Another huge day of rises and we see the first £20 player. Take a bow, Neymar.

Generally, when this happens there is a clear pattern. The Index King reaches a peak, people then think “ah that means X is also worth Y” and then the other top 10 move up in price to match. We are already seeing that.

Typically though, you don’t have to chase that if you don’t want to. You just need to wait because high prices for the premium players tends to drag the rest up behind them, starting with the £6-9 range and then filtering down to the £3-6.

People love comparative value. It’s a very natural thing to do and can feel logical. But it’s also a very, very poor way to judge what a player is really worth as I said yesterday. But people will keep doing it, at least until a few players get shown up as grossly over priced.

Before the season start, I published a strategy article in which I discussed what I considered to be the “maximum rational value” of a player for this season.

At the top end, for heavy media and performance returning players, I put this at £15 to £20 at current dividend rates. I pegged the next bracket (chiefly strong performance players and “next big things”) at £6-10 and then any other relevant players at £2-5.

From where we are now, this looks about right. At rational value for a strongly returning player like Neymar or Pogba, investing at £20 still nets you around 15% annual dividend returns at a very rough average which is good by most investing or gambling standards, particularly for big holders with a low maintenance portfolio.

Of course, we have players pushing those prices like Mbappe who have a long way to go to meet any kind of “rational value”. In fact, if you assume he will be 4 times better in the next 12 months than he was in the last 12, you would still only get roughly 6% annual return buying at £15. (I do think he will improve somewhat but this is just to highlight how far he has to go to justify this price tag and truly belong up there with Neymar and Pogba.)

Will the share split change much? Yes and no. It makes no difference whatsoever to “maximum rational value”. But it will encourage more new traders to get involved over time.

Another factor to be considered too is that dividends will probably increase at some point, but probably not until next season at the absolute earliest.

As player prices are now starting to hit what I term “maximum rational value” I think people will start instinctively realising that at some point a player has to start earning their price tag.

Even with a share split, we can’t rely only on capital appreciation forever and as time wears on people will have to take increasing account of the actual win mechanics on the Index. That’s dividends, in case anyone has forgotten! 🙂


Rocket Ships

Antoine Griezmann

No specific reason for the rise and I think you can lump him in with Mbappé, Pogba, Hazard and Dybala today.

They are all big players that are probably hanging on Neymar’s coat tails as people’s sense of comparative value filters from the top to the bottom.

If Neymar is £20 Griezmann must be at least £7 right? And if Griezmann is £7 then Icardi must be worth… And so it goes on.

Griezmann has always been a solid dividend returner. His baselines are fairly low but actually better than most strikers, so he doesn’t always need two goals like many do, one matchwinner can do it.

He is in good form of late, and his on pitch stats suggest his recent run of good performance scores is no accident.

All in all, I think he is a solid hold. You’ve got good dividend prospects and he is never far away from a transfer rumour if we are already thinking about the Summer.

That tough match up with Juventus in the CL is a dampener but if there is a shortlist of players who could spoil the Ronaldo show, you’d have to put him on there.

Joao Filipe

Absolutely not to be confused with Joao Felix. Same first name, both midfielders, both at Benfica and worlds apart in terms of proven and potential quality according to any source I can find.

It’s easy to assume new IPO players are good especially when they are released at a high price. “The Football Index must know something!” No, no they do not. Not always. They want as high an IPO price as possible so that they can print money.

These targets are also very easy to pump and dump.

The similarities to the recent rise of Felix are such that people will fall for it.

Don’t.


Sinking Ships

Frenkie de Jong

As so often happens particularly in transfer windows, yesterday’s riser is today’s fall guy.

So many people jump on these transfers for the rumour. Of course, with these B list transfers the odds of actually winning any dividends are small.

What people are doing is flipping the story and that is why in almost all cases, players will tank after the transfer goes through.

I actually think De Jong is pretty decent, as I said yesterday. It depends whether he is made a regular starter and given freedom to push forward. If so, I can see him challenging for wins 5-6 times a season.

As with any young player at the moment though, the price is inflated and it is getting hard to find real value in the youth bracket.


Hot Gossip

Leandro Paredes

The link with Chelsea has soured and it looks like PSG will be taking him.

As a deeper midfielder he doesn’t fit the stereotypical performance player mould. But, he may surprise people because he can take a ranged shot and at a team like PSG where half of your matches are against a bunch of farmers, 5-6 goals a season aren’t out of the question.

He should have the baselines to make a single goal count.

I think it is worth watching but I will wait and see how he fits into the side.


If you find this post useful please like the post on Twitter or share using the below buttons. You can also follow me on Twitter at @_FI_trader for additional daily thoughts and tips.

FIT

error: Alert: Copying is disabled to protect members content :)