Dec 14

Football Index: Cash Builder Series - Fifth Installment

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Introduction

If you haven't done so already, and have not yet tried Football Index (“FI”), I'd suggest that you read our Football Index beginner's guide as it explains most of the key concepts (including dividends, buying and selling players and commission). If you'd like to follow along, you can join Football Index here.

Welcome to the latest article in my Football Index cash builder series for 2019/20. At the start of the season, I deposited £100 onto the platform and my goal is to grow that balance as much as possible. Each month I will top up my balance by adding another £100 (if I'm able to), but the focus of this series is percentage return on investment rather than cash balance.
If you haven't already, and are new to the Index, please give my beginner's guide a read and if you have any questions please reach out to me on Twitter @FPLBraveheart.

The state of the market

The market has been in a state of flux in January as those in charge of Football Index announced two promotions mid-way through the month. The first was a "money back offer" for all those who are at a loss in their shares purchased from 10th January onwards. The covering email to the announcement of this offer included a suggestion for traders to try new strategies to see if they work for you risk-free. I did this and, unfortunately, it did not work out as profitably as I would have hoped but more on that later.

The second promotion was the announcement of a "transfer dividend" of 10p for all completed moves and 5p for all completed loan moves. This promotion was announced in the middle of January. I was somewhat disappointed with the manner of this announcement. It seemed to me that it would have been much better to give traders notice of the dividend, and give them the full month of January to take advantage of it. The way it was announced gave the impression it was reactionary short-termism in response to a lower January market increase than anticipated.

All that being said, Football Index market continues to grow with a market cap at the time of writing on 24 January was £96.5 million (an increase of £5.5 million since the end of December). The market cap is the total amount invested in players and as it continues to go so too will there be natural growth throughout the Index. One way of working out if your trades are successful or not is by comparing them against the natural growth of the market. If you beat the rise in the market cap then you are most likely to be a profitable trader (rather than someone simply being lucky by being in the right place at the right time).

My strategy: overview 

In the opening article of this series, I said that I would be going with an in-play dividend hunting approach. My reasoning for that was that there were a lot of players under £2 who score or assist frequently and so represent good value for returning regular dividends. However, in light of the massive 57% increase in performance dividends announced at the end of October, I decided in November to diversify my strategy and have more than one strategy by which I would profit.

To summarise the strategies I'm using, I've been targeting players for a number of reasons:

  • they are a young player who has potential to become the next big thing (“youth strategy”),
  • they are priced quite low because they are not frequently competing for performance dividends but they score and assist a lot (“IPD strategy”),
  • they are currently injured (and have been for quite some time) and are nearing a return to first-team action (“injury strategy”),
  • they are likely to move teams soon and so may have an improved chance at performance or media dividends (“transfer speculation”),
  • they are regularly putting up good scores for performance and/or media dividends and are likely to return regularly (“long-term holds”).

How was January?

As with December, I was unable to devote as much time as I would have liked to managing my portfolio. This meant that I missed a lot of opportunities as I wasn't as savvy about the market trends. I continued to put money into IPD holds and long-term performance holds, while the focus of the market seemed to be the latest January transfer rumours and youth players so my portfolio stagnated while there was considerable growth elsewhere in the Index. In February I'm going to try and "take the pulse" of where the market is going (rather than where it is) to try and profit from emerging trends. I've subscribed to a number of free newsletters providing information about market trends and will hopefully be able to use the information to profit.


Over the course of January I held shares in 8 players (I sold Kimmich of Munich for a loss because of the reasons in last month's article and I also sold Sabitzer of RB Leipzig for a small profit as I believed his growth had stagnated so I wanted to move my money to somewhere it would work harder). I also bought and sold a number of players (Piatek of Milan after he was linked to Spurs and Man United, but I was too late to react to the news so suffered a loss. And Iheanacho of Leicester after Vardy went off injured in Leicester's match against West Ham but again sold for a loss as I was also too slow to react here). Of the players I'm still holding, let's see how they got on:

Trent Alexander-Arnold

  • Liverpool
  • Defender
  • Bought for: £4.33
  • Current price: £7.16
  • Dividends per share (at bought price): £0.04 (0.92%)

TAA continues to be one of the players best suited to the performance matrix. He had won the star man and defender dividend in Liverpool's bronze matchday against Wolves and before the end of January will have a similar opportunity against West Ham.

Mattia Caldara

  • Atalanta (formerly AC Milan)
  • Defender
  • Bought for: £0.46
  • Current price: £0.53
  • Dividends per share: £0.00 (0%)

One of the reasons I was frustrated with how the transfer dividend was announced was because I held a number of shares in a player who transferred on loan from AC Milan to Atalanta. Ultimately the player would not have qualified for the dividend (as the player had to be priced over £1 at the time of the move) but it impacted my initial views of the promotion. Atalanta is a better club for Caldara and he has already featured in a Serie A match. When he was announced in the starting line-up for Atalanta, his price spiked to 59p. I continued to hold and his price dipped again due to not starting in the subsequent game, however I remain optimistic that this remains a good hold with potential for a strong percentage increase.

Florian Thauvin

  • Marseille
  • Midfielder
  • Bought for: £2.36
  • Current price: £2.37
  • Dividends per share: £0.00 (0%)

Thauvin has dropped this month but I remain in profit with him. I expect him to rise more towards the end of February as he returns to action following a lengthy injury. He was formerly one of the better midfielders in terms of the performance matrix so I'm excited to see how he'll fare with the new matrix one he is back. Marseille are playing well at the moment and apparently there is rumours they will need to sell Thauvin in the summer due to financial issues at the club so I'm content to be patient with Thauvin over the coming months to see how he gets on.

Jude Bellingham 

  • Birmingham 
  • Midfielder 
  • Bought for: £2.42
  • Current price: £2.95
  • Dividends per share: £0.00 (0%)

Bellingham was a player I bought in an attempt to gain some experience in the IPO ("initial player offering") markets. This is where a new player is introduced to the Index with much fanfare and there is often a high number of traders buying the player (particularly if they are an English young prospect) in order to "flip" that player. I'm up almost 20% on my first serious attempt at IPOs although this is a particularly dangerous aspect of FI as there are technical issues meaning it is fastest finger first so new traders should not invest big money in their first IPOs. Use small stakes to get familiar with the process and the mania of the market. I like Bellingham as I can see a lot of Premier League rumours about him in the summer transfer window (Man United were linked with him in January). 

Cash builder summary

  • Balance at start of December: £223.64
  • Balance at 30 January (minus expected commission) : £232.64
  • Monthly Return on investment (%): +4.02%
  • Total Return on investment (%): +26.32%

If you haven't already, and are new to the Index, please give my football index newbie guide a read and if you have any questions please reach out to me on Twitter @FPLBraveheart.

Rules

  • I will invest £100 in the first week of each month,
  • I will buy no more than 5 players,
  • I will look to short-term trades (i.e. 30 day/monthly cycles) rather than longer term,
  • Every trade I do, whether profitable or not, will be discussed in this series of articles.

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