Week Review – Bundesliga, Matching Engine and FootStock
Well, it was great to get real football back, even though I've never been a fan of football, all the research I have done since joining back in February made me eager to see some PB Div and In-Play Dividend returns after topping up on existing players, and investing in new ones, on the last day of the Deposit Bonus period at the end of April. I even had made the decision to watch one full game a week, at least initially, to try to improve my knowledge and understanding of the game. I had made the decision to watch RB Leipzig as I felt the had the ‘easiest' fixture and because I have a few players in the squad in my portfolio. However, after they went one goal down and Haaland had scored the first goal in the Dortmund game, I decided to switch my viewing to the Dortmund v Schalke match – it was an inspired decision a I saw a great performance by one of my Top-10 holds, Raphael Guerreiro nab 2 goals and win Star Player on the day. The next day was almost as good as another of my key holds Benjamin Pavard also took the Star Player, after being a standout defender, from a PEG perspective, prior to the game. 2 days, 2 Star Players and decent Matchday and In-Play Dividends – football was back. The next day there was only one game, I hold a fair bit of Kai Havertz and was a little gutted to see him pipped for Matchplay Divs, but a bonus was to see him topping the media charts that day, showing that diversification is important across PB and MB and that there are multiple ways to get returns on the platform. Over the last month I've managed to double my dividend returns from £400 to over £800, with little move in the overall portfolio valuation, which I expect to change once Matching Engine goes live. The market was a little flat on the Sunday and Monday, I had imagined there were a few profit takers and people selling up to invest elsewhere. I had noticed a drop in Premier League player values, the very same afternoon there was an announcement that they would commence training on the 1st June – another key indication to be patient in this game. The La Liga, Serie A and Premier League players will all get rises when they resume games, there is a little bit more risk with Serie A and a few less opportunities in La Liga but I'm hopeful the EPL will provide some decent top-up opportunities.
There was also the announcement on Wednesday 13th May that the Matching Engine would be arriving ‘within the fortnight', so by the 27th May – the timing of this is excellent, with 0% commission till end of July, giving people plenty of time to play before other leagues return. It's a massively positive thing for the Index. I've experience of them with the Nasdaq but mainly through Betfair. It will lead to increased opportunity, reduced spreads, more choice and increased liquidity. Have a look at FIG's video guide to the Matching Engine, for those that are still confused or worried about it, you will honestly get used to it once it's up and running. The doom and gloom merchants would have you believe that it's going to result in a sell-off, perhaps FI will do something to mitigate that risk, but we should never fear a correction, if it shakes money out of the market and gives traders the opportunity to invest in other players. The biggest risk to FI right now is the growth of Footstock. Some, including myself, say that both can co-exist, which is totally true as they are different products and appeal to different types of traders and gamblers. Right now, Footstock provides traders with far more of an ‘adrenaline rush', it's far more of a gamble with regards to the roulette and virtual tournament aspect but it would be naieve to think that the growth of Footstock will not impact on Football Index. My own belief is that traditional football gamblers, who perhaps are more focused on the short-term, will switch allegiance to Footstock, while the more savvy, long-term ‘investor' will remain with FI and, with the introduction of the Matching Engine and Order Books further down the line, attract more serious investors. It ‘should' balance out but I'd be massively surprised if FI are not impacted by, what is in reality, a competitor in the market.
I tried Footstock for the first time a few weeks ago, please don't go hating on me FI regulars, read on first. I see similarities between Fantasy Football and online poker, with regards to the tournaments. There is also a trading element and, so long as you stay away or limit the roulette, there is money to be made, so I am diversifying across both FI and FS. I can see Footstock as having incredible growth right now, similar to the early days of FI, which has been slowed by Covid and will ultimately slow down in Footstock at some point too, but right now they are definitely making a dent in FI, and FI need to really do something about that. I've seen numerous posts from people selling up on FI to invest in FS as well as spammy Footstock affiliates using the Football Index hashtag, all of this will take users away from FI and into FS. Sometimes it's strange as it's to the detriment of some FI users own portfolios to do this kind of behaviour, it's self-defeating in some respects but just a sign of the times.
I'm not saying Football Index need any gimmicks, as the two are separate products. However, FI do need to fix some fundamental issues with the platform – lack of notification about share expiry, issues with first name/last name in media, not having all players in the index and lack of announcements about media review, expansion plans etc. They could perhaps introduce a tiered PB or something else to give people that feeling of excitement. Excitement is over-rated, it does provide quick gratification, but at the same time, it's important to a lot of gamblers…and we are all gambling at the end of the day. There is a lot to be said for delayed gratification and having less risk and more of an invesment approach but you can have both. I'm going to write a blog post in the next month or so about my first month experience on Footstock, in the meantime, I recommend you try them out and make your own mind up by clicking on the banner below. I realise the irony of an affiliate link below, but I won't be spamming the Twitter FI timeline with affiliate links and just keeping them on this blog. As ever, make your own mind up.
PEG VALUATION CATEGORIES
There are quite a few questions you can ask yourself when deciding whether a player represents ‘value' on Football Index. Value is a subjective, and mostly misunderstood concept, some people mistakingly believe that a low-priced player is good value and that a high-priced player is bad value, when actually it's often the opposite that is true. By using the Price Earnings Growth ratio (PEG), we can help narrow down the focus. In this article I hope to share some research as to how many players in each team, position, age and league have a PEG ratio of less than 1 and what the average PEG figure is in each of those categories. A future article will look at XDivs (Expected Dividends) to try to identify players that have yet to earn and Performance Based Dividends in each of these categories. You can read more about PEG ratio's with examples in this blog post, under Step 4.
Bundesliga players have had a little bit of a rise over the last month or so, so that skews results slightly, but they have 41 players under 1.00 of PEG with an average PEG of 0.34, not the best average, but not the worst. As we will see later in the Teams Analysis – Bayern, RB Leipzig, Schalke and Dortmund players account for well over half of these players, perhaps an indication, again, to focus on those teams near the top of the table. Premier League is next best with 34 players under a PEG of 1.00, with an average PEG of 0.33, headed by Leicester City with 6 ‘value' players and 4 other teams with 4 players, Chelsea, Liverpool, Man City and Wolves. Next up is Serie A with 33 players and an average PEG of 0.31 with Napoli (5) and Juventus (4) leading the way. La Liga has the worst average PEG figure of those under 1.00, something I alluded to in the PEG La Liga post here. Sevilla (5) and Real Madrid (4) the two teams with the highest amount of ‘value' players. Ligue 1 have an excellent average PEG of 0.28 with PSG (4) leading the way. With no football till next season in France, I half expect that number to increase a little bit. Finally, just 9 players from non-PB Leagues with positive PEG's, again a lot of this owing to Europa/Champions and Internationals for certain players.
There IS an age bias on FI, with preference towards younger players on FI, however you cannot ignore the stats that show the 3 best average PEG ages are between 29-31. Does this mean we should be buying 29-31 year olds? Not necessarily, but it does mean, that in terms of a 3-year bet, you should not worry about buying players that are 26-28, especially when research like this suggests players hit their peak between 27 and 29. Now, obviously the numbers of players in this age range are lower, but proven div winners with capital growth will return Divs…to a point, until capital appreciation starts to drop. This is happening already with Messi, while Ronaldo is still returning Divs with good growth, but each player needs to be looked at in their own right. However, there is definitely a lot to be said for those who are 23-28 and that would be the age range that I would focus on, but there are obvious exceptions to the rule, 20yo Sancho for example at one end of the scale, and 35yo Ronaldo at the other end. There is also a lot to be said for taking into account the position the player is playing in. For example, players in goal or central defence can play a lot longer and tend not to decline until 31 or 32, compared to wingers who are already declining by 30. Check out this ESPN article for more on this. The fact that 23-28yo's fill the top-5, in terms of number of players that are ‘value' suggests this is the best, or safest pond to go fishing in. The relatively high figures for 19 and 20yo's suggest that looking for the ‘next' Sancho is perhaps a fools errand, and better to look at those who are already producing the goods, in terms of Divs, or at least Div potential, combined with capital growth. Looking at youngsters at the bottom end of the scale, could result in lower liquidity and more disappointment.
I've covered specific players in teams above in some of my previous posts, but thought I would mention the positive PEG players, ranked, in each of the top few teams, in terms of numbers, and those with the lowest average PEG figures. Again, all data is since August 1st 2019 and PB only. There are some hybrids in there that get MB also, like Coutinho, Werner, that give them even more favourability. You also have to take into account the player ages and other factors like contract renewals or loan extensions, especially with the likes of Ighalo and Coutinho, it's about balancing all the factors and looking for those players with more in their favour than not.
Bayern – Pavard (0.102), Lewandowski (0.103), Gnabry (0.183), Coutinho (0.225), Kimmich (0.338) and Koman (0.687)
Leicester – Pereira (0.174), Chilwell (0.214), Soyuncu (0.316), Ndidi (0.332), Fuchs (0.671), Barnes (0.710)
RB Leipzig – Nkunku (0.107), Werner (0.120), Sabitzer (0.203), Halstenberg (0.232), Upamecano (0.426), Orban (0.707)
Man Utd – Ighalo (0.013), Fred (0.059), Fernandes (0.117)
Lyon – Marcal (0.040), Cornet (0.197), Depay (0.238)
Wolves – Adama (0.098), Jota (0.142), Doherty (0.207), Moutinho (0.225)
That's a fairly decent list, the majority of those I would expect continued moves upward in price and continual returning of PB Divs.
So often we look at Goalkeeper, Defender, Midfielder, Forward without digging a bit deeper. Thanks to the stats guys at Football Index Edge – who I highly recommend, for the breakdown of these different positions, has helped massively in my own personal research. There are clearly some interesting signs here – Attacking Midfielders/Wingers have the highest amount of positive PEG players and also have the joint-2nd lowest PEG ratios, after Second Striker/Winger, closely followed by Full Backs. For me, these are the 3 key areas that we should be focusing on for buys. Interesting to see such a relatively low number of centre forwards, and with the 2nd-highest PEG figure, after goalkeepers, who clearly should be avoided. Centre Backs and Central Midfielders you probably have to be a little more selective with. Great examples of players in the following categories are -:
Attacking Midfielder/Wingers -: Ramirez (0.032 – Sampdoria), Ilicic (0.043 – Atlanta), Payet (0.052 – Marseille), Cuadrado (0.058 – Juventus), Fred (0.059 – Man Utd), Golovin (0.073 – Monaco)
Full Back – Max (0.036 – Augsburg), Rui (0.036 – Napoli), Hernandez (0.038 – Milan), Marcal (0.040 – Lyon), Alexander-Arnold (0.046 – Liverpool), Guerreiro (0.040 – Dortmund)
Second Striker/Winger – Haddadi (0.072 – Sevilla), Berardi (0.090 – Sassuolo), Adama (0.098 – Wolves), Calvert-Lewin (0.105 – Everton), Willian (0.148 – Chelsea), Deulofeu (0.178 – Wolves)
Once again, you need to take into account the player age, whether the Divs they returned were over a short-period of time, earlier in the season etc and the teams they play for, but it is quite informative as to which players to foucs on.
The problem with looking at price ranges, is you generally get smaller sample sizes, the further up the scale you go. In PB terms, Sancho is close to being his price, but of course that doesn't take into account all the other positives, transfer news, media returns, age etc etc. However, it's interesting to note that he is close to being about the right price (neither good nor bad value), then we have Bruno who is next highest priced who is exceptional value, both in terms of PB and MB. Then we have a couple of players priced between £8.01 and £9 in Haaland and Neymar, but again doesn't take into account Haaland's excellent media PEG of 0.063. A sweet spot seems to be players that are priced between £1.51 and £2.50 but it's worth digging deeper into the bigger samples at the lower prices, splitting the £0.10 – £1.00 players up a bit, which gives the following -:
It's a little bit interesting that the lower down we go, the worse the value, not massively bad, but from £0.91 upwards, things tend to improve. I'd never be buying a player at 30p or less. In fact it's highly unlikely I'd be buying at less than £0.90, which is why I think it's more difficult to find ‘value' the lower down the price scale you go. Of course there will always be anomolies but there seems to be a nice sweet spot between £0.91 and £1.20 which contains 20 players. Now, some of these could be ‘one-hit wonders' but it's worth filtering them by age, position etc to shorter down your list of contender to buy.
So, PEG Analysis and filtering by team, age, position, league and price range can help narrow down the analysis. For example, if I were to filter by the £0.91 and £1.20 players, while looking at those aged 23-28, ignoring La Liga and looking at full backs/second strikers/attacking mids/wingers then it would give us the following players. I wouldn't be interested in the bottom two as there is a bit of a gap between them and the rest, in terms of PEG but the others are all worth a look I think -:
I'll be using some of these filters when looking at XDiv performers that have yet to achieve Div returns but have capital appreciation and perhaps hit some of the key profitable areas above. Any comments, again, please post below and if you would like to know about a particular player I'll endeavour to respond when I can.