Insight 17: Reaction to Friday’s Announcement (Football Index)

Updated: Dec 1, 2020



An update from Vespasian here following on from Insight 16 and his thoughts from the most recent Football Index (FI) update. From conversations with him since the announcement, he generally sounds quite excited about one of the impending changes coming Thursday 19th November.


I've found this a hard announcement to make my mind up on. I'm in a different situation to Vespasian. I still have lots of money tied up in the lower end market whereas he exited these at the first signs of FI removing IS; they've had very little - if any - IS opportunities since. I reviewed them yesterday though (about 100 players) and feel they still have performances in them that on a fixed and settled FI they will sell (I'm gambling on the platform now). I wont be panic selling now- we still have a lot of football to be played and this announcement showed one major step in the right direction- many steps left to hurry and take though! Some traders might decide to sell as the money could move to other players with the liquidity Thursday may bring- it's a tricky choice!


One thing I've noticed is the lower end prices have not been dropping so much compared to the top end- less 1p races down being had- so maybe they are already low enough in holders eyes. In hindsight, I did however sell off my premiums at seemingly a great time; I've only missed out on one big bounce back spike since, and yes some dividends, but the falls have been far greater again. I have this cash ready to use. As much as I've always been a dividend based buyer, and in prior dips sat happy with the winnings treading water for my port value in those times, dividends mean nothing if sustained capital depreciation is greater or if you can't sell to realise any profit. Hopefully, we are getting nearer the bottom- its been this lack of being able to see the bottom that has caused this slow death to so many portfolios with buyers always having to think the bottom is probably less than these prices as sellers are restricted. Now with the restrictions lessened, Thursday may provide the bottom! It will swiftly turn around once prices available mean dividends winnings alone could return your stake over 3 years- attracting traders that use this lower risk model- and once this positive buying starts it will be just as contagious as the selling has been! A lot of damage has been done though, that may be irreparable or will take a long time to fix. The trading numbers come Friday 20th November will be very interesting.


I will also be interested to see if there is a reaction from FI around the Sportstack announcement that hijacked this announcement even #ing Football Index in their advert. It may be a good time for FI to chuck in a buying incentive for Thursday. There was a time I felt FI should have tried to blow competition out of the water with swift actions- they didn't. So now they are being pecked at from many angles. I wonder if they have the strength to deliver a big blow anymore, or have they like so many other things let this slowly creep up on them til it's far too late? From speaking to many that have entered Sportstack this week, one saving grace is the current predicted yields look less- one to keep an eye on though as we always support de-risking your football money by spreading it across multiple platforms such as Sorare and Footstock.


So I agree with Vespasian on the main positive he draws from this announcement, and I will be ready to reinvest a large sum if prices reach my 3 year return valuation. Gone are the days I'd consider career earnings or even factoring in future growth and dividends increases- I feel I have to reduce the risk as much as possible as these last few months have been a real eye opener to how the market has changed. It's very noticeable that even renown FI enthusiasts that were ridiculing the likes of Vespasian, Mr Wh1te and Thomas Moran when they aired concerns many, many months ago are now parroting very similar despairs and warnings.


Overall, positivity for buying could return on Thursday! Good luck!


Value carefully,

Buy/Sell sensibly,

BeGambleAware,


Thanks for reading,

Westy


My Reaction to Friday’s Announcement

(by Vespasian)


Some frustration, of course, but they got the important one right and I think this time next week we can begin to trade again with much more confidence. It excites me as a trader/buyer and whilst an impending ‘crash’ may be worrisome to some users there is no need for it to be.


Media


The delay on this is disappointing. This week we saw Troy Deeney win MB for writing a column in which he was talking about far more interesting players and we saw Thiago Silva up there for nursing a headache; on days where 17 year old Jude Bellingham was called up to the England squad for his debut.


Talk of media change has been long needed and long promised, it is one of the main USP for the product but 5 years in and we have retired players and wrongly named players still topping the charts regularly for long periods throughout the day. Not to mention some obscure winners and controversial rulings made on a whim.


We need media improvements urgently, especially as the initial proposed changes seem like half a job. So we need it implemented in order to start planning for the further enhancements. Prioritising creating 50 ways to make our meaningless port value easier to stomach isn’t acceptable in my opinion.


Nasdaq


I’m not overly excited by Nasdaq so in isolation and subjectively, I’m not fussed that this is delayed. It’s better infrastructure to handle more data more securely. We don’t need it at the moment. I don’t believe being associated with the Nasdaq brand is the bait to catch the whales as many propose. It certainly won’t hurt the Football Index image, but it just isn’t all that exciting. The only concern ongoing is that this project is another one that is taking years to get over the line. The project management and financial planning leaves a lot to be desired.


IPOs


I’m glad they are delayed. We have too little money spread over too many players and it is already hard enough to get repeat winners for the dividends. Throwing in 1000s of new players creates further lack of liquidity and more competition for the rewards. However, this isn’t why it’s delayed. It’s delayed simply because the tech isn’t in place. I’m sure if Nasdaq was in play, Football Index would have happily started throwing more players into the mix.


I don’t think we are ready for them from a liquidity point of view but I do understand it’s not the best look when regular starters and scorers in PB leagues aren’t on the platform. I’d hope they find a way to purge players in the future, starting with obvious wins like retired players. Then move onto old World Cup players who have very few shares in circulation and little to no chance of ever being eligible for dividends again. Further down the line they could be more bold and have much stricter rules for expiring shares on players that transfer to non-pb or get relegated. If not, the player pool just grows and grows as new teams get promoted and the money get’s spread thinner and thinner in untradeable players.


Portfolio Calculation


Give me a break! You can only ever sell your shares to the highest bidder. If people want to pretend their portfolio is worth more, give them an edit option and have done with it. It is beyond a joke that they have spent so much effort to give us so many ways to value our port. Seemingly the option we don’t have is to base it purely on existing bids that we could accept there and then!

Market Depth


Need it for the look and feel of the platform. It’s good they’ve managed to integrate it in a reasonable time frame. Not a tool I will use as I think it will lead to bad decision making with people buying and selling based on what other people are bidding. If there are 300 shares for sale at £2 and the next sell orders are £3, you are a fool for buying purely on the basis it will be ‘£1 profit straight away’.

Bid Commission


With current trading volumes they simply aren’t making a sustainable amount of money from commission. However, adding bid commission into a buyers’ market is just going to lead to wider spreads as there is no reason for buyers to absorb the cost. At this time, Football Index should be encouraging tighter spreads by every means possible to get people trading again. Whilst it’s necessary to earn more income, as they won’t be minting shares anywhere near what they used to, I think it’s poor timing.

Market Sessions


11pm, why?

Liquidity


No mention made of additional liquidity providers at this stage. Not much to say on the matter; we need it, but until we have completely free market, we won’t get any external market makers. And as for LP01, it’s one of the worst traders out there and used so badly it had an adverse effect on the market.

Sell Orders


Now we get to the good bit. Biggest issue is lack of liquidity. Restricting sell orders to 1p has been extremely detrimental! Drops were going to happen, they needed to, but thanks to the restriction they have been forcibly gradual, and we have had to endure months of slow pain. The knock on effect of which is wide spreads and lack of bids.

Now sellers can push their sell orders to within 1p of the highest bid, or the floor (if there is no bid). It’s not perfect because buyers still can’t bid freely – however, it is much closer to a free market than we were, and I think it should create a lot more trading.


I was worried Football Index would bottle it and wait for market makers to give us any sort of free market, so I’m pleased they’ve made steps and it gives me confidence that it may not be long until all restrictions are lifted.


I think Thursday probably will bring some sharp drops as people make use of the sell order freedom to get out of holds they no longer want to be in, or indeed the Index itself. Confidence is low and we know people want to leave. It would happen eventually so better to get it done quickly so as buyers we all have more confidence of where the true ‘bottom’ is and can buy back in.


Everyone is a winner. If you have faith in your buys like the guys paying £15 for Sancho and telling us he was worth £36, it shouldn’t matter to them what his price is now. In fact, they should be filling their boots now they can double their holding for half the price they paid before. If you are a buyer waiting for the right moment, Thursday/Friday may well be it? Or closer to it… timing the very bottom will be difficult.

Prices on Thursday vs dividends on offer means we have genuine opportunity to get players at prices that nullify a lot of the risk. For example, my biggest outstanding concern is around selling shares because of oversupply and too many sellers competing for too few buyers. I’m not so concerned now that prices are down. The players I want will be at such a price that I can win my bet comfortably without ever having to sell them to another user (as long as my projections are correct!).


A piece of advice; don’t top up on players you already hold simply anchoring to their old prices. Look at the market with new eyes, new understanding of true value and risk, and buy the best players for your strategy moving forward, not buying purely to “reduce average cost”.


Good luck and don’t panic, embrace the chance to buy cheaper shares. Or if you have had enough, embrace the increased flexibility and chance of selling.


Thanks for reading,

Vespasian



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