FIT GUIDES: WINTER BREAKS

Winter breaks always cause a bit of anxiety as they get closer. Will there be a sell off? Will it be a bad one? Will people also sell up because they need to raid their piggy bank for Christmas?

All of these worries can cause a drag on the market and hit confidence so once the break is a month or two away you can start to factor that in to your thoughts.

It obviously depends on what else is happening in the market. If FI were to drop a big promotion or similar, it maybe that these mild fears about a winter break are blown out of the water.

In general, I think the winter break can be overstated as a major factor. I think of it as something that I may need to tweak my tactics around rather than a major turning point in the season.

Let’s start by understanding what actually happens. And then I’ll describe the usual trader behaviour.

How are the leagues affected?

The break primarily impacts on the Bundesliga (1 month) and Ligue 1 (2.5 weeks). That’s pretty substantial and is something to factor into trading.

La Liga and Serie A also take just over a week, but personally, I basically discount this. If I’m wanting to sell a player because he misses such a short period, I probably want to sell him anyway.

The clear winner is the EPL as it carries on into the relentless festive period with many games in a short period of time. And even better, with the other leagues out, there is much less competition (all be it at often lower payouts).

What can we expect on the market?

Generally, as we get towards the back end of November and into December, you will see winter break chatter become mainstream on social media and it will usually start to drag on things.

It will likely start a drip of sales particularly in Bundesliga and Ligue 1 players. This can contribute to a general sense of gloom and bleed into other leagues too. 

I would generally expect Serie A and La Liga players to avoid the worst of it, as most people will realise that they aren’t out for long. But if things get generally gloomy they may be hit too.

EPL players on the other hand can be expected to get a significant boost. The money coming out usually goes somewhere (unless it’s on Christmas parties) and EPL players is the logical place to go.

All fairly straight forward so far.

What I think often gets overlooked is how quickly traders will want to come back to many dropping players.

As long as the players you are holding have quality and a good strategy fit, you should not get too many problems tempting traders back to your players later on.

You will not have to wait for the full break to be over either most likely. Before long, the winter break value hunters will be out in force buying the dips. 

It’s quite similar to injury trading which is pretty common these days.

Often with the winter breaks, same as an injury, plenty will buy thinking “he’ll definitely rise when he is coming back!” and somehow the player can end up the same or even higher than before with weeks to go until they kick a competitive ball. Trader logic.

However, we should avoid complacency about this. I’d stress that a bounce back is only a reasonable expectation if your player is: 1) a good dividend prospect 2) a good fit for the trends ahead, and 3) at a reasonable price.

So what to do?

It’s best to make any tweaks for the Winter Break nice and early, ideally before it’s really becoming a major issue on social media, from the back end of November to early December.

I will rarely trade specifically because of the winter break. But rather, it’s another factor I’ll account for.

For example, for Bundesliga / Ligue 1 players, I will be much more likely to sell a player in this league if by the back end of November I’m starting to question their performances or trend fit. If I’m undecided, knowing the break is on the way might tip me over the edge into selling.

For the players who I am confident with and I believe will be in hot demand after the break, I’ll just leave them be generally. It can be worth offloading them if the spread is minimal and the player is cheap because you pay less commission. 

But in general, for any kind of fairly well known mid-priced or above player, the cost of spread, commission and the probability of buying back later means I rarely find it worth it. As described above, if I am confident in the player, I’ll be confident they will bounce back in late December and January as the value hunters pick over the bones of any drops.

It can be worth shifting this money towards the EPL players for the festive period however again, this is best done in late November or at least early December. I’d never be shifting money out of the Bundesliga between the 15-25th December and moving it into EPL players who have risen already. That’s a mug move.

I am in general wary of many EPL players since their very popularity often makes them the weakest value across the leagues. 

If I do decide to do this, I will either go for 1-2 premiums or some cheaper punt picks. 

For premiums, I would generally stick with 1-2 premium picks I think deserve the price on merit provided I think they are a good fit for the remainder of the season too. Premium players are not players that are easy to buy and sell quickly or efficiently (look at the spreads!). Like puppies, they are not just for Christmas.

A more profitable avenue, provided you can get it right, can be to target some lesser known EPL players who can nick a win. Because we know there will be less competition with the other leagues out, players who don’t normally win can stand a much better chance. 

The obvious example would be the big goal scoring striker who very rarely wins performance because he does little else other than score. Or, a high baseline midfielder or defender who is often in the top 5 but is always beaten by the goalscorer of the day.

With 5 leagues in play, a 150-200 score is usually not enough. With 1 league? It can win.

We can even go for some of the middle ranking clubs with good fixtures here. And these less well known assets are likely to be cheaper and have a smaller spread.

If nothing else, it keeps me busy and removes the temptation to buy players I know are overpriced just to have a dog in the fight over the festive season.

What about when the break is coming to an end?

As we hit the back end of December the forces pushing prices switch around. People will want to be coming back to Bundesliga and Ligue 1 players. 

They may want to move out of some EPL players particularly if they have reached high prices and have not succeeded in the first game or two. (And the EPL has it’s own winter break in February).

Generally, I will wait until people are feeling the most negative about Bundesliga players, perhaps just as the break is about to start and people are the most gloomy. This is probably when prices will start getting to a bottom.

Then, maybe in mid December or late December, I’ll start hoovering up some of the good value players that have fallen. Generally, the good does fall with the bad because often people don’t know the difference!

I would very much avoid buying Bundesliga or Ligue 1 players come January because the best value is likely to have gone already.

I hope you found this one useful, there are 8 other topics covered below and I’ll be adding more to the series over the season.

Best,

FIT!

 

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