3 Days Later - Part 3

Welcome to Part 3, where I cover the best questions I have had in recent days, with my attempts to answer them.

And just in case reading Q+A’s published at around 8pm now leaves you breaking into a sweat, don’t worry, mine will be much more uneventful than FI’s on Friday.

If you haven’t already, you can start with Part 1 which covers the wider issues of trust, including my inner incandescent fury at how this was handled not just on Friday but in all the sequence of events that got us there.

And if you want to focus on the practical stuff about whether Leagues is actually any good or not, here is Part 2

Questions and Answers

What can players really be worth under Leagues, rationally speaking?

On Friday night when the world was falling apart around us, I was doing some very quick and very dirty maths on the Live Blog. As soon as my jaw was off the floor, anyway.

I wanted a reference point, a marker in the sand. The game had just been flipped on it’s head. So what should prices actually be now?

One member commented that he had to laugh when he called in on my blog. His Slack, Twitter, and WhatsApp groups were all burning down in flames and there I was discussing the relative value of Mason Mount in this new world. He called it the definition of keeping your head when all around you are losing theirs. 

I am not sure I felt particularly calm at the time but I will take this!

In the end, I came to the conclusion that as things stand, a rational market, based on rational values rather than the fear of recent days would look something like this:

There is no reason for even the best player on FI to be worth more than £3-4. On Friday, with them sitting at £6-7, that was a massive drop.

Right now, it feels like a very optimistic target price as some are even below £1 on the Red Button (I note some actual rises today so a bit higher now maybe). Which shows how much things have changed in just a few days.

I’d be more confident at the lower end of that range and £3 would certainly be realistic for someone like Bruno at current performance levels on a stable platform.

Strong performance players that have recently shown strength, perhaps a Mount or a Kroos, can probably achieve £1.50 on a rational basis.

And then there will be a big chasing pack hovering in that £1 range most likely.

This is because we can expect a more “flat” market where premiums are nowhere near as far ahead as we are used to.

More players have value. And more will command decent £1 to £1.50 prices. So most well regarded players who people think are regular winners will hover in that £1 to £1.50 price range I would expect. 

They may even be more stable than before – since you don’t have to worry about waiting 3 months for say Sabitzer or Demirbay to eventually turn up with his inevitable (but often very far away) massive score. Someone like that will win much more often now and not suffer so much from that drift down in price between wins. (That may not be a good thing always, I am sure I will get onto the mechanics of trading before too long). 

However, there will always be scope for good traders to get their edge. Traders are, on the whole, not brilliant at knowing quality, not until it hits them in the face. And then they might pay too much for it. 

They are heavily driven by who won recently or who comes out well in historic databases which can be useful for some things but it is not the best way of judging a player at all. The popular perception is often skewed. So we’ll be finding the value players who might be 50p but should be £1 or £1.50, that will be our new hobby. And possibly selling them when they become popular, most likely. Actually, that isn’t too much different from our old hobby.

Do note that these numbers were produced very swiftly under pressure so they are not going to be exactly right.

Most importantly, we will have to adjust down for age in more considered analysis (For example at 28 and above I start chopping 40% off the target price ceiling as opposed to a 25 and under player). 

But as a ball park, I’d put my name to these for now as the best stab. I will be doing a more accurate analysis in the coming weeks I am sure once dust has settled.

Are you going to keep producing content? Will you move to another platform like Sportstack or Sorare?

I will keep going until a day comes when FI looks done and options are so limited that I feel I can no longer be of help to my site members. 

I promised analysis of what is going on this market to help people do the best they can on FI. That commitment was made with the intent of helping members make good profits in a fun and sustainable way over the long term.

Now? Maybe that commitment is about helping people salvage what they can, or for some, and these people exist, setting portfolios up for Leagues.

Either way, I’ve got work to do. I could go and hide under the duvet but what kind of person would cut and run on that commitment when things are at their very toughest. This is when people are looking for more information they can use than ever.

I still have hundreds of amazing members who give me their 3 quid a week to make it possible for me to produce all this content. And I expect to be working harder than ever for them in these days and weeks ahead. 

And you know what, their support, both in subscription and also in a lot of cases the messages of concern for me personally means more to me than I am capable of expressing. (My parents were old school and taught me the traditional and possibly wrong way that a man should never be so soft as to actually express an emotion). 

If in a week of graft I can find or share just one thing that helps someone salvage something from this mess it will be worth it.

FI is not done yet. There will be next steps from FI, and probably unexpected plot twists ahead with new information coming to light. I’ll be there throughout all that doing my thing.

I have however offered existing members a breather from subscriptions if they are feeling hard pressed. (I haven’t actually actioned these yet as so much to do but I will and if your subscription date goes by in the next day or so I will make it right). 

And if the day comes where FI looks done, I will be refunding people for remaining time on subscriptions. For example, I’ve got people who paid for an annual pass just last month – I’m not going to be holding people to that in a world where FI does not exist. They’ll get unusuable months back.

I have today also extended this to new members – i.e if you want to join today to help navigate all this and FI drops next week – I will refund you for the 3 unusable weeks.

As for other platforms, I haven’t thought about this in detail. I love this job. It is likely that if FI went away some product would fill the space. We are already missing the fun of match days as I could barely focus on it yesterday. I know I am anyway.

But right now I am 100% focused on what is going on with FI, and will not be going anywhere anytime soon.

Q: “I’m still in shock after the announcement so excuse the simple question: ‘do you think FI management have any idea how their product works?’
 
I ask because having stopped IPDs (sensibly) to narrow the spread of winning players on the platform and focus PB (FI’s alleged ‘core focus’) on a smaller number of players, with leagues they have just blown it wide open again.”

This was from the Live Blog on Friday. I’ll just summarise my answer.

So IPD was removed. I had called for it’s reduction (I thought outright removal was a bit heavy handed at the time, but came to the conclusion in the end that I thought it was probably better just to dump it).

The reason I liked this change was liquidity. Simply put, IPD gave value to everyone. If you want liquidity, you needed a smaller pool of desirable players.

So that is why I applauded this. I hoped FI had done it for those reasons, and not just because they wanted to cheap out on IPD. Who knows.

Leagues… is contradictory in this. It makes a wide batch of players viable all over again, spreading what thin liquidity there is over a wider group of players.

Potentially bad.

Frankly, I haven’t spent a massive ammount of time thinking about the mechanics of how this will work. That is a whole article in itself that will be worthwhile.

I suspect now whilst the pool is wider, there are also a lot more players who can exist perfectly happily at lower prices in that £1 range and even 50p range. Whilst we need to spread money thinner between a wider number of players again, they will need less money to support them too.

Premiums for example at £3 no longer need quite so much behind them. They hog less of the money in the market, which could be distributed more evenly helping liquidity further down.

This is starting to feel like a long way of saying I don’t know for sure. 

It is a contradictory change that I have my eye on. Perhaps after the 3 days I have had after being hit by that Friday night meteor I may lack the brain power to think about this extremely complicated issue. But it is right to highlight this as a problem and this topic will come up again for us to look at.

Q: “Looking at the fixture calendar, there are so many Bronze Days. Is this going to make Leagues miserable?”

Possibly yes. A practical worry with Leagues is the randomness of the fixture calendar, particularly this season. With games being rescheduled left right and centre, we don’t know the full calendar ahead. 

So there is something of a lottery here – FI are outsourcing exactly how fun and rewarding the product is to the fixture scheduler. We’ll also have to pay more attention to who plays what day. This could be the new annoying random factor much as Game Winning Goal is now.

I can see a world, pretty easily actually, where with enough Silver or above days in play we are going to have fun watching a squad of players get over the finish line and win in multiple categories, enjoying a more steady but constant flow of dividends into our balance. 

Which in many ways – is quite suitable to a stockmarket dividend system, possibly more suitable than a jackpot model.

Yet. If what we get served up is a succession of Bronze Days, of which FI have little control, that is going to be something of a struggle.

It is a problem that will fade – in a more normal season we should see games clumping up more. But Leagues will need to start well and the current fixture calendar is looking a little thin. 

What FI should really do is come out with an offer similar to during COVID where they temporarily widen the net to make more days Silver and cut those Bronze days down.

So if there is a single practical issue to campaign on that might actually get listened to beyond the (justified) complaints about the whole fiasco – this might be it.

It is also worth saying that as per the Part 2 analysis of Leagues, you can actually take home a reasonable clutch of dividends on a mostly Bronze Day, if enough players come in for you. 5-10p maybe. Which ain’t much but it ain’t nothing.

“I know the premiums a very badly hit which kills a lot of the “big money in the market” would you avoid the older players too? And do you think they’ll maybe increase divs for the euros? (Wishful thinking)”

Yep. It is bad for veterans. Particularly the 32+ age range, maybe 31+ if you fear they won’t be around for at least 2-3 more seasons. 

Whilst many could feasibly net 50% or more of their value in just a single good match day, they now cannot come even close to that. 

They are now under much greater pressure to return enough dividends to warrant the price in the seasons remaining to them and so do suffer from this. When you could grab their big win then hope to get out before it was much more sensible. 

Now you know you have to stick in for the longer term, letting dividends trickle in, all the while watching the clock ticking on their career and fearing other people jumping before you do.

Of course, in a similar way to how IPD players were hammered after the last major change – people are likely to oversell the veterans for this reason. 

And they may end up looking decent value again before too long. Even if you hold them actually into retirement and place a print out of those shares fondly on your wall. That sounds crazy but in the near future that will be a viable option. 

(Edit to the original answer: at current prices, this would already be viable, provided you were happy with the dividends alone and don’t care about a future sale. I would expect to be able to find a lot of these as of today – in which, you can disregard everything I just said about fearing veterans – that only applies if you know you need to sell them later. Perhaps we could call this part of our portfolio the “Retirement Home”.) 

I will cover the specifics of which veterans might be good or not in Scouting as we go once that gets back up and running (planned to start tomorrow actually). 

Now as for the Euro. Assuming we get there with FI, I probably would expect them to do some kind of promotion for this. It’s got to be part of the plan and it is quite well timed, with a few months between now and then for dust to settle. 

They sure as hell need to throw a few more carrots in eventually as they try to regroup (though they might be better starting with olive branches that help older customers – tacky promos right now would go down in flames). 

Assuming they are sticking in for the fight, they have to have some ammo in the locker and a plan for how they get out of the hole they have dug for themselves here. And Euro’s would be an opportune time.

“Do you think FI have scammed us, or have they just been incompetent?”

My personal take is that this is incompetence, rather than a scam. I wouldn’t swear to it, how do I know? I think if it is a scam, then it is a very, very long one. And a very, very well executed one.
 
I think this is the story:
 

It started well enough. They had a lot of success, turning the sort of idea you might dream up in the pub with your friends (Let’s make a stockmarket… but for football!) into a viable and successful business after a few years. And it was awarded, now infamously, Number 2 in the Sunday Times Tech Track 200 not long ago only in September 2020. 

And it was a product that many people really enjoyed (and many still do and would like to see back if at all possible. Or, if you have turned your back on FI, most longer term traders seem to want something else to fill the space at least). 

There was a lack of a clear long term direction, probably. And too many knee jerk reactions as they tried to encourage growth or pull the market back from a drop.

To an extent – this is a function of the financial volatility in the background that resulted from the old dividend system. The new one at least, looks more stable, so logically, should put them under less pressure to do silly things.

I guess the main reason I don’t believe it was a scam is because there have been so many chances for FI, Adam C, Mike B etc to cut and run before now. But they didn’t. They stuck for 5 years. They stuck when COVID was coming and the prospect of no football for 9 months or more and a crashing market loomed. 

Why would you bother fighting through all the uncertainty of something like COVID if you were always planning a scam? You’d just take that chance to jump, blame COVID, off you go to Panama.

This looks to me like a series of poor decisions, which is infuriating and heartbreaking for all of us that took the hit for this. But I do not think it is a scam on current evidence.

And the whole Leagues thing, too. This is a point that Mrs FIT actually made to me this morning. If the plan was to cut and run this week they would have not gone to all this trouble to create an elaborate system like Leagues, surely? They would have just straight cut dividends and folded more quietly. That would have been less disruptive and probably left them with more money to take.

The fact that they bothered to come up with Leagues at all suggests to me they are planning to fight this out. Maybe the strength of the reaction on the weekend has made them feel that isn’t possible now. But I think that was the intent pre-announcement at least.

That is what I think anyway. I’m not going to swear to being right because I cannot know the inner thoughts of the FI staff. I can only draw some inferences based on what I see.

“Would it be wiser to hold a bigger portfolio now to catch more winners, say 50-70?”

I think so.

Depending on time of year and whatever is going on I generally say 40-60 is optimal for most people. With 30 for reasonably aggressive types. Lower than 30 is generally best for very small portfolios where the holder is happy to bet quite aggressively. 

(Very small can mean different things to different people. For some £100 is a lot of money, others are happy to aggressively punt £10k without blinking). 

I rarely suggested more than 60 players. Beyond 60, we were often getting outside of really optimal picks and picking up some mediocre stuff. There were never 60 slam dunk value choices.

Maybe now there is.

It is early days but I would agree with you here – 50-70 for most people is going to be quite a good range. Wide enough to give all the benefits of a diverse portfolio, and catch a clutch of winners come match day. 

Not so wide that we are carrying lots of passengers in our portfolios. I can imagine that some people might suggest you should now hold 200 or so players to catch ’em all. I would disagree. Strongly.

This is not pokemon. We do not have to catch ’em all.

This would be a good approach if, and only if, you are a fairly lazy trader who didn’t do any research or monitor their choices. 

Whilst the pool of winners has widened, the quality players are coming through to claim the lions share of dividends. This is just probability. We want to lazer focus on these for optimal results. That random player picking up 1-2p very occasionally is not going to be attractive – we need players who can win again, and again, and again now. 

It may be a good while before we have freedom to do much about this sort of thing! But good to be aware of nonetheless. Once Scouting is rebooted, likely tomorrow, we can put more brainpower into how we might adjust portfolios for this new world. 

Some of which I know some people want to act on now, and for those sitting tight, it’s still going to be good to have that knowledge base available should we see some kind of plot twist that makes us believe we will get to see Leagues in action.

“Would you have any inclination to deposit at this stage? As your analysis suggests a lot of players have benefited from this and are still going for pennies. There is money to be made… but it feels a little like a ‘fool me twice’ shame on me scenario”

I never tell people what to do with their money. I just provide information and opinion and then everyone does their own thing, that’s the deal!

However, speaking personally about how I feel – I would be cautious right now. Nobody knows what is going to happen. As per Part 1 of this series today, things look bleak, and based on current information, it may be more likely than not that FI has given itself a fatal wound.

I am aware that a few others are quite bullish and tempted by the absolute rock bottom prices. And, from what I see today actually, that sentiment appears to be growing as people recover from the initial shock, and more calmly evaluate the value proposition. It is a trading stereotype after all that the best time to buy is “when there is blood in the streets”. Well, you ain’t going to see more blood than this weekend.

But this quote is really meant to apply to things you know will have it’s day again eventually. We don’t have that certainty. 

I’ll end with this. I see no reason whatsoever to feel any pressure to go back in to avoid missing these low prices. If you really want to chance your arm and bet with some money you are able to lose and expect to lose for a chance at a big pay off, that’s for an individual to decide.

But I can tell you right now that if FI does continue, finding value is not going to be a problem we have, even weeks or months from now. It’s perfectly fine to hang back and there will be plenty of good options later if something happens to make you feel more confident in the product as a whole.

“I really appreciate how rational you are and how you try to find positives in this, to see how to set portfolios past April. I guess it’s thanks to you I’m “only” down 85% as I had just 10% of my port in Brunos, Sanchos, KDBs etc. But little does it matter today with Alberto, Sabitzer, Guerreiro and the likes down just as much.

Hopefully this settles down by the summer and FI have something up their sleeve to improve things at last. If there’s any positive from their actions in yday (and last few weeks), it’s the fact they really should be in good shape financially, right? RIGHT? :D”

A bittersweet question if ever there was. I get some nice emails from time to time from people who consider they have improved portfolio performance by joining me here on the site. I have never once before been thanked merely for limiting someone’s loss. A miserable sign of the times.
 

But, it is better than it could have been which is something. 

I would also say that life is far from over for Alberto, Sabitzer, Guerreiro and other solid players like this under the new Squad based strategy with Leagues. Leaving aside for the moment the question of FI stability of course.
 

I always say, and especially now, trust our own judgement of value. Because these prices we see on the screen today? Absolutely nothing to do with a rational price. They are to do with panic and fear. 

And that is perhaps not unjustified. But you have already said you are riding this out (in the rest of his email) and in order to be able to do that, what you need is a portfolio that can excel under Leagues. 

It sounds like you probably are most of the way there because, the main positive from the analysis of Leagues is that the majority of a good portfolio from recent site scouting/strategy is going to remain good going forward.

So, coming to the part of the question where you ask if there are positives from all this. Well you are putting me in a place where I can only write things that may not be all that popular here. But so be it. I will try to find some. (hear that sound? That’s me scraping the bottom of the barrel). 

This might be one – the type of portfolio I tend to favour will almost certainly prosper under leagues. No fluke. We have stacked the odds heavily in our favour deliberately. That of course assumes FI keeps going but we cannot control that bit. 

So do not stress about low prices for a Sabitzer or similar (other frustratingly occasional big scorers are available). If FI settles – Sabitzer is extremely likely to win and extremely likely to rise once more. In fact, he is likely to benefit strongly from Leagues because his wins will be more consistent and he can keep momentum, rather than spiking every now and again and then going quiet for weeks.

If you were holding really bad players who could not bounce like Sabitzer can – that is when you have real problems. Such players should probably be sold at any price if you have no confidence in them in the world of Leagues. 

This is fine – even to take pennies for them. Why? Because you can probably swap them for other players you can also pick up for pennies. And you’ve improved your portfolio for little cost.

But let’s just make sure we are getting this right and not dumping good players – remember that plenty of players who were strugglers before may now come back into it – Morata etc. I will cover this in Scouting soon.

Let me scrape that barrel again. Positives…

– Leagues is actually quite a good system in itself (the main issue is it savages existing users)

– FIT style portfolios will be good for Leagues. Very good, I suspect. So we may already be in decent positions for that. And we can make them better with tweaks.

– (The following positive is highly questionable) FI surely must believe they are taking a short term hit for a long term gain. And, you can see how the new system makes them more financially stable should they continue.

So if you really, really want me to try to dig a positive out of that.. FI knew what would happen and did it anyway, suggesting they believe they have a programme ahead that gets themselves out of this hole. Whether we believe that? Open question.

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