Subject: Index in your Inbox |004| 29/10/2019: Sun is shining, Index is Sweet

Liam, Trader, Buzzing paul,Ginger Pirlo and I are back for the 4th newsletter running, and this is definitely the best one yet. I think? 

The Football Index world has exploded, with crazy rises due to a dividend increase announcement - and obviously, that's what we're all writing about today. Some cracking stuff from the guys.....you'll enjoy reading this one!
Last time out we speculated what the big announcement could be and it’s safe to say it didn’t disappoint (many). According to football index, we saw over £20 million traded between the 15th and 21st and the hype was clearly matched by the real thing considering how much of that money was flowing into the platform.

We saw the obvious choices for dividend winners get the biggest immediate rises, and so they should, like it or not, the weighting of the matrix towards some of these players is huge at times and their possible returns just increased massively. The star player returns now being double that of the other two regular position payouts definitely support those quality midfield rises. 67% of star player winners have come from the middle of the park so far this season thanks to the new matrix meaning some of the returns could be huge once the new payouts kick in on the 1st of November. So massive in fact, that despite some players having risen upwards of 50% in the last couple of weeks, they could still represent value if they can be as consistent at winning as it looks like they may be. For example, look at Kroos, currently priced at £3.50, a gold day star man win for him will see him return 4.5% on his price. That is a huge percent, so huge that it’s a higher return than you would of gotten on him at £2 under the current structure (7p star man win equals 3.5%).

It’s likely we see the “Pb beasts” in Kroos, Parejo, Pjanic etc continue to push the boundaries of PB-only player prices in the coming weeks (helped out, of course by Kevin De Bruyne continually raising that ceiling at £5) as long as at least one of them wins in the coming weeks. You’ll probably see those who aren’t as good but capable continue to follow them in price in a pack behind too. The likes of Coutinho, Sensi etc. Which is logical in the sense that they have a lower probability of winning but their payout potential just increased largely. But one thing is for sure, having players from these brackets winning dividends over the next few weeks is definitely best for the growth of the platform. The more these prices rise the more the ceilings of others follow behind and eventually you see more money invested in performance based players, not to mention more dividends being paid out and hopefully reinvested.

Media Dividends got a nice % increase, yet no one seems to be talking about that. I do feel that the overall randomness of winners has definitely increased and the new infrequency of the likes of Pogba winning is not made up for by the fact the dividends have increased. Although I believe media dividends are important for the platform in keeping the biggest names in the game at the top of the market, I personally prefer a more performance based platform and am happy to see media dividends being won by those who score big game winning goals regardless of their price on football index, rather than for getting their haircut, but I can see why media heavy players like Pogba haven’t had the rise they may have had the media not been opened up. One big opportunity this media boost brings is the possible returns on transfer rumours which I’m sure will be revisited closer to January.

Of course the final type of dividend on offer are in play dividends which saw no increase. Having been boosted not too long ago this is not so surprising. It probably is smart to keep these as they are given the potential huge liability they must be for football index compared to the other types of dividend, especially if goals had been changed to 2p for example. Even at 1p the amount that will be getting paid out at the moment because of all the buying that’s gone on over the last few weeks will be huge. Despite no increase, one thing mentioned in the end comments of the announcement was the possibility of a new “reward” for performance accrued over a certain period. This could be a team of the month or something similar which may well be another way that those premium “baseline” players are rewarded.

Finally, the announcement was used to do a little bit of housekeeping for football index, including scrapping “single/double/treble” days and replacing them with “bronze/silver/gold” so people will finally stop asking “double what?” Like the change from “performance dividends” to “match day dividends” I'm sure it won’t take much getting used to. They also stated that the dividend table will be reviewed before the start of every season, which should stop speculation of increases throughout the season and mean that what we have now will be in place to take us through to order books with a good continued growth for those who deserve it. All round a very good announcement. 

On my site I’ve mentioned off and on for years now how FI will mature as it gets older. All markets do. In the early growth phase you get these huge gains and rampant speculation. 

But things do settle and markets eventually move closer to true value. In fact, ask an academic and they will tell you that is the function of a market – thousands of people acting together to find the true value of the assets being traded (with winners and losers along the way). 

On FI, the only thing that provides true value is a players ability to win dividends. The only thing. Some people say different but they are just wrong about this.
And I think this huge 57% increase from FI is an important step along that road, especially with the statement at the end that dividends will be reviewed on a season by season basis. That gives reason to believe that dividends will continue rising in line with platform growth which they will need to in order to maintain a value proposition.

Throughout this season, strong performance players have done well if you can find the consistent winners. But, a lot of garbage and hype has gained traction too and it makes the market look very strange sometimes. Think of the challenges FI have in onboarding new customers. 

“What’s your football knowledge worth?” Well, sod all when the stars of world football aren’t worth much and 15 year old Ajax players who won’t kick a competitive ball for 3 years are worth a lot.

It bears no relation to reality. And most people can’t/won’t watch academy players week in week out in the same way especially when they can’t win dividends.

It’s just not fun and it’s hard to explain to new customers why you can’t have a decent chance of winning some money on the real first team players.

That’s the real motivation behind this increase. To inject more reality into FI and that’s important for growth going forward.

The main takeaway from the announcement is that this is just good news for traders who spend their time and money on players of real FI quality. It’s bad news for traders who exist on hype and speculation. Knowing who the really strong performance players are on FI (as opposed to the ones often pumped in chats or social media) was always important, but now even more so.
Those dividends, especially on those incredibly lucrative Gold match days (formerly treble) are huge and undeniably worth playing for.

Even as a trader who focuses on players of real quality, only a fraction of my returns actually came from dividends. Rather, I used extensive research to predict dividend wins before they happened, then made most of my money from the price rises that followed dividend wins as other people realised that the player was strong that little bit later than I did. (See here for a public review of my very successful early season strategy, shared with site members in July.)
That will still make up the bulk of my gains for the foreseeable. But it now becomes much more attractive to actually play for some dividends, particularly on those treble days. (I mean Gold days I’d better get used to that).

And it really gives a premium to those big hitters like Kroos or Parejo who can absolutely blow the competition away with a 300+ score on a Gold day.
Those first Gold Days in November should be huge.

I've discussed this a lot on the pod, but for the first time - this was probably the easiest thing to predict from FI, from a dividend structure standpoint. 

The generous increase in PB and MB has made FI function parallel to its USP of a '3 year bet', which I think was the essential thing. 

So far, we've seen most money go into the premium PB midfielders, and rightly so considering how dominant midfielders have been with the new matrix. It's interesting to me that some of these mids have only really been compared to eachother in price, and not really with other positions. We've seen Depay get a lot of love today, but is he overpriced compared to some of the midfielders on show? I'm not too sure. Not so much that this comparison makes him actual value, but it's just interesting to see that the comparisons aren't being drawn cross-position. We should be concentrating on potential dividend yields, regardless of position - so it's interesting to me that it has taken this long for the likes of TAA and Depay to get some love. 

Not only was the dividend structure revamped, FI signalled intent for the first time to increase volatility and trade volumes, by pushing back the 2pm deadline to 3pm. I think they had a good opportunity here to actually be more aggressive, if we consider how large the dividend increase was. Eventually, I think we'll see 5,6,or even 8pm deadlines, and if that's the way FI are moving toward - I think there was a good chance to nudge this to say, 4 or 5pm. IPDs increase volatiltiy and trading, but it costs FI money. Moving the deadline, costs them nothing but increases trading. That's a no brainer for me, and it's a smart way of trying to increase the amount of comms they receive. 

The way I see the market panning out is the following:

  • Continued dominance of money into PB premium holds for the next 4 weeks or so. 
  • Money flowing into some transfers for the January window
  • Accumulation phase for lots of PB players during the winter break 
  • Another large flow of money into PB players, potentially breakout ones as we turn to 2020
Alongside this, I think we'll see some big rises in those sub £1 players. I mean if you look at Demirbay, and his rise last week due to simply 60 mins of football, I think that type of action will be seen a little lower down as well. I'm just not sure as of yet, that people will be accumulating these players. I think there'll be more action on them in play. 
Buzzing Paul

So far in the series we have explored some of the best scores within the dataset. I thought it’s about time to celebrate some mediocrity.

Step up Christian Benteke. His score of -48 against Liverpool is the 12th worst score of the 204, 949 in my dataset.

The Match
Liverpool v Aston Villa Saturday 19nd August 2017

The Report
Sadio Mane earned Liverpool their first Premier League win of the season as Crystal Palace suffered a second straight defeat despite an improved display at Anfield.

Jurgen Klopp's side were heading for a frustrating draw after wasting a string of chances when Mane prodded past Wayne Hennessey for his second league goal of the campaign.

Palace, beaten 3-0 at home to Huddersfield in their opening match, should have scored when the game was goalless. 

Christian Benteke was unmarked and eight yards out but blazed over the bar from Ruben Loftus-Cheek's pass. Matip did a fine marking job on Benteke throughout. However, Benteke was well placed to give Palace a 57th-minute lead after excellent work by Loftus-Cheek but somehow hammered the ball over the bar. It was a huge let-off for Liverpool.

The Star Player
Benteke score of -48 is the 12th worst score I have recorded in my 4 (ish) season database.

The majority of the negative points he scored were from his attacking output
-32/-48 points earnt for his attacking output:
  • 1 Shots @ 3 = 3
  • 2 Big Chances Missed @ -10 = -20
  • 2 Fouls Won @ 4 = 8
  • 1 Offside @ -5 = -5
  • 1 Loss @ -15 = -15
  • 1 Goal Conceded @ -3 = -3
  • His passing output was typically unimpressive:
  • -6/-48 points were awarded for passes
  • 22 Passes @ 1 = 22
  • 12 Giveaway Passes @ -3 = -36
  • 1 Key Passes @ 6 = 6
  • 1 Accurate Long Ball @ 2 = 2
  • He rounded out his incredible score with a splattering of defensive points
  • -8/-48 points were award for his other non-Goal Attacking output
  • 1 Block @ 5 = 5
  • 5 Fouls @ -5 = -25
  • 6 Ariel Duels Won @ 2 = 12
There is a strong argument that the introduction of Big Change Missed limits the potential scores of out and out goal scorers. When you combine the inability to finish big chances with the inability to pass you have all the ingredients for a treble MDD player. Benteke is about the best example of this I can see within the dataset, he is even worse than Romelu Lukaku.

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

It Came Early!

Me and the gang were readying ourselves for some last-minute writing this time around, as the Dividend review was due on Newsletter day! However, Adam Cole’s impatience helped us out as he forced through the new Div announcement early, and boy it came hard.

57% increase for Dividends all round. Kaboom! Plus, an unexpected change of the deadline time, moving forward an hour to 3pm. Brilliant. I think this has fallen under the radar slightly amongst all the excitement, as it opens up even more opportunities to make money.

We have all seen the team news released on a Saturday afternoon at 2pm and spotted someone unexpectedly getting a very handy start but if we buy, they won’t qualify for divs for the day. It was frustrating but we all kind of just accepted it. Now that’s changed it makes you realise how silly it was and I for one welcome this 100%.

It also drags in more matches inside that “pre-div deadline” window that creates extra hype for performing players and/or goal scorers. Bundesliga matches kick off at 2.30pm for example on Saturdays so any early goals from certain players could bring big rises. Lovely.

Sundays have regular 2pm kick offs which includes the Premier League, so having a full half of the match open for potential dividend buying is fantastic. Lucas Digne bends in a free kick to open the scoring 30 mins in? Boom time my friend! Living in the short-term game, I can’t wait!

As for the divs themselves, two things stand out for me. The most obvious is the 8p star man boost for the newly titled Gold days. What’s not to like there? A player in theory can now win 19p worth of divs if he smashes star man which results in a media win on top. Plus, any IPDs if you’re a new buyer. Unbelievable returns!

The other is Silver days. Star man gets 4p to add to the 4p winning PB score, which compared to Gold may seem a bit tight. However, consider those 5 game silver days. Seriously, consider them good and hard (a lot of sex references this week). The star performer in a limited field will bag himself 8p plus any IPDs gained. In a 5 or 6 game matchday this is huge!

Last week I mentioned my strategy on this announcement was to buy PB players, some premium, and sit it through the announcement. Can’t say I can complain with the results. I just wish I had more players locked in.

When It was announced that it was coming earlier than expected I couldn’t understand why Neymar was still hanging around the price he had been for a fair few days right up until the day before it was all about to kick off.

So, I grew a pair and bought more. Seeing him break £8 was lovely to see, even though he dipped back under and sits patiently on £7.96 as I type. I predict this won’t last. I think once he is back, he will break £8 again and I can’t see him ever going back (serious injury free) which is important for the product. 

Neymar is the glass ceiling in terms of pricing and the higher he goes, he will naturally drag the market with him, even if it doesn’t seem noticeable to the naked eye. If Neymar can break £10 this season, I will be happy with that. Not just as a current holder (see if it lasts) but as a trader in general. The higher he goes the better for the product and for all of us!

Who knows, maybe the £10 mark may have seemed like a cautiously moderate ambition come April/May time. :D
Peace out!

The newest episode of my blog series ‘Can I make a living from Football Index’ is either out now or due very soon. Check out my twitter @GingerPirlo_FI and it will be on there!

Research, Resources, Tools & Tips:


Audio Content:
  • FigCast Ep 105: Awesome pod with Allen Cooper from twitter and Ellisandro from the FI Forum. It was done live on YouTube, so please bare with if there were any mistakes and stumbles!
  • FigCast Ep 106: I was joined by Football Index investor and Nick LFC, for a great, great pod. Both of them were superb!
  • State of Play Ep 22: My Other podcast which is about football in the top 5 european leagues, is now really motoring again. 

Video Content
  • Latest Episode of the bank builder series is available here on YouTube, and I do a deep dive into a trade on Gabriel Martinelli, outlining my thought process throughout!
  • Keep an eye out tomorrow for the latest episode of the Squad Builder :)
  • Nice Video from TIFO football explaining Inter Milan's tactics this season, and how Conte has been a revelation for the italian side. 

Written Content
  • FI Trader will release a new Key Strategy for Winter this week over at https://footballindextrader.co.uk! To see a review of how the last one did click here.
  • Ginger Pirlo's 'Can I make a Living from Football Index' Episode 3 is out! You can read it here

Other
  • Check out this awesome giveaway we're doing on the State of Play twitter account!


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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