A more depressing week on the market – and a return to more nerves, fear and doubt in parts of social media.

Let’s look at the price movements as usual to see what we can see. Then think about some of the hot topic mechanic/platform issues currently doing the rounds.

Then we’ll discuss what we might actually do about it!

Market Watch

Last time out when I reviewed the final week in November it was pretty clear what the main driver of prices was – it was perceived performances. Good performances were getting rewarded strongly. And bad performances punished.

But not always entirely accurately which is why I underlined perceived – very few people do extensive scouting or know what they are really looking for so you have to expect a large amount of inaccuracy when judging how well a player really did. 

Often for example a player can get a bad FI score and/or appear to play badly, but if you dig into it you can clearly see they aren’t a million miles away from a win at all.

And the reverse can be true – a player can smash a 300+ score and appear to be doing really well but actually be extremely lucky and a diligent researcher will know not to expect that again soon.

This is good – it’s exactly the sort of market where good research gives a trader a key advantage because that information allows us to exploit these common failures of judgement. Simply put we can buy good players most people think are bad cheaply. And sell overvalued players people want for a premium. Good conditions.

But in the last week those conditions have not continued – we now have a different market environment again. 

It’s far from the panic of early November, but there is a clear bleed out for many players at least in Blue Button price terms. How much credit you really give that is questionable. As we know by now – it only takes one reasonably sized holder to crush that price. 

A player can appear to drop 2-5% say just from one person’s decision to sell. That can bounce back very quickly if those shares are bought. The question is – how many people are dragged down with that seller? How many people think “oh no – it’s happening again!” and join that seller disposing of shares cheaply?

It’s hard to know. We now have some market depth information in that we can see the top 5 prices but this is far too thin to be truly useful and it’s why I was a little lukewarm on it. It is useful for grinding out a few extra pennies when buying or selling but as genuine market depth information that tells us what is really behind that Blue Button or Red Button? Pretty much useless. We need to be able to see all of the bids/offers.

You do have the Average Offer Price which always looks much healthier and probably closer to the real value of a lot of the players. But as per my immediate reaction to these on the Live Blog – there is a trust issue with these. 

The entire purpose of this number is to help people get over the volatility of the fact that one person can drop a price. Yet it’s so obvious how this Average Offer Price can be gamed and therefore there is zero trust in this number. This is a mistake – a trader should not be able to place unrealistic offers to pump this price. 

If we look at Hudson-Odoi for example I can currently Offer him for sale at £3.05 to pump his average offer price! Yet anyone buying knows they won’t have to pay much more than £1.20. FI caved to social media pressure and actually increased this ceiling as traders wanted to be able to manipulate these prices. In my opinion – this totally backfires. 

Even for the traders who think pumping the average offer price is helpful to them. I don’t think people care about Average Offer Price because they know it is too easily gamed.

Have we ever seen anyone celebrate the rise of an Average Offer Price? I have not.

This needs reverting in my opinion – FI should enforce realistic offers only that may actually get matched – then we can see an Average Offer Price only from genuine sellers. It would be lower yes – but we could trust it more.

It is important to have a number we can rely on – because the Blue Button price is still dragging people’s emotions around more than anything else. And yet we know this number is total garbage as a reflection of value. 

It represents the feeling of the most panicked, stressed out trader who is willing to sell at rock bottom. It does not reflect wider opinion – but it can become self fulfilling as more and more people are dragged into that panic mindset. And you can’t just dismiss these people as mentally weak – this isn’t easy to just brush off even if we like to think we have ice in our veins.

When it comes to the type of player that is dropping this week it is a real mixed bag – and I think it just reflects popular players that people have rather than anything else. The more people hold them – the more likely at least one of those people decides they have had enough and drops their price. And then if one goes… the next can follow like dominoes as the pressure mounts up.

We are still unlikely to see a recent winner or big scorer on the sell list. Wins will still boost confidence and keep people in. But we will see players who are very close to winning but haven’t being sold. And if we find ourselves with free money available from dividend wins or similar – it’s just an undeniable opportunity to get great players cheaply.  

And you can see some rises for good performers – Jones, Chiesa. Pogba who hasn’t done a great deal to deserve that except hit a transfer rumour although as discussed the price was getting so low that he was probably due a come back at some stage.

But in a market like we saw last week we aren’t going to be seeing many Blue Button price rises. There is just no reason to do it – we all know we can get cheap bids matched. It’s not that no confident traders exist – we can clearly see the trades going on – but it’s all happening on bids.

This creates a situation of strong downward pressure on the blue button, but extremely weak upward pressure. In a market like this – blue button prices can only really go one way. Except when a player does something so obviously remarkable that people see a need to buy them heavily right this moment. And it will take a lot to make that happen – nobody is going to pay more than they have to right now.

So what we are really looking for when it comes to success is a closing spread that shows demand for that player is picking up. And that is much harder to see on the platform because the price graphs do not track the spread.

I’ve said plenty of times recently that what we need more than anything is tight spreads that permit trading. On that score – we definitely have a much better situation than we had weeks ago. This is hugely encouraging although is probably missed by most.

You can get sell prices on most of the top 200 and many of them are pretty reasonable spreads. It may be that the blue button price had to dip and the red button price had to rise a bit and they met in the middle. Which will be cold comfort to holders – but this is exactly what needed to happen in many cases.

This is key – if this stays true then my stress levels are pretty low overall. Blue Button price falls are depressing but when you know how easily those prices shift around and that just one person can be behind them you know not to take them too literally. Why would I let other people change my perception of what things are worth on this short termist basis? I spend enough time working that out for myself and I’m going to use that rather than anything else.

There has been plenty of people who have wanted to sell players but haven’t been able to this year and that demand to sell has been backed up creating a big downward pressure. Maybe some of them are thinking “it hasn’t all just bounced back immediately, I’d better just take my hit”. Maybe it’s the right decision for them, who knows what circumstances they are dealing with.

My feeling is that at some point, probably not far away, we likely hit some kind of equilibrium where those who do want out are out and it’s the sticky traders left. Prices will stabilise at a level that will continue to be well under what I call “True Value” (i.e a rational dividend return for the price). And after a period of price stability and probably a few changes from FI – people will come and collect that value because that is human nature. 

Coming back to what is moving prices – winning and losing is still going to have a lot to do with it for the foreseeable.

We’ve had one of those weeks where lots of the winners, particularly of Star Player have been those sort of “spoiler” or punt picks that aren’t widely popular. This happens from time to time and there is nothing wrong with it – but it is unfortunately timed in a delicate market.

People wanted to see big dividend wins for traders and what we’ve seen is… Gervinho, Payet, Giroud, Zubeldia, Mallo, Doan, Ben Arfa, Grillitsch. Meet your Star Players of the week. This is just unfortunate at a time when the mood really needed some big ticket winners, but that’s just the breaks. I am sure this has contributed to the feeling of gloom.

I can only point to 4 winners in the last week out of 21 outfielders who you would call popular or well known – Insigne, Pepé, Messi and Lukaku. That’s pretty miserable and badly timed during a fledgling recovery. It’s even sparked talk of “is winning FI too hard” or “should I change to a full IPD strategy”. I’ll discuss that more below but spoiler alert the answer is a firm no.

For the next week – of course performances are still going to be important for maintaining/boosting prices and closing spreads. And if probability asserts itself some more popular winners should come through and that could be some cause for cheer. 

Whilst confidence remains flaky though there may be no escaping that blue button price drag even for good players. All it takes is one holder to lose confidence to make it happen. 

Although we can decide how much we let that person influence our actions. I am personally much more confident in my own judgement of quality versus price than the fluctuations of the Blue Button.

Is FI too hard to win?

I’m not sure if my social media feeds are the same as everyone’s but there’s a few hot topics I’ve picked up on this week: is it too hard to win? Is the FI match day experience fun?

These are interesting topics and it would seem remiss to ignore them. But I’ll preface this with my overall view here: endless discussion and hand wringing over mechanics and value is not really the most helpful thing we can be doing.

If real value is what we want, it’s obviously there. It’s obviously not too hard to win if you know what you are doing and are patient. I don’t think hounding FI on social media is the best way to help the platform or get changes we may want either. It often just whips up more negativity which is bad for everyone involved.

FI are culpable in the past for creating this mentality by over delivering whenever people have complained loudly. I felt that the last major communication headlined “you are the platform” was a deliberate move away from this historic approach. I think they have a “there is value here, come and get it” mentality now. Which isn’t wrong.

But they should combine this with some hard work in the background to deliver the changes that are needed. Under promising and over delivering if you will.  Listening to traders of course, but remembering that those howling the loudest on social media are often not the majority.

So really, I think we serve ourselves best by focusing on actual trading and what we can actually do rather than anything else. I’ll end the article with discussion on that. But it’s still interesting to discuss these wider issues.

Is it too hard to win?

This issue seemed to kick up when Sancho narrowly missed out on what would have been a deserved win recently with Cuadrado beating him to it. Lots of disappointed holders there and even if not holding I think a big winner like this would have been good for general morale. 

It got even worse when Cuadrado was reclassified just a week later! Conspiracy theories abound but FI really do not control this it’s just OPTA. And unless you think OPTA have a secret conspiracy to block Sancho using a relatively obscure aging wing back… well. Let’s just not get involved in that.

And the issue has gathered even more pace because as mentioned above the list of winners in the last week has been.. uninspiring? 

So is it too hard to win? 

Historically – we just know it’s not. We win too frequently for it to be just random chance. I’ve run numbers on this many times in previous articles – and I just wouldn’t have any members left if the players I were highlighting as good weren’t proving it over the years.

But is there something unique about this season that is upsetting that?

I did a very quick and dirty exercise to look into this. I made a list of all the forward, midfield and defender winners from this season on Bronze, Silver and Gold Days since 12th September – the day Leeds kicked off the EPL against Liverpool.

I roughly divided them into two groups – players I have considered in Scouting to be good performers at say 3 out of 5 stars and above, from the obvious Neymar’s to Skov and Depay and Kroos. And including the more obscure ones you can still see coming like Tapsoba, Rakitic, Pizzi.

And the rest – the “spoilers” if you will. Players that I consider to be weak selections and generally not worth a punt – if they win it’s likely to be luck and not something you can really bet on with any kind of decent odds. Someone like Zubeldia from this weekend, or De Jong. Or even Lozano who I didn’t rate before his early season win. Or – they could be ok performance wise but so unsuitable in trend fit you wouldn’t likely bet on them anyway – maybe Ben Arfa or Vertonghen – I’ve considered these to be spoilers.

I’ll paste full lists at the end of how I cut them up – though this is quick work and not exactly in my most presentable format. And I also know I am missing 3 winners somewhere but I have decided not to go through the entire list again to find the stragglers as it would take an hour and won’t change the outcome significantly.

To cut to the chase – of all the winners from this season 62% of them have gone to players I’d generally cover favourably in scouting, with “spoilers” – players I think are not great bets or poor for FI purposes taking the win 38% of the time.

A decisive victory for the quality players. And you have to bear in mind too that quality players are actually rare on FI. In a platform of over 3,000+ players, the “Spoilers” will be making up ~2,700 of that total. I’d be surprised if I could name 300 genuine quality contenders without getting into very obscure punts.

On those very very rough numbers 10% of the players on FI are taking 62% of the wins which is a horrible bastardisation of mathematics because I’ve used so many averages and assumptions for speed. But for purely practical purposes, it won’t be far wrong.

So, it’s clear that FI does reward the elite players and it is entirely geared that way so that should be no surprise. It’s been like that in previous seasons – it’s not different this season.

I would suspect it is harder this season than usual to predict specific winners on specific days – just because of all the additional rest and rotation we are seeing. And there is a general theme of big hitting sides struggling and not dominating this year as we know from the EPL – which may or may not be related to the heavy fixture calendar and disruption to team selection.

But the quality players are still winning out, even in this unusual season. 

And we are not betting on just one player either. Most of us will have a portfolio of 30-60 high quality players, and with a well targetted group of players the likelihood of us dropping on a win any given match day remain very high. If one stumbles, another can step up.

So. Is it too hard to win? Should we say “well you can’t pick the winners anyway, why even try!”. No – that’s obviously not the case and it flies in the face of all available evidence. This is likely the argument of people who can’t be bothered to put in the effort to pick winners or don’t know how to pick winners. No dice.

It might feel too hard to win if you are an average punter who doesn’t do a whole lot of research. There is also a point about patience. If by “winning” you mean – will I make a great return on a good portfolio of players at current buy price (or even Average Offer Price) over a season? Then yes, you are very likely to win a good dividend return if you make good choices. Because prices are low and dividends are high.

If by “winning” you mean – will I win a dividend this weekend? Well. That’s much harder to predict and from a rational perspective also does not entirely matter.

If we think of “winning” in terms of is there value available in a longer term focused product – it’s not even up for debate. The value proposition from FI is currently extremely generous and nobody should pretend it isn’t. 

However lack of immediate wins and a perceived difficulty in winning do matter when it comes to a slightly different question about accessibility and the experience of FI which we can come onto next.

Spoilers (click me)
Solid FI Players (click me)

Is FI fun?

FI matchdays can be fun – watching your player rise on the leaderboard and chase down a rival pipping them in injury time is highly entertaining. And it happens surprisingly often.

Or biting your nails with your player at the top of the leaderboard, willing everyone else to fail so your boy can hang on in there. 

These enjoyable situations happen a lot – whilst on paper there may be 800+ players in action, we know that only 50 of them might be in with a credible shot. And if we have 10-20 such players playing that match day, we’ve got a reasonable chance of winning even on that one day.

And FI being FI – it is not a traditional bookie – we don’t even need to win that day at all from a profit perspective. Just one win a season can be enough for many players. The higher the price the more you need that player to win of course.

We know all that. But is that kind of patience fun? Do traders actually want to be winning every weekend, even if it’s smaller amounts? 

The FI solution to this short term itch is IPD. But currently, with prices so low, more matches in 30 day periods, and a doubling of payouts this season – they are a hot mess. They are skewing the platform massively because this has become so lucrative it is impossible to ignore even for normally very patient traders.

IPD has always been best as a side show – it was never intended to be the main event. It’s really, really difficult for players to get a sustained price rise when all people want to do is keep selling and maybe rebuying for IPD purposes. Once the money is out of that desirable player – there is nothing to say it has to go back to them for a rebuy. You might want to move it to a different player and that may well be the right call for an individual.

But the overall impact on the market is additional volatility which it does not need, especially now. I don’t think this was planned by FI, it’s an accident. 

On the match day performance payouts, FI is currently set up on a “jackpot” structure. It’s a relatively big win when it drops. But there are only 5 possible winners a day and hundreds of players are in action.

It can be super frustrating to see a player miss out narrowly – especially when people don’t respect the reason for that – such as the randomness of game winning goal, or awful crossing being over rewarded in this scoring system.

A popular and long called for solution is “tiered” payouts – perhaps having the top 3 forwards winning on a Gold Day, with a lower payout each tier – exactly as Team of the Month is done. 

Adam Cole, FI chief, is consistently on the record of preferring the jackpot structure. He’s a big believer that people want that big win. Those are the ones that will get shared on social media. If your “Star Player” only nets you a small payout – will you care?

There’s merit to his argument. But in my view the pain of just missing out is just too harsh and frustrating. It needs to be more of a downramp than a straight drop. 

If you added a runner up (not a dividend increase, more a redistribution), even if this payout was relatively modest, I think this would go some way to soothing it.

Or you could really fire up Team of the Month. This is another solution to the problem of near misses – if they near miss – well at least those points count towards the TOTM total. But this was overtaken by the wider dividend increase. In comparison – TOTM feels pretty modest and doesn’t cause huge excitement.

So what could you do?

In an ideal scenario, two things in my opinion:

1) Rework the dividends. Cut IPD in half and use that money to add a second place for each positional category on a match day. Maybe chop a little off the 1st payout if needed to do that. And boost Team of the Month to make it exciting. Or, scrap Team of the Month and add a third place to tiered PB on Match Days. 

Obviously you’d have to actually be FI to work out the details and make that financially sustainable – but some sort of dividend “rebalancing” event rather than an increase could help. These are changes that will help stabilise the market – and reinforce the key differential between FI and a traditional betting platform. 

In a totally ideal world you’d subtly do this during a dividend increase to avoid that “but you took my dividend away” feeling – but dividends are currently far too generous versus market prices and it’s just not feasible.

2) Iron out problems with the scoring system. 

It’s not a bad system overall. It’s undesirable to change it completely so it perfectly reflects something like WhoScored player ratings. FI is it’s own thing and there has to be a learning curve – if predicting winners is as easy as looking up WhoScored ratings then value in the market evaporates because everyone has exactly the same information. It just doesn’t work.

But there are significant tweaks that could be made.

I understand the need for game winning goal from a business perspective. Without that random element it would probably be slightly too easy for a clued up trader to win too often. But toning it down by just another 5-10 points would help. It’s just too big of a factor and when you see your player lose just because of GWG – it’s not something football fans respect.

There are other significant issues. Crossing being over rewarded. Forwards are punished too heavily for risky but often decisive passing. Centre backs get a raw deal. Positional classifications are a mess. 

There is a lot you could do here relatively simply to iron out some of these issues and increase the respect traders have for the system.

But will FI change anything major like dividends or the scoring anytime soon?

I’d be very surprised. I’d love to see the above changes but the last thing FI will want to do right now is cause anymore havoc. I think what is needed is stability rather than change overall.

We are more likely to see some mechanical tweaks. The way the Blue and Red Button prices shift around at the whim of a minority. The lack of respect we can have for Average Offer Prices because of all the gaming. These are real problems that need sorting as soon as possible. I’d expect more action here.

But more than anything – we just need spreads to stay somewhat sensible as the main thing. Huge FI intervention is unlikely to help, and could just make things worse if more change unsettles people. Unless it’s in the background with increased market maker activity.

Final Thoughts

I’m not a particular fan of sitting and waiting for FI to fix everything. 

There is at the end of the day a reality of markets. Sometimes they get in flaps, happens to all of them. Some people leave. Some people stay. Eventually equalibrium is found, things settle, it grows from there. I don’t see FI as any different on that score.

As long as the basic value proposition remains – i.e prices are value versus the dividends available and we continue to have reasonable spreads – I’m not overly stressed.

There are changes I want to see – but lots of this can wait until next season. It would reek of panic if FI did a dividend review or scoring changes now and I don’t think they will.

What we do want to see is some solid improvements to the platform – particularly on the way prices are presented, and more on market depth which is far from deep enough. 

But I just fundamentally don’t think there is a magic bullet. I’ve expected a recovery but over weeks and months rather than days. And I don’t think we should be surprised to see a stutter. 

It isn’t all gloom. There are clear opportunities if we find them and grab them. We can trade more freely than we have in a while because of the tighter spreads.

I’ve been able to net some thrilling wins recently by trusting the match data. Something like Lemar from Scouting recently is a good example. Dead and buried, rock bottom price. Yet clearly improving and very close to a win. Actually missed out by just a few points but he got a decent price rise if buying at rock bottom.

Better than decent – it was possible to pick up some as low as 30p and he could be sold less than a week later for a 66% gain. And that’s in a scenario where he was unlucky and just missed out on a Star Man win by 8 points.

And that’s not a huge risk – he’s a young player at a rock bottom price. And the match data was clear about the improvement. It’s calculation not speculation.

One limitation of these is that cheaper players don’t have huge amounts of liquidity, so if you have a larger £20k+ portfolio – you don’t want to go too crazy and buy a massive number of shares in just one player. It’s best to spread it around a little, stick to numbers of shares that you can credibly sell at some stage. It will still be a significant gain in many cases.

Smaller portfolios get an advantage in this space as they can be more nimble. 

IPD rotation trading is very much in style too as I’ve mentioned many times in recent months. And I’d also say this kind of rotation is often possible with standard “performance” players. After all, most good performance players score and assist frequently so where the price is right you can refresh them in the same way.

There is also nothing wrong with a more patient strategy. If you have a portfolio you are confident in, and they still have reasons they can recover – it may well suit some people to just monitor what they have and trade only when they feel something has changed.

For the optimal results right now – I think we need to be quite active. A little braver than usual. More willing to trust the match data and go for players who seem unpopular but are actually close to winning. There really are massive wins available in that space.

And make the most of these opportunities to refresh IPD windows because the unique circumstances that make that so attractive will not be around forever. 

We’ll also want to think about the January transfer window, which I’ll be looking at tomorrow and sharing my analysis.

We also have that EPL focused period coming up at the end of the month when it will be the only show in town.

And there is another round of big European games this week. Hopefully that delivers some more popular winners – although as it is the final game we can expect rotation for many teams. 

The knockout draw is next week and I’ll be analysing those fixtures closely too. 

Plenty coming up to factor into our trading – and whilst talking about mechanics and platform changes can be interesting – I really think it’s best we focus on our own game at times like this.

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