FIC Weekly 12.10.20

Uncertainty, instability and a lack of liquidity have led to what, at times, has appeared a brittle, dry, thin market. As we all know, with the dividends doubling and prices falling – we have been presented with some of the best value throughout the platform for many years.

Value based on dividend to price ratios alone was unable to evoke the confidence needed to keep prices from falling in a market without transparency (No depth of the market) where prices have been reflecting such low volumes of average offers.

Depth of the market will help reduce panic and volatility

It has not only been Football Index’s questionable choices, but their naivety to the underlying issues around liquidity and attempts to temporarily paint over the cracks with temporary promotions and bonuses that have caused many of the problems in recent weeks. Although we can take advantage of such offerings, it has only contributed to the general uncertainty.

The Football Index community is full of clever people and great ideas but often it seems like Football Index’s direction or focus is elsewhere and this can be frustrating. The Official Football Index Podcast which focuses on general football much more than the actual platform is a symbol of Football Index’s ignorance at times to the Football Index communities’ actual needs.

There was never any doubt about the dividends on offer, but the question for many recently has been would Football Index address the clear issues around; trading experience, portfolio valuations, depth of the market, circuit breakers, liquidity, media monitoring, NASDAQ and IPO’s. Well, this week they did exactly that. To Football Index's credit, they almost always get it right...eventually.


Football Index’s market update may not have been the most informative in terms of actual proposed dates on when the above issues and implementations will be resolved and added, but there is a clear underlying message.


The subtext of this update basically reads ‘We are listening, we know we have messed up in recent months, we are learning and from now on we are going to make effective changes following strict testing. Trust us, the platform is going to improve’.


Given Football Index want to avoid overpromising and underdelivering again, I do not think we can ask for too much more than this for now.

Before this update, the market had been becoming more and more stable with less daily volatility and tightening spreads. Since this update, we have also seen several players rise in price.


A lot of the soft money in the platform has now evaporated and what now remains, appears to be a solid base with huge growth potential. As the market matures, Football Index should be able to attract more liquidity providers and this may well lead to a very positive cycle with growth being the overall result.


The transition to order books and becoming a NASDAQ powered alternative asset class was always going to be a rough ride and a lot of avoidable damage has already been caused, but it looks like we are now well on our way.

Which players are currently rising?

On 1st October 2020, I shared a spreadsheet including 29 players that I thought and still think are excellent value, especially if bought close to their instant sell prices. Since then, the market dropped a little further and so 18 of these player's market prices have dropped since.


However, as a whole, the players have already risen since being mentioned on the site. The average market price is up 0.3% and the average instant sell price is up 6.10%.


Furthermore, we have seen some seriously impressive rises in a few of these players already and no players have dropped more than 13%.


Below are the rises at the market price/instant sell price.


Jack Grealish +50.57%/+76.74%

Federico Dimarco +17.74%/+75.00%

Neymar +8.48%/+12.85%

Christopher Nkunku +6.78%/+32.58%

Jack Grealish has earned 20p and risen 50.57% since being highlighted on FIC at the start of the month

Meanwhile, the biggest drops from the players highlighted in this spreadsheet have been in:


Rayan Cherki -12.72%/+11.48% *Instant sell price is up at least

Kai Havertz -11.18%/-11.31%

Jadon Sancho -10.51%/-6.74%

Mason Greenwood -8.98%/-7.94%

The contrast between the risers and fallers is very obvious. Right now, it is lesser proven, youngsters that are dropping in price. Longer-term, I would expect the above four youngsters to all rise again.


I have added some new columns into this spreadsheet to show the price movements so far this month. I have also colour coded the player's name depending on their price movement so far this month. Understanding which type of players are rising/falling can help show the current market dynamics.


FIC October Players Price Differences Excel Spreadsheet

FIC October Players Price Differences
.xl
Download XL • 39KB

FIC October Player's Price Differences Google Spreadsheet


https://docs.google.com/spreadsheets/d/1BBhLWp3EYTmALcLBxI8xDATL56ixwDwwCrttpCjaQBw/edit?usp=sharing

Market Shift towards PB performers?


As dividends have doubled, we may see a slight shift towards players who are more likely to earn dividends in the short term. It is also worth pointing out that several, quality, young players rose huge amounts in price over the last 4/5 months.


Until there is enough money in the market, traders are less likely to buy into lesser proven players for the speculation of future dividend returns. The sweet spot is ofcourse young, improving players who have a strong chance of earning matchday dividends in the future.

Dimarco is now up 58% since being highlighted on FIC in August due to his strong PB potential

As sentiment starts to play a bigger part in trades again, the money will likely move back into some of these young players that have recently dropped in price.


Overall, over the upcoming months, I would expect to see huge risers in high PB performing players, even more so than usual. We saw a similar trend last season and with the dividends on offer, a lot of players are currently looking extraordinary value as short to medium term holds for matchday dividends.


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