What Drives Prices
On Football Index?
Why do players Increase & Decrease in value?
BY THOMAS PADDOCK
If you have just signed up at the index, asking yourself why one player may be £X, but another player who has better stats, etc, is cheaper, then this can be explained very easily in this post.
We discuss exactly what drives prices, making one player worth more than another.
Also, future potential will be discussed, as this really is the unknown, but traders are trying to get in on the next generations of best player already.
Until very recently, Dividends were the sole driver of prices. Yes, a players age was a factor in this, as Ronaldo never quite matched the pricing of Neymar/Messi due to him being 33 years old.
Since the Share Split date announcement,there has been an adjustment towards the Youth Players on the index.
Now, what follows sounds as if I am slating these Youth Players, but I must stress I own many of these Youth Players, admittedly less than I do the Blue Chip premium buzz winners.
Players that have proven to earn consistent dividends, such as Messi, Pogba, Neymar have all reached highs of £16+ across the board.
However, we now have a bubble of youth players, such as Jadon Sancho, Vinicius Jr & Kai Havertz slowly reaching the prices of these actual dividend winners.
Between the above three, over the same combined amount of time, they have earnt maybe £0.20 in dividends in total, compared to Messi, Pogba & Neymar having over £12 in dividends.
There's no doubting they have the potential to be world class players, but at which point does the bubble burst? If it does.
I hold many Youth Players, for their potential ability to win dividends.
I am not interested in an 18 year old playing in the first team, scoring 20 goals in 20 games, if he's not winning dividends.
Why? Without earning dividends, he isn't a worthwhile player to own on the Index.
Yes, there may be capital appreciation, but you have to sell a player in order to gain from Capital Appreciation.
A trader can purchase a player in hope for future dividends, but there really is no guarantee that your players, regardless of price, will earn dividends.
You could even say that even someone like Pogba isn't guaranteed to win buzz ever again, which is true. He's just very very very highly likely to! ha!
These should be the main driving force behind any players price on the index.
Unless you're a day trader, flipping for profits, which some do. Then, dividends don't really matter.
A player should (& will in most cases) be higher priced because he has more chance of earning you dividends.
For example, Paul Pogba is £19, while Nemanja Matic is around £1.
(This is because traders will want to own the players with the best chance of earning dividends, thus meaning that the price will be higher, as for every 100 shares purchased, the share price will move £0.01).
The top defender for Dividend winning is Joshua Kimmich, he sits comfortably as the most expensive defender on the index platform, which is 100% rational.
Where things start getting a little messier, is with players such as Jadon Sancho. He sits as the 2nd most expensive Midfielder on the platform, although he has earnt around £0.10 in dividends since FI began.
There are players such as Thiago Alcantara, who is £7, but proven as the best midfielder to hold for Match Day Buzz. (He is the 5th most expensive midfielder).
It gets very diluted, as traders are second-guessing Sancho's future prospects. He's under 21, English & had a transfer rumour about Man Utd. This ticks all the boxes for ‘buzz', but he's not won much at all.
It's weird slating a player that I actively own, but I would much rather take 2 Thiago's than a Sancho future. Why? DIVIDENDS.
Top Players Pricing, reverse effect when youth become too expensive
Believe it or not, the player at the top of the Index is a driver of prices. It's Neymar presently, and probably will be for years to come.
Trading trends tend to change 3/4 times a season, when it moves back to the Premium Players, you will see Neymar rise. After Neymar has risen, he will have created a gap with the slightly cheaper players, making players such as Mohamed Salah, Messi etc look like ‘value', then it will continue trickling down to the lower priced brackets.
Then, you'll never guess what? The cheap players which win less dividends will look expensive, making the Top Players that rake in Media Buzz look like value. The cycle will start again.
Pump and Dumpers
This is the bad side of the Index community. You're always going to get a trader to try and influence the market to his/her own gain. I feel bad saying her as there's only about 3 women actively on Twitter, and they don't pump!
They will try and control the market by retweeting news stories constantly, bigging up average play & all round cringey things which just make you shake your head.
“He looks very cheap #Footballindex”
Here's a thought, if he looks cheap you should nab as many shares, as cheap as you can, as that will work out better in the long run than giving out these ‘cheap' shares to someone else. Be very wary of this.