Subject: 'Dividend Review.....what two words would you rather hear?

Well, it's been a crazy 2 weeks. Index in-your-inbox as cleverly named by the team, is back and I'm back in the host-author seat. Apologies for lettint FIT drive last newsletter, I was away! As you can see above, with a swanky new banner - and a dividend review on the horizon, it seems as though the wind is really in the Football Index sails. Probably, mostly due to the new banner - but we can debate that another time. 

Liam, Trader, Buzzing paul, Ginger Pirlo and I are back and we couldn't really talk about anything other than....the incoming review? The next newsletter will be due on the day of the review, so we'll probably hold off on releasing that one until the 30th, just in case we make some more silly predictions and they're completely wrong! 
Liam

It’s been two weeks since our last newsletter but it feels as though we’re in the exact same position all over again, except this time football index have pulled a different string. There are so many implications talking points come from this announcement that I could write a book on it but in the interest of everyone’s busy lives and the hope that the other lads pick up on other points, I’ll try to keep it focused on two areas- timing and changes.

Firstly the timing. I can’t decide whether it’s a weak reactionary mentality or a stroke of genius, whether this has been planned for a while or decided at a panicked Monday morning meeting. Here are the arguments for both and then you can decide…

On first glance, it certainly looks like deja vu of the deposit bonus. We’ve had a few days of negativity and complaints and football index have decided to give in and offer up a dividend increase (if that is indeed what it is). We had previously been told that there would be no increase this year, which is clearly the biggest indicator that this could be an ad hoc decision to say the least. However, this may not be the case. It is entirely possible that football index never had a time stamp on the next dividend increase, rather, they used a metric such as market cap or average dividend yield for example, to determine when a change is needed in order to maintain attractive returns, and therefore when they said we won’t see an increase this year it’s because they’re didn’t expect the incredible growth we’ve witnessed over the last few months.

You could even take it one step further and say perhaps that metric was surpassed some time ago but they decided that there was no need to add fuel to the fire amount of growth occurring and risk it completely overheating, rather, wait until it slows down to then use the increase as another market stimulus. This would also allow them to sweep a nice bit of income from the amount of instant selling that went on during those few days too which I’m sure will go a long way towards a possible dividend increase. This may also be their reasoning behind the increase of the average spread on players too. Whether people would rather have increased dividends or reduced spreads is a debate for another time but my guess would be the former. So there we go, maybe we’re not giving the guys at Index HQ enough credit and what initially looked reactionary has been the plan all along? I guess we’ll probably never know!

Reactionary or not, come 29th of October something is changing, and of course everyone wants to speculate at what it might be, so here are my two cents on the matter. My thoughts on this have changed several times over the last few days. Even just on how much of a relative increase would be appropriate. On one hand, if you just do a minor increase there’s the risk of an underwhelming response and now both the deposit bonus and the dividend increase cards have played, it could be hard for football index to swing confidence again. On the other, a large increase may see a ton of money pile into the top of the market again to the extent that they become overpriced and stagnate resulting in calls for another increase six months down the line.

However, after speaking with many traders regarding this I think I do now fall on the side of “bigger is better.” A decent increase would definitely set the platform up for the rest of the season and beyond. It would help bring dividends back to the forefront of the site and get yields back to what they once were which can only be a good thing in the times of user expansion as we head towards order books. The next question would have to be how will they do it? Of course, a simple % increase in some/all of the dividend types would be the easiest option and is possibly the most likely. This provides a chance to make double and treble days actually double and treble something and I’m sure many would be happy with a straight upscale without any added complexity. It’s interesting that this whole thing seemed to kick-off because of the media opening up and 7%gate yet I think, in comparison to match day dividends, media won’t be increased as much. Maybe a little to keep some people happy, and I do agree that media is an important part of the platform that helps to stretch the market and keeps the worlds best players at the peak of the market, but the message has always seemed to be that Football Index want to move towards a more performance-based platform in the future and this is a good chance to take a step in that direction.

Alternatively, we could get something completely different. More media places, new media outlets from other countries, a cap on the number of articles from any given source, the possibilities are endless really. It will also be interesting to see if any changes that are made are actually implemented immediately. It could be the case that they tell us what’s coming and give a start date at some point in the future. This is something I wouldn’t object to at all, in fact, I think when this tactic has been used in the past it has been very successful, seeing a must more sustained growth in the interim and really milking the change for all that it has. Either way, not long now until we find out what’s in store for the next phase of football index growth and product development!  

Football Index Trader

It’s amazing how quickly the mood can change on FI.

Not long ago, if you were to drop into FI Twitter, people were elated over the 10% bonus. Then worried about what happens when the bonus ends. Then shocked and appalled by the changes to media dividends (I’m not sure why, since it was announced six months previously).

And just when everything seemed doom and gloom, Adam Cole rides in on his white horse with an announcement of a Dividend Review and all is well in the world again!

I personally have not been expecting a dividend increase in 2019, and thought towards the end of this season in 2020 would be a more likely scenario. This tallies with previous statements from Adam Cole and comments of the senior FI management team very recently. But, they have announced a review that contains a heavy hint of an increase.

To be fair, despite the last increase being relatively recent, FI has grown a great deal since and there probably is a rational case to be made for increasing the dividends at this point.

My hope is that FI had this planned and it is not a knee jerk reaction to the always temporary Twitter outrage.

The last thing FI need to do is create a culture where every time someone makes a bad decision and loses money, they have reason to believe they can take to Twitter and rubbish the product until FI cave and deliver a bonus or dividend increase. It creates a bad image for the product and it teaches traders nothing about good trading.

My overall take on all this is that the traders who don’t overreact either way to perceived positive or negative news are going to end up doing a lot better over the course of a season.

Whilst I did not expect an increase, I’m still in exactly the correct position to be profiting from one should it happen. As I said on my site recently (www.footballindextrader.co.uk) when you avoid straying too far from the real win mechanics of FI (dividends) and avoid holding players who are significantly overpriced, you make your own luck.

It is these players who hold up best in a storm. So I saw almost none of the losses we have seen in recent months as poor players were found out and ditched. Or media players were sold. And I am holding real FI quality that has been and should continue to make gains in the build up to any announcement.

Of course, we don’t know for sure an increase is on the cards. It could be a redistribution of how dividends are paid, or tiers of dividends (1st, 2nd, 3rd place wins and I hope so!). But, from the language FI use of “ensuring dividend returns remain an incentive” it would be very surprising if an overall increase was not made. There may be winners and losers within that, and it may not be a flat increase across the board. We won’t know until we know.

But on social meida we are already seeing a raft of detailed theories about exactly what may change as a result of the Review. But the fact is, we don’t know what FI are going to do. In the past, we have plenty of examples of traders trying to guess the announcement in really specific ways, repeating it to each other so often it becomes “fact” and people start trading on that basis. And then when FI do something completely different these traders scream blue murder as if they have been wronged.

They weren’t, they just made an assumption and got it wrong. I therefore avoid believing what I read on social media and steer clear of wild guesses.

What we can reasonably guess is this: a dividend increase, should it happen, can only benefit players who win dividends or who have real potential to win dividends. No matter what anyone tries to come up with, it will only ever lead them to that conclusion. And that thought has a brother: “I may need to sell the hype players who do not actually return dividends in order to pay for them.”

Therefore, I don’t really have to do much different, I’m already in the optimal place because I stick to good value players with real quality anyway. If you do this, you will find it works in your favour time and time again whenever there is uncertainty.

You make your own luck on FI. 

FIG

The truth is, FI will probably have our pants down with any predictions, but I suppose it'd be remiss of me to not at least try.....right?

If we look at it logically, FI have tried to water down MB intentionally through 1) Increasing PB and IPDs 2) Decreasing the number of Triple MB days and 3) Opening up the top 200. Now the reason they've done this is because Media buzz is, or at least was Football Index's most expensive dividend. Quite a simple business decision, when you couple it with the fact that Perfomance Buzz is more alluring for new users, and more exciting for existing ones. Now I do think FI will continue to Veer in this direction in the mid to long term, where MB is watered down - at least until the scoring system is much improved, but immediately I think it they'll be kind to it. Maybe not a kind as they're planning on being to PB, but kind nonetheless. 

I think Perfomance Buzz will be the main beneficiary. If you think back to Ciaran discussing the new website, he often references how Football Index want users to be able to see stats easily. This is one of many indicators that I feel show FI will continue to push in the direction of 'on the pitch actions' dictating the value of players. 

I don't know, but I do feel FI should be aggressive in this situation. A 15% or so increase would be nice, but is probably already priced in. If they want to see a robust market, ready for the transition to order books - I feel it should be more generous, probably as generous as they can afford to go. 

The one thing they need to be careful on, is IPDs. I fear that if they push the boat here too much, it could be a huge risk to how many large investors we see on the platform in the future. We need to remember, the USP of the product is the long term nature of the bet. That 'investing' aspect of it, even though it's a gambling product. That's one thing I don't want to see watered down, and thus I hope to see a good increase in PB, with MB rewarded second most. 

Back to the futures - Buzzing Paul

Last newsletter we looked in detail how a strong baseline can provide a solid foundation for matchday ranking scores. Now it only seems fair to reiterate that goals are also really powerful.

There is no better example of this than the 58th best score in the entire data set. Robert Lewandowski scored 5 goals in 9 minutes against Wolfsburg in 2015. In so doing he scored an incredible 325 points, just 26 less than Jorginho’s score in the last installment.

The Match
Bayern v Wolfsburg Tuesday 22nd September 2015

The Report
Robert Lewandowski scored five goals in nine minutes after coming on as a substitute for Bayern Munich in their Bundesliga victory against Wolfsburg.

Wolfsburg took the lead when Daniel Caligiuri beat Manuel Neuer at his near post.

But Lewandowski's introduction changed the game, as the 27-year-old produced a clinical striking display.
Six minutes later, the Poland international netted his first goal of the night from close range.

Lewandowski added four more in quick succession to record the fastest five goals scored by one player in Bundesliga history.

Three of his goals were from close range, with his second driven powerfully from outside the box and his fifth a brilliant acrobatic effort.

The Star Player
Lewandowski’s score of 325 is the highest score I have recorded without a start in my 4 (ish) season database.

The majority of the points he scored were from the goals he scored:
· 318/325 points earnt for goals scored
o 5 Goals @ 45 = 225
o 1 GWG @ 35 = 35
o 5 Shots @ 3 = 15
o 5 Shots on Target @ 5 = 25
o 1 Win @ 18 = 18

· -10/325 points were award for his other non-Goal Attacking output:
o 4 Shots @ 3 = 12
o 2 Shots On Target @ 5 = 10
o 4 Big Chances Missed @ -10 = -40
o 2 Fouls Won @ 4 = 8
o 1 Corners Won @ 5 = 5
o 1 Offside @ -5 = -5
His passing output was typically unimpressive:
· 14/325 points were awarded for passes
o 15 Passes @ 1 = 15
o 3 Giveaway Passes @ -3 = -9
o 1 Key Passes @ 6 = 6
o 1 Accurate Long Ball @ 2 = 2
He rounded out his incredible score with a splattering of defensive points
· 3/325 points were award for his Attacking output
o 1 Ball Recoveries @ 3 = 3

Lewandowski has been one of the most consistent goal scorers over the past 4 seasons. Whilst he may be significantly less valuable without reasonable base scores, he has benefited most from the extension of IPD to Euro 2020 Qualifiers. He should consistently score until Christmas, at which point there may be dip during the Winter break. Maybe then will be a good time to jump back on.

If you have any feedback for me, I mostly hang out on #footballindex and @IndexGain Slack’s community. Find me on both @BuzzingPaul. Any suggestions for future performances are most welcome.

Ginger Pirlo's Short Term Game

Dividend review you say? Lovely jubbly

For readers of my new blog series ‘Can I make a living from Football Index?’ or those that see my waffling on IndexGain, you may think I don’t care about dividends as a short term trader. This isn’t technically true.

I like winning dividends as much as the next man, I just don’t chase them. Or at least my main strategy isn’t to chase them. I still make the odd cheeky cheap trade to see if I could sneak a PB win (which I managed with Brosinski last week) now and then, media divs not so much.

Even in the short-term game, I still understand how important they are for the product. As at the end of the day, without dividends to win what is Football Index? How would it work? What would be the point? Why would Neymar be pushing £7.50 a share?

They are the lifeblood of the product, so when FI announced they were going to “review” them at the end of October this is brilliant news. As reading between the lines, this will bring an increase in dividend payout amounts and/or make them more viable to win somehow.

We can speculate on the specifics such as tiered dividends coming in or how much they will go up by but whatever changes they will make; it should benefit traders and the product overall. Especially those traders who have large amounts invested in dividend winning players.

I am not one of those traders, but the changes can still benefit me as whatever brings activity and investment into the product, bring opportunities to make money. Even the announcement itself created a chance for me to make some quick coin.

Fortunately, I checked my phone when the random announcement was made and after a minute of digesting and seeing some ticker activity, I bought some PB players as well as Neymar himself and had a nice boost on my app home screen over the course of the afternoon.


I have even won media dividends since which is as rare to see in my account as the #footballindex twitter hashtag not full of unhelpful, biased, negative, self-appreciating horseshit. I almost bagged the full house on the last treble media day. Scenes.

My plan at the minute is to hold onto the players I bought (minus the ones I have took the profit on or otherwise) up until the announcement, as I can see another spike happening based on what they end up doing.

This tends to happen with announcements so unless they actually fuck this up and it’s a massive damp squib, I should be fine, but you never know. I also tend to get locked out after these 30-minute breather sessions with the app or site being totally inaccessible, so I shall take my chances already owning some dividend beasts.

Who knows, if they really make dividends more valuable, I may keep some long term holds in my port…crazy times.

Peace out!

Research, Resources, Tools & Tips:


Audio Content:
  • FigCast Ep 103: Sensational Episode with PB man, I'd reccommend everyone listen to it! 
  • FigCast Ep 104: Another great ep, this time with Ali G where we talk mostly about the upcoming dividend review.
  • Whoscouted latest podcast episode


Video Content-

  • Latest episode of my bank builder series is live, and you can find it here on YouTube

Written Content

Other

  • Interesting Article about FI's potential future plans for the US?


Have a great couple weeks trading! Give us some feedback on twitter, email or other about the newsletter. Even if if you hate it, let us know :) 

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