Measuring success against the market

It’s all well and good comparing one ‘fund’ against another but how am I doing against the market as a whole?

We’re in a growing market at the moment so the phrase ‘a rising tide lifts all boats’ certainly applies. We all read about traders who make huge RoIs each month, some of whom trade full time on the Index, but what about the average trader?

I consider myself pretty average. I spend maybe 8 or 9 hours a week on FI in some form or other. I work full time. I know a fair bit about football but I don’t watch as many games as I’d like to. I’ve been on the Index since 2017 and I’ve been making money since the beginning, in a slow and steady sort of way.

To make an assessment of how well I’m performing against the market, I first had to find a measurement of the market itself. I looked at three alternatives – the Footie (the original ‘sentiment’ measure), the combined value of the top 100 players (available from IndexGain) and the Market Tracker put together by @FIMarketCap (which is the value of the whole market: every player’s price minus their IPO price).

The three measurements show very similar market movements, as you’d expect. This is the week by week movement since I started this challenge (thanks to @Freunds_Mullet for providing the spreadsheet to help me put this together):

The Market Tracker shows slightly more growth during the period than the Footie. The Top 100 players tracker shows the least growth, a reflection of the value of top players being somewhat suppressed for much of this season. I decided to use the Market Tracker to track the performance on my funds, simply because it measures the whole market and is a more transparent mechanism than the Footie.

I then looked at my three funds – Premium (+£4, expected to compete for MB and PB on a regular basis), Performance (less than £4, expected to regularly compete for PB/IPD) and Potential (youth prospects or those in non-PB leagues with perceived future value) – and mapped their movements week by week:

As you might expect, they tended to peak at different times, with the value shifting from one part of the market to another throughout the season.

The biggest standout moment on the chart is the PB dividend increase which was announced in mid-October. This supercharged the Performance holds and caused the Potential holds to nosedive. Similarly, you can see the pattern of the Potential holds tailing off in July and August, while the Premium and them Performance holds see a nice increase. The pattern was reversed in late December when it was the Potential holds that got the biggest boost from the winter break.

Onto the big question, how are the funds performing against the market? The short answer is…

Not that well…

This graph shows that none of the funds have managed to match the growth of the market as a whole, so far – around 72% growth over the period shown. The Performance fund comes closest on around 61% but a couple of injuries set this back in December. The other two funds lag further behind, with the Premium holds almost static since the end of August but the Potential holds showing some recent promise at least. Adding the funds together, the total fund growth is 44.5% over the period.

One other interesting thing to note – my portfolio is made up of the three funds that I write about and that’s it, but what isn’t counted within these figures is money from IPO flipping, deposit bonuses and so on. If I add that on and look at my port as a whole, the picture is slightly different. My total portfolio growth over the same period is 62%. Based on the amount of time I spend on FI, I reckon my hourly rate is about £20 per hour.

So what do I take away from this?

  • It’s evident that holding the Premium players has gone a long way towards stunting any growth this year. The trade off is that Premium players are low maintenance as a ‘set and forget’ strategy – so it’s whatever works best for you as a trader really.
  • The best profits are probably made by those traders that know how to read the market and when to switch between trends. There is always a segment of the market that is outperforming the rest so knowing when to let go of ‘off trend’ players and move the money elsewhere is key.
  • If you have the time to make the most of IPOs and the various bonuses offered by FI you can really maximise profits. I suspect that it’s pretty hard to stay ahead of the market without getting involved in these.
  • FI have the power to flip the market on its head which each announcement that they make. Given the speed of the announcements at the moment, we should all be a little wary of that.
  • Most importantly of all – you don’t have to outperform the market to be happy! The Potential fund hasn’t done as well as the Market Tracker but I’m more than happy with the amount of money I’ve made. You can’t plan for things like injuries so perhaps beating the market (or at least this measure of it) isn’t all that realistic for most traders anyway?

So that’s me. How is your portfolio doing against the market? Let me know.

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