Westy: FI stop the drop.
The drops were big. They will have been a good measure of each holder's tolerance for risk! If you haven't experienced drops before, now you know what it feels like and will have learned a lot from your reaction. Remember, the capital you put in is always at risk.
Firstly, lets briefly recap on the actions taken by Football Index (FI) during this COVID 19 crisis that has caused crashes across most financial products. For someone who builds their portfolio around dividend potential, with a diverse and long term mentality, it has been a refreshing reset of the general market mentality where we have seen dividends in the driving seat! Yes my PB holds have crashed, but my MB holds are spiking. I have managed to just sit and watch this happen without too much stress! Lowering the spreads has stopped panic selling and tied in with the generous 8.25% net buys bonus AND double dividend payouts, it has been a master stroke by Football Index. It has pulled the market through the most dangerous period it has faced whilst other markets have crashed.
Football Index actions:
Widened the spreads (basically closed the Instant Sell).
Doubled dividend payouts - overall a saver for them as would have paid out more weekly if PB and IPDs were in play, but it has worked a treat with money flooding into MB players.
8.25% net buy bonus - incentivising traders to put money in.
This shows the top 10 traded footballers in March 2020:
FI's approach has clearly worked well so far!
Westy: Have we found rock bottom in PB players?
Prior to FI's actions, I thought rock bottom would have been when we hit a peak in confirmed COVID 19 cases. Then the beginning of a recovery from the pandemic, and positive news of the world going back to normal, would have been when we start to see money go to the PB dips. Obviously the spreads put in by FI have stopped the major drops and managed to raise the floor of what the bottom may have been!
Due to FI's actions, we have possibly seen the rock bottom already. Most markets in a crash see a double dip and Football Index has had that. This graph shows the Footie for March 2020 (credit IndexGain). Reducing the spreads could cause another crash, but I imagine they won't release them until fixtures return when there will be enough buyers to reduce the impact.
We don't know yet how much damage has been done to the global economies. How many traders will need money back out of FI? There will likely be redundancies and wage cuts, along with inflation. Buying the dip is a big market timing call to make which is one of the hardest trading skills. For those that do have expendable cash- that won't be needed long term- though, it really can be a chance to pounce! The Footie continues to flourish even during the crisis.
Westy: Using player graphs.
I have been monitoring a few players and watching their graphs. These stand out to me as having reached a bottom. Anyone that was holding and had to take money out has done. We are now left with those willing to hold through this downturn- 'hard money'. These graphs of well known (but average) PB players suggest some traders are confident enough to be buying the dip now as we can see the steep decline flat lining then gradually rising. Apart from spreads being released, what else can likely happen to these holds to make them go down further?
These remind me of the usual end of season drops on PB players which is when I usually top up my PB holds for the next season. We await news today of the plan for football's return, but I guess the usual Summer break will not happen.
(Bonus points if anyone can work out who the players are. I selected them based on:
PB average > 100, Peak score > 220 and Pb wins this season but no MB wins.)
Hasselbanker: How do stock market investors judge the bottom?
I can only liken it to financial markets. As this is football based, it’s a question of when clarity is provided around fixtures returning. There’s no recipe to saying exactly when players that rely on fixtures will hit rock bottom. Fibonacci sequencing is a fairly common principle to apply in the stock market, but its probably not an option on FI to be able to graph it (trading software we use in the stock market has it built into analysis).
You need to understand what drives prices up and down. At the moment, no football is driving the PB players down and the media focus is driving MB player's prices up. The spreads introduced - and the lack of fixtures - has acted like a close in the market.
The fact you can earn dividends from media helps those with diverse portfolios or those that managed to switch their portfolio focus quickly before action was taken by the masses and FI.
From an outsider looking in point of view, I'd question how long can the market be motivated by media? Especially if FI incentives dry up.
It will be very interesting to see FI’s next move once we hear when and how the football fixtures are returning.
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Good luck in the market and keep safe!