It’s a year since I decided to run this challenge and, although it was curtailed earlier than planned, I wanted to write something about the key takeaways for me.
I want to say from the start that I stuck rigidly to the rules that I set for myself. I split my £10k into three and invested it into three discrete funds – Premium players (over £4 with MB and PB potential), Performance (established players, usually below £2.50, with a good shot at PB and IPDs) and Potential (youngsters and those plying their trade outside of the PB leagues). Capital appreciation and any dividends were reinvested into the fund they came from.
The overall performance of each fund was surprisingly close:
- Premiums: total profit of £1,347. ROI of 40.4%
- Performance: total profit of £1,520. ROI of 45.6%
- Potential: total profit of £1,624. ROI of 48.7%
Those figures don’t tell the full story though. Digging a little deeper, there were five obvious learning points for me from doing this challenge:
Different asset classes will peak at different times of the season – to make the most money you need to know when to get off one and onto the next. Be warned – the biggest driver is likely to be the actions of FI themselves!
These were some of the things I noticed when looking back through my notes.
The Premium fund generally did well when FI intervened in the Index – around the deposit bonuses in June and September, the matrix change in August and the launch of the new dividend structure in early November.
Of course, the Premium players also suffered badly from changes made to MB during the season which significantly reduced the odds of winning. The dual change of replacing MB with PB in the international breaks and opening up MB to the squad, dented their intrinsic value and led to a long-term slump for my fund that only really ended when COVID-19 woke traders up to the importance of dividends again. Again though, the intervention of FI made a big difference here – paying out on 5 MB places increased their value.
The Performance fund was much more driven by matters on the pitch, as you might expect. After a bit of a summer slump, their values peaked once the football began around the middle of August, which was followed by a small correction. There was another mini-slump around the winter break.
Again, FI had an impact on the value of this fund. Prices saw a huge spike in mid-October after the announcement of the new dividend structure.
The Potential fund was probably the most consistent throughout. This fund had some peaks around the transfer windows but, other than that, it was fairly steady growth. The players in this fund didn’t tend to be affected by the FI announcements in the way that the others did.
With the benefit of hindsight, I could have probably doubled my money by ploughing into Performance holds in July, selling up a couple of weeks into the season, then sitting the cash in Potential holds except for periods of deposit bonuses and matrix changes when I’d have stuck it back into Performance holds, and then moving it all into Premium holds as soon as COVID-19 started circulating.
Hindsight isn’t going to help me much on here so I guess the learning is that no amount of research into a player is enough on it’s own. You have to be looking at the external factors and market cycles too. Fixtures is the obvious one but also where we are in the season, what FI are planning, and any events that might be coming up that will pique the interest of other traders.
When FI make any intervention into the market, you may need to rip up your research and start again.
This is really a continuation of the previous point but it’s so important I’m going to say it again. There was barely a week that went by when FI didn’t make an announcement or do something which altered the value of players on the Index.
Off the top of my head, we had – deposit bonuses, matrix changes, mass IPOs (and all-nighter IPOs), media madness, unexpected position changes, transfer dividends, super matchday points… and I’m sure I’ve missed some too.
I’m not keen on the current IPO mechanism but I recognise that not participating in it hurts my overall ROI as I’m missing some big opportunities. Likewise, deposit bonuses can be really valuable if approached correctly (timing is key).
Some of these things fundamentally alter the value of your bet, either in the short-term or in the longer-term. If it’s short-term, like super matchday points, then there’s some sense in ignoring them but for the longer-term changes, you really have to adapt-or-die. We can assume that the same will hold true with the new Matching Engine – so it’s well worth getting your head around that now.
(as an aside – taking all of that into account, I can’t for the life of me understand why they haven’t fixed MB yet – the reasoning of not wanting to alter people’s bets during the season doesn’t hold water)
A diverse port is the best protection against unexpected circumstances – and it must include players with genuine dividend-earning potential.
As I’ve already said, different asset classes tended to peak at different times but I was ready to write off my Performance holds in November. After some good growth at the start of the season, they mostly flat-lined from that point forward. If it wasn’t for this challenge, I’d have put them all in the bin and ploughed my money into cheaper holds.
As it turned out, it’s really good to have a flow of dividends coming in while the world goes to shit. The likes of Fernandes, Sancho and Kane have appreciated in value and pulled in a sizeable haul of dividends. In fact, the Premiums have more than doubled their yield for the season in the last 10 weeks, so not a bad effort at all.
That’s definitely taught me that it’s worth keeping some higher priced players in your portfolio – they typically hold their value well and generate a steady trickle of dividends. It’s not as exciting as holding the striker that bangs in 3 goals and sits at the top of the PB rankings on a Saturday but sometimes you need that stability.
You need to find the sweet spot between having too many players and too few.
This was something I found really difficult. My total port tended to fluctuate between 30 and 60 players. Too many players and I’d lose track of what was happening with each player, too few and I’d feel like I didn’t have enough ‘skin in the game’ to make FI fun (which is a key part of it for me).
Having too many players also indicates that you are probably not quite sure enough in your choices. If I like the look of player A but I’m certain that player B will rise further and faster, why wouldn’t I just put all my cash into player B? The forced choice really tests your confidence in your ability to value players – something that will be ever more important with the gradual shift to order books.
I couldn’t imagine ever putting my money into just 5 or 6 players but I do want to tighten things up a bit in the future and work at the lower end of things – around 25-30 players.
Something I learned about me – I need to enjoy this game and find a way to make it work for me.
As I touched on above, this isn’t just about making money for me – I need to enjoy it too. In that respect, players that bring in dividends tend to excite me more than those that are slow-burners. This can make holding youngsters a bit problematic at times as they often sit around a price for a long while before suddenly catching fire.
I’m sure that I could make more money if I wasn’t in this for the enjoyment levels. I know I get attached the players at times and I can be slow to sell on a rise if I can see some good fixtures coming up where a player might be in with a chance of winning dividends (in most cases it’s better to sell up on the rise and not wait for the PB lottery).
The time I spend on the platform is linked to my enjoyment levels and fluctuates during the year. Sometimes I want to do a lot of research and really hone in on my choices. Other times, when the market is a bit flatter, I’m less inclined to dig deep into spreadsheets and I’ll either just sit on my fund as it is or I’ll wait for someone else to tell me who to buy.
I found doing this challenge really helpful (if a bit time-consuming!) as it forced me to move out of my comfort zone and invest in players that I wouldn’t have otherwise considered. It’s also helped me to look at things a little bit more objectively than I was doing before – it’s so easy to just get stuck in a rut and do things the way you’ve always done them.
I think it’s important that I’m aware of all of this as it perhaps tells me that I need to work out a simpler way of evaluating my holds for the times that I’m getting too attached to holds, time-poor or find things are stagnating. Or maybe I do just find someone else to do that for me?
And that concludes this first chapter and marks the start of the idea for next season’s 3 funds challenge…