and have money you can safely use to do so).
Many of us will not be in that position though – we’ll be mostly invested. And we can expect on paper portfolio values to drop for sure. It’s going to hit both good players and bad, though the better players are holding up much better as people seek safety in real quality.
It’s a definite trend shift away from the hype of the past and if we haven’t made progress in gains – we can possibly measure some success in holding on to more than we otherwise would have. I have for example seen a wide range of portfolios and the drop can be anywhere from 10-20% but it can be more than 50%+ if poor choices have been made.
Hanging on to most of our gains in the rough times can be a greater sign of success than profiting in the easier times.
If a trader is sitting here right now with a portfolio built on hype without much real chance of dividends – that trader is in huge trouble right now. You can’t really just ride out this dip because to do that we need real reasons why people will want to come back to those players.
If however we have made good selections and we’re holding players that are winning dividends, have a good chance of winning dividends, or at least have some concrete reason why they look like future winners – we are in a much better position. We’ll likely have experienced fewer drops than we could have. And we’ll be in a better position to take advantage of any bounce back.
So in this scenario, and I expect most members are in this boat where they have a wide selection of good quality players or why would you even be here – I’d say stick to your guns if your players are really worth what they are worth in terms of true value. This is a buyers market, not a sellers one. And that’s going to be true for a good long while.
We will all of course have problem players in our portfolios too – players that have lost their way, dropped out of the team or just not performed as hoped. Some of these have a legitimate reason they can bounce back. Others will really not have much chance and these should be dealt with decisively – taking that hit if need be. As I’ve been saying on this for many weeks – I’d just get on with this rather than wait.
I find myself a little surprised they have been this bold. But oddly… I feel kind of good about it? Even though I see portfolio value drops coming.
I think my nightmare is a continuation of the current miserable scenario where our trading moves are incredibly limited.
If competent market makers are not coming over the hill like the cavalry saving the day… then letting traders trade is probably the best option. At the moment we have a sort of zombie market where blue button prices are way out of whack with the red button bids.
This hurts both players who deserve their blue button price AND players who don’t deserve it. As long as traders are limited in their moves by these mammoth spreads then we are never going to see the market get healthy again.
If prices have dropped but spreads are tight – that’s actually healthier than the current situation. And with the real value available – could lead to a strong bounce back in the coming months – though I suspect we are talking months, not weeks.
Well. In the previews to this announcement I said what the market needed was closer spreads. We’re going to get them, but perhaps not in the way traders had hoped.
That market maker activity has been committed to and will be there. But we note in this announcement it isn’t mentioned even once.
This is a deliberate throw over to traders – giving us freedom and the tight spreads needed to turn the market around.
FI are hoping that the low prices and huge dividend incentives clearly available are going to turn this around – and they don’t think they need to inject much liquidity to do that. Or, they can’t. It’s one of the two.
This can be interpreted as a possible sign of strength – i.e they think the offer is so strong that they can ride out one more drop in the market before things settle and then recover quickly maybe in early 2021.
An alternative interpretation is the opposite – it’s a sign of weakness because they actually can’t inject more liquidity anytime soon either because they don’t have the money or they can’t find a viable market maker to do it.
I suspect the truth is somewhere in between. My guess would be they are confident in the product, have money, but cannot find many viable/competent market makers in the time frame needed which is basically… right now.
I haven’t glanced at social media yet but I suspect this will land badly in many quarters.
It’s not an offer of a massive cash injection to push those red button prices up.
It’s more of a gambit. FI are saying:
“Look, there is TONS of value here. We’re going to drop the artificial stabilisers and let traders trade, let you find what players are worth. We know this is going to crash portfolio values and we think the market can take it. Longer term – this will allow trading, create natural liquidity, and end the shenangians and perverse incentives that are causing problems”.
They may well be right. And I’m even a little impressed by their confidence here. But I still don’t think many people are going to like it because they wanted a quick FI fix. And they are going to like it even less when on paper portfolio values drop.
So this is brave.
This is not a big offer from FI to charge in and save the day.
The final line of this text says it all: “You are the platform”.
The major thing here is the removal of that 1p Offers floor – meaning from November 17th we can Offer shares at anything 1p higher than the red Button Instant Sell price.
What this means:
– Spreads can close naturally – possibly leading to the conditions where a healthy market can trade again free of shenanigans and indeed with natural liquidity.
– There are no obvious plans for market makers to close the gap by injecting liquidity – although those promises have been made separately – this seems like an attempt to play down those expectations.
– Portfolio values, on paper, are going to plummet. And this is going to freak people out.
– Real value, in terms of what a player is really worth by way of dividends, will of course not change. Will this be lost on many? Probably.
Good morning/afternoon and welcome to the Live Blog!
FI should make their announcement very shortly and as covered in my preview this week (here) the main thing I am looking for is measures that tighten spreads.
This is the key thing for me – nudging those red and blue button prices closer together will be the game changer that will encourage healthy trading and remove the incentive for all the various trading shenanigans we are seeing right now.
The best way of doing this is for FI to bring forward liquidity providers that are competent – both in their ability to manage the market and to understand that mix of quality and hype that can support a players price.
They should come in and start bidding aggressively and raising red button prices on players that can justify those prices on a realistic dividend return.
We may also want to see movement to reduce the 1p limit on Offers – reducing blue button prices is another essential way of closing spreads (all be it a less popular one!).
Some players deserve a blue button price drop, it’s important to recognise that. But many do not – the real value is so clearly there right now in terms of dividend return.
So, if all we get out of today is a firm date before the end of the year on significant liquidity injection I’ll be happy and remain optimistic.
We’ll also get some other tinkerings which may be helpful. Changes to the way our portfolio values are calculated most likely. Including a probable widening of the worst FI acronym the “VWAP”.
Circuit breakers to prevent sudden crashes are probably part of this. All good.
Depth of Market will probably get covered – but I expect a slower timeline on this than next week – introducing this depth now I think is a be careful what you wish for scenario. For many players all Depth will show right now is how shallow it is.
Overall – I’d urge some caution on this. I do not think we are going to see an announcement today that will fix everything in one go.
Yet on social media, as is so common right now, we are seeing massive overhype and cranking up of expectations which are almost setting this announcement up to fail. It’s near impossible for FI to meet expectations.
Why people behave like this I am not sure. Perhaps they think they are pressuring FI into action? Or are so upset/angry they can’t really do anything else? Who knows.
What it actually does it set up hopes that are very likely to get dashed – draining confidence even further which is bad for everyone.
I’d like to be pleasantly surprised and blown away by the announcement today – but I suspect we are going to see some positive steps but nothing that gives an instant fix.
I think things will turn around but it’s going to take weeks and months not days.
Let’s see. I’ll start writing as soon as I have read the announcement at noon and have anything useful to share! Do get questions in whilst we wait.