We’ve had the weekend to digest what was a really strong announcement from FI about dividends on Friday night.
I blogged my reaction and analysis live for around 4 hours during the announcement in the members area on Friday night and there was lots of interesting stuff to talk about.
Unlike other announcements, it didn’t have me furiously bashing a calculator to try to make sense of it all. It was an easy to understand straight up 57% dividend increase across the board, with a few interesting details on top.
The main takeaway is that this is just good news for traders who spend their time and money on players of real FI quality. It’s bad news for traders who exist on hype and speculation. Knowing who the really strong performance players are on FI (as opposed to the ones often pumped in chats or social media) was always important, but now even more so.
Those dividends, especially on those incredibly lucrative Gold match days (formerly treble) are huge and undeniably worth playing for.
Even as a trader who focuses on players of real quality, only a fraction of my returns actually came from dividends. Rather, I used extensive research to predict dividend wins before they happened, then made most of my money from the price rises that followed dividend wins as other people realised that the player was strong that little bit later than I did.
That will still make up the bulk of my gains for the foreseeable. But it now becomes much more attractive to actually play for some dividends, particularly on those treble days. (I mean Gold days I’d better get used to that).
And as I said on the live blog on Friday, it really gives a premium to those big hitters like Kroos or Parejo who can absolutely blow the competition away with a 300+ score on a Gold day.
I’ve long talked on this blog, for years now, of FI maturing as it gets older. All markets do. In the early growth phase you get these huge gains and rampant speculation.
But things do settle and markets eventually move closer to true value. In fact, ask an academic and they will tell you that is the function of a market – thousands of people acting together to find the true value of the assets being traded (with winners and losers along the way).
On FI, the only thing that provides true value is a players ability to win dividends. The only thing. Some people say different but they are just wrong about this.
Without dividends, we are paying real money for empty entries on a spreadsheet. So when players don’t return dividends and have little prospect of doing so, they are worthless in terms of true value.
A market will always find that out in the end, regardless of the speculation caused by over optimism or poor information in the mean time.
This was always going to happen and it will keep happening. Not least because FI know it needs to and all of their changes will be designed to build a credible product.
Think of the challenges they have in onboarding new customers. “What’s your football knowledge worth?” Well, sod all when the stars of world football aren’t worth much and 15 year old Ajax players who won’t kick a competitive ball for 3 years are worth a lot.
It bears no relation to reality. And most people can’t/won’t watch academy players week in week out in the same way especially when they can’t win dividends.
It’s just not fun and it’s hard to explain to new customers why you can’t have a decent chance of winning some money on the real first team players.
That’s the real motivation behind this increase. To inject more reality into FI.
And traders respond and adapt. The market matures. People start to see profit in seeking true value rather than hype and speculation.
That’s good for anyone like me who plans on being around on FI for the next 5 years and beyond, whether you benefited immediately or not.
In a way, traders invest in players but they are also investing in FI as a whole. When FI does well, it’s good for all of us.
That’s something I apply to my trading and my strategy. I don’t stray too far away from the real mechanics of FI, even though I do lean into the trends and have taken significant profits from the hype kids too along the way.
You often hear talk of luck on FI. One Twitter user I saw this week claimed to quit because FI’s announcement apparently caused him to lose a ton of cash and rendered hours of his research into extreme and obscure youth picks completely useless.
Luck has nothing to do with it, he did this to himself. When you stray so far from true value and the long term direction of FI, you may make a short term gain but over time you will get punished.
Comparing that to my own experience, since I have been holding the type of player now in demand since pre-season, I could barely have had a better few months. Do I feel lucky?
Hell no. I feel like I benefited from the results of hundreds of hours of hard work.
It’s becoming a site catch phrase but that’s ok:
When you don’t stray too far from the real win mechanics of FI, you make your own luck.