Subject: Index in your Inbox |007| 10/12/2019: Boxing day sales come early ❄️

As the winter breaks loom, and traders get jittery - it's often a period were there's ample opportunity - but growth can also be slowed due to lack of games. That being said, there could be some big money entering the market in January - and if the hype from FI HQ is anything to go by, 2020 is goint to be the biggest year yet. In this newsletter, we talk winter breaks! 

Speaking of breaks - this will be our last newsletter before the new year. We hope you've enjoyed it, but if it's only a 9/10 in your eyes and not a 10, what can we do to improve it? Let us know on twitter or via email!

Liam, Trader, Buzzing paul, Ginger Pirlo and I are back. This newsletter, and every newsletter, has a theme. This could be anything. It could be biscuits, it could be dogs. Absolutely anything. Hit me up on twitter @FiGuide if you think you've figured it out, or just tweet it out with the hashtag #Indexinyourinbox 
Liam

When we first decided on this topic a week or so ago the “winter break drop” was being continually proclaimed about on the timeline as we saw a few players from foreign leagues, especially Germany, drop a few pence, demonstrated by index gains tweet below.
Yet this week, after some big dividend winners and lots of football the topic has seemed to have quietened down a little and although we’ve seen some decreases, they’ve not seemed any more drastic than normal.

Let's start by looking at how long the winter breaks actually are. All leagues winter breaks can be seen below.

Premier league- each team will get a week break between 8th and 22nd of February (5 of the 10 fixtures for that GW will be played each week)
La Liga- 23/12/19 to 02/01/20 - 11 days
Serie A - 23/12/19 to 04/01/20- 13 days
Ligue 1- 22/12/19 to 10/01/20 - 20 days
Bundesliga- 23/12/19 to 16/01/20 - 25 days


To help understand how much of a drop to expect, I looked back at last seasons December period on the Index and saw that the narrative of “it happens every year” that we’ve been told multiple times on the twitter timeline wasn’t exactly true. In fact, you can see below that we had some huge rises in this period, admittedly the share split being announced at the end of November (which then went ahead in March 19) definitely helped move prices upwards but is that really any more of a stimulus than we’ve just had from a dividend increase and marketing news? One rise in particular that I want to focus on is Kimmich. Everyone knew the winter break was coming, yet because of his form and dividend wins at the time, he rocketed regardless, showing the winter break really isn’t as much of a downward force as we’re being forced to believe. 
The fallers were mainly due to people selling off players to jump on the big risers from the announcement at the time and many of the forwards you see on the list had risen significantly prior to December because of the introduction of IPDs but again, the point I want to take from this is that is it’s just full of German or French based players and in the main, the market operated as it usually would.


So why are so many people feel the need to “warn” others on twitter? Well, I don’t think it’s because they’re trying to give you an early Christmas present! Rather, they try to panic others because they have sold and want to make sure the prices fall at least below the price they sold at when accounting for transaction costs in order to confirm for themselves they’ve done the right thing, whilst decorating it as helpful news for others. It’s probably the same people who will try to sell you a player by talking about the EUROs in the same breath!

Granted, holding players for a 25 day period without them playing comes with an opportunity cost, especially when it’s a player who’s main intrinsic value comes from possible performance dividends and they may well be stagnant or fall a little over that period, but despite what people will say, no one can be sure how much, and at the same time no one can tell you when they may start to rise again.

Don’t get me wrong, it’s not always a bad thing to sell before this break in order to use money elsewhere or to get out before a drop you’re predicting, but the wisemen who were planning this would of market sold a couple of weeks ago before this became a topic and would have no need to try and cause a panic or sway others behaviour because they’re confident of their strategy. For me, it ultimately comes down to the question of “can you make more than the transaction costs of selling and be able to get back onto the players you originally had before they rise more than you made elsewhere?”

The thing I don’t like about the winter break narrative is its negativity. Winter is a great time to make profits on football index because of the huge number of games, smaller player pools and the higher correlation between big game performances and media winners. As well as the fact more people are able to spend the time to watch games while they’re off work which can equate to greater price movements. So yes, some prices may drop a little, but many will rise a lot. Its also a great period to rack up IPDs for players who have a lot of games in a short space of time, namely premier league teams. Or alternatively, it can be a good time to be stocking up on those who have dipped.

The calendar of all the match days for the next five weeks that I created may be useful for you to evaluate buying decisions, you can find it here

To summarise, selling players to fund other purchases can be very profitable over this period, but timing it correctly is very difficult. Make sure you think about it carefully before you start rashly instant selling or Yule soon find yourself in desperation on the TL trying to make others follow suit. Like many things on football index, it creates a self-fulfilling prophecy fuelled further by those who have sold early in the belief of drops but often the reality is much less severe than what is described to you. Winter is a great time to profit on Football Index and enjoy the game we all love so don’t worry too much about short term drops on your long term holds, enjoy Christmas and get ready for another HUGE year in 2020!
Trader

Winter breaks always cause a bit of anxiety as they get closer. And we have more than just that to think about too.

Will there be a sell off? Will it be a bad one?

Will people also sell up because they need to raid their piggy bank for Christmas?

Why is my portfolio not flying like it was in October!? Am I doing something wrong?

All these thoughts will have crossed most people’s minds recently.

My view is that the winter break can be overstated as a major factor. It’s something that I tend to tweak my tactics around rather than something I think of as a major turning point in the season.

I have recently published a new guide on trading around the winterbreak over on http://www.footballindextrader.co.uk. So for the rest of the article I’ll focus on the mood of the market in this period rather than winter break tactics that can be found in the guide. (Especially because I’ve been falling behind on my public market analysis blogs as I get busier and busier with the site as a whole, I’ll try to get back to it.)

As we head towards Christmas, some people will indeed need to take some money out to pay for parties and presents and what not. Particularly if they have put in more than they can really afford during the October frenzy. But we can’t really put a number on that.

And selling up for that reason alone would seem a poor decision - there are costs to selling in terms of commission and spread and no guarantee that the players you want will be cheaper than before. For the players in biggest demand it will often be the opposite.

As a rule I would say a trader who does not have to sell for this reason is in a stronger position than the person who feels forced to take it out and tells themselves they are “timing” the market.

I’ve seen on social media that many have felt glum in recent weeks. It’s certainly been possible to lose money. It’s also been possible to make it. More likely, most people may feel they are kind of bumping along and stagnating.

Looking at the list of players who are dropping, it is often, as it has always been in recent months, the players who have been overhyped and reached too high a price that are falling the hardest. Not always, some good players are falling along with the bad and knowing who they are is crucial.


I recently did some analysis of how effective the pre-season scouting analysis in my members area was by going back and assessing how players I assessed in June to the season start have fared since.

One of the main takeaways was how crucial realistic assessment of players ability versus their price really is. Following the hype on social media hurts your profits overall, it does not help them.

Knowing who to buy is key but equally important to the huge success in this period was knowing which popular players being pumped on social media not to buy.

In fact, 66% of the popular players that my pre-season analysis suggested were overpriced/hyped were worth less in November than they were in pre-season. That’s staggering when you consider a market that has risen 57% in that period according to @FIMarketcap.

Just 2 of these 58 popular players on my pre-season naughty list had outperformed the market by the end of November.

I’ll be sharing this analysis on Twitter soon (@FI_trader) so follow me there to get it.

By focusing on the very best performers at the best prices and ignoring both the overpriced weak hype players and the overpriced but good quality players, huge profits were possible.

If you ever wonder why some people can make 200-300%+ over a season and others are barely keeping up with the market - this is why.

Avoiding players who stagnate, drop, or rise a bit but underperform the market not only saves you that drop, it allows you to use that money productively. The resulting swing in your total Return on Investment from doing that is huge.

When it comes to the risers list recently, we are seeing that there are gains to be made but we are having to work a bit harder. We can’t just expect automatic rises at the moment - our players have to win and show quality or we have to find something a bit more unknown.

Winkling out a player like Iheanacho who had a bad reputation until recently and a price to match was really profitable this week for example. It was clear from his recent stats that he had a good chance of success relative to his 62p price tag. But it’s no good waiting a week for the goals to come when he is now £1.22. You’ve got to know sooner and that takes hard work (or a site membership :)).

This is more reflective of a more “organic” market that is functioning without boosts like dividend increases or bonuses from FI themselves. We have to know how to keep making progress in these times or at least avoid losing money. If we can’t, it’s a warning sign that we will likely struggle when FI becomes more mainstream and the competition is fiercer. Take the opportunity to fix any leaks in your trading game (Look up the poker term leaks for more on what I mean by that!).

That’s not to say that any drops are a sign of poor trading. It could just be that you have some good players at reasonable prices who are being sold by others who do not realise their strength and I can certainly see examples of these on the market.

The questions are: do you really know the difference between an overpriced and underpriced player? What are the stats that indicate to you this player will succeed on FI? Why do they fit the trends ahead? Is that enough to support the price? Are you paying too much attention to what you read on social media or in chat groups?

If you are satisfied with these things and are confident in your judgements, you rarely need to sweat on any drops.

I expect a great 2020 ahead and positioning for that is my concern rather than worrying too much about a quiet few weeks.
FIG

My initial reaction to some of these drops was one of bemusement, but FI does seem to be a constant cycle of self fulfilling prophecies! 

I won't analyse every league like some of my more esteemed co-authors have, but I do want to compare and contrast two teams. I'm an Arsenal fan, so I'll obviously use them as an example. It's not very merry at the emirates at the moment, and maybe for the best, Arsenal don't play a PB eligible game for 10 days due to the FA cup break. Barcelona for example, even when you take the winter break into consideration, won't play a PB eligible game for 14 days. Not a massive difference, is there? 

Now if you consider the amount of money going into prem players, compared to the lack of money go into La Liga players, it's a bit too dramatic, isn't it? 

Now many will point to the packed schedule that many prem players have, meaning more potential dividends. But as we well know, there's always a lot of rotation in this period. Now logically, that would point to less money going into these players. But markets don't always work logically. Especially, the market that is FI. 

The other thing that really is remarkable to me, is the amount of people that seemingly hold players 'for the euros', yet are very quick to instant sell when players don't play for 2-3 weeks. 

Like RC, I'll keep this one short and sweet, and I wish everyone a merry Christmas, and a happy new year! Merry Figmas :) 
Back to the futures - Buzzing Paul

FIG: So Paul is a back to the future(s) no-show for the second newsletter running - but he tells me he's working on something big to show you guys exclusively on the newsletter.....I'm excited, I hope you are as well!

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

Winter sale bargains

Oh the weather outside is frightful
But your profit is so delightful
And since we've no place to go
Let it grow, let it grow, let it grow!
It doesn't show signs of stopping
And I've bought shares on players for topping
The lights are turned way down low
Let it grow, let it grow, let it grow!

It’s December. It’s getting cold. But the football comes thick in fast, in England anyway. Other PB leagues have themselves a break over winter which is probably a smart thing to do. But much like Brexit, we know better than those pesky Europeans, so we play MORE games closer together!

It may not be smart but it’s fun and keeps the match days ticking over nicely. So unlike Brexit, I wouldn’t have it any other way. But we must acknowledge that our European friends take a break and therefore their respective players won’t be around to rake in any match day divs.

For clarity the 21st/22nd of December is the “cut off point” for these leagues from which their breaks come in. Importantly though, some take more of a break than others. Observe:

The Spanish La Liga only misses one weekend just after Xmas when you look at it, as they have fixtures on 4th Jan. They do miss out the following weekend though before they are back on the 18th. So, does this really count as a “break”? Barely. Those fixtures slap bang in the middle of 4th and 5th of Jan kind of kill it.
The Italians is actually even shorter. The miss out the weekend of 28th and 29th like all European leagues do, barring England, and are back in action from the 5th. Barely even noticeable. One weekend off is hardly a break at all. No worse than when International matches are around.

The Bundesliga is where you see the real difference. Those Germans love to party, so they don’t wanna play no fussball when it’s beer time. They are basically off for a month and miss three weekends worth of football. They play on 22nd Dec then are back on 19th Jan. They can do this as they have a smaller league with 34 game to be played.

The French are back a week earlier than the Germans and get back to business on Jan 12th. This means they only really miss two weekends of football which isn’t too bad. It matches the Spanish amount of time off but is all in one go as opposed to one week off, one week back, one week off.
So, what does all this mean for Football Index. Well traders seem to get twitchy around this time and look to sell players who won’t be playing. In general terms, it doesn’t really make sense as we have International breaks once a month and players will always grab a suspension or injury here and there, but traders do what other traders do.

So, if there is word others will sell then they will. Happens all the time. Rightly or wrongly. Looking at it this year I can’t see any practical reason to sell off any Spanish or Italian players in the means of a winter break as they hardly have one. So surely traders will recognise this in bulk? Right?
French have two game weeks off so maybe their will be a short dip in some players but if you are holding players long term, is a two week break really worthy of paying commission to perhaps get back on later? I shall let you work that out yourselves.

The German league is where it makes more sense. Three weeks with no games can seem like an eternity on FI. Especially when you are seeing Premier League games coming thick and fast. If you find yourself listing or instant selling players very soon than I won’t blame you.

What I will say on the Bundesliga is this, with any dips may bring opportunity. If players are seemingly being sold off purely for the sake of this break, then they may see a nice rise leading up to when they are back. So, keep an eye on it.
In the short-term game I often look at upcoming fixtures to get on people for a short amount of time. My advice is to look at the fixture for teams for after these breaks and try to time your entry well.

You may able to pick up a nice “Boxing Day” style bargain in the winter sale and get on someone you have always wanted but didn’t have the means or motivation. Now could be the time. One thing is for sure it will be fascinating viewing and test out people true trading skills. Good luck.

Research, Resources, Tools & Tips:


Audio Content:
  • FigCast Ep 111: Fantastic episode (if I may say so myself) with Karl Brown and Football Index Veteran
  • FigCast Ep 112: Another awesome episode, this time with Football Index Wetherz (70k port man) and FI Market cap!
  • State of Play Ep 27: On my other podcast, we discuss Ljungberg coming in to AFC, Sarri's Struggles, Ciro Immobile on fire & a Moussa Djenepo Player Profile
  • State of Play Ep 28: Juve, Ancelotti and Napoli, Ole and united's resurgence, Chelsea and Lampard, Mason Greenwood player profile

Video Content
  • This was a weird one.....I did a very ad-hoc FIFA, Football Index and Chill. It was only a test, but a few seemed to enjoy it! Let me know what you think, you can watch here
  • Q&A #5 FI competitors, Whales and more

Written Content

  • Another stunning article by Karl Brown here

Other



Have a great couple weeks trading, and a happy holidays! 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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