My new YouTube video on Diversification
Give it a watch if you want :-)
Feedback always greatly received
Frank Mole-Pepys last edited by
@Tom7471 - thanks for sharing.
Just for info Steve Jobs did diversify including founding Pixar, NeXT and being a board member of Walt Disney.
I’ve also discusses diversification in by ‘Newbie Trader Diary’ blog on this forum. I favour diversification but I don’t think either diversification or focusing on a few picks is right or wrong. Different strategies suit different people’s risk appetites. You may want to go for big bucks and I may be happier with an safer income that pays above bank base rate. If we want different things our strategies are going to be different. Neither is right or wrong.
I enjoyed your video though as it sets out clear the case for backing a few selections.
Coriolanus last edited by
@Frank-Mole-Pepys that's the key really... You've listened, understood and are making an informed decision as to which strategy suits you... We are all individuals.
Think it's a really good case for not diversifying and it was a topic worth putting out there.
I diversify a little bit for fun and profit during the busiest part of the season (europa and CL group stages)...but I back myself during summer months to condense into very few players that Im 100% certain will have a spike on transfer rumours. I then sell that spike (rather than risk whether a transfer actually happens or not)
That way I'm picking the ones I'm most sure about rather than picking 50 I think might have transfer rumour and could be waiting a long time or not at all for the rumours to happen.
Frank Mole-Pepys last edited by
Also, whilst I'm sure that Tom as a professional gambler will be aware of the Kelly Criterion, it may be worth others googling it if they are interested in a formula that purports to calculate optimal bet sizing in relation to one's bank roll.
Good video and as vesp says, a good case for not diversifying.
I would take some issue with the whole 'go for it in business' argument though, they arent the same thing
- In business people go for it to make their business bigger and bigger, that isnt the case with here, as at some point, prices of a player will drop
- in business you have control over how you build it to make it better. on here you have no option whatsoever
that said I think it is a clear message
diversification = less risk, lower reward
non-diversification = higher risk, higher reward
and that is a very personal decision
@Frank-Mole-Pepys thanks for the feedback. I truly believe that lots of strategies can work on football index and one of my good friends holds over 100 players and I think it's brilliant because in gold match days he has the chance to win divs in every position. Something I have no chance of.
I really think that the fun element has to be taken into consideration because in my opinion it's incredibly fun and if you only have 4 players that will take the fun away. John from the high wide and handsome podcast tried having a small port and didn't like it and that's such a big influence rather than making money. Thanks for watching.
@Vespasian32 sounds like some very good strategies you have there. On the fun side of things being able to buy and sell on transfers and transfer rumour sounds a lot of fun. Something I may start doing more of.
Coriolanus last edited by
@MrWh1te the conception is that diversifying is safer... But as labelled and example within the video... Maybe its a misconception?
Diversifying your money across products and type of investment... Yes...
But in FI is it safer? Maybe... But it'd be good if you can give examples.
The common go to is injury.. But all examples from tom dispel that...and actually if you hold 100 players your more likely to have players that suffer injury or lose place in team... Or transfer abroad than if you have one hand selected..
When it comes to something like Covid or the Index going bust ... Being diverse isn't safer...
If FI goes bust, every strategy loses. I think that is clear, I have no argument with that.
It isnt just injury. Plenty of players go down for whatever reason, I think Sancho will have a massive fall at some point. Transfers out, injury, not being flavour of the month, loss of form etc etc.
So if you go all in on just a couple of players, and research well, the rewards will be very high. but also higher risk than say a port like mine that just sits there and doesnt do much.
both good strategies and very different reasons for choosing them
Sol last edited by
@Tom7471 great watch Tom 👏👍🏼
@MrWh1te thanks for watching and for the great feedback. I guess the idea of business was a little left field and they are very different but I ever since the first deposit I wanted to keep playing for larger stakes.
I understand this can't go on for ever but the more "good decisions" you make the more likely this is to happen.
My main thing about the index that I don't think is talked about enough is how brilliant the idea of a football stockmarket is. I have always loved football since a small child but like many other on here football index has made me love it even more and on a global scale. Instead of just watching the prem, I genuinely enjoy watching psg, Bayern Munich and all different foreign clubs. That's a massive win in my eyes.
@Sol thanks bud.
I also want to get people thinking of other options. Not to say I'm necessarily right at all but if it gets people thinking maybe I could do things differently (even if they don't do it) I think that's a big win.
Londoner last edited by
@Tom7471 Interesting. A diversified port doesn't have to have many dozens of players. I have a diversified port of around 15-20 players. I make sure there is at least, 1 player representing all the PB leagues. I also only buy a minimum of 100 shares in each player in order to make winning dividends worthwhile (pounds instead of pennies).
I'm flexible with my diversity and jump on existing trends. If it's youth, I'll buy a couple of youngsters. If it's PB, I'll have a few PB players. I currently have a few MB players for obvious reasons now. Recently, I bought 7 German players with my DB since there's a good chance that the BL might be the 1st to return to football.
It'll be 2 years in August since I joined. It's taken me this long to come to this strategy! So I have diversity as the spine of my strategy, but I'm still flexible as well.
Harford is God last edited by
@Londoner My approach seems similar to yours, currently got 20 players but 4/5 will be moved on with transfers hopefully, also loaded a few weeks ago on German players with perhaps one eye on expansion as well as return of football. Still learning after 8 months and mistakes aplenty.
@Tom7471 great video and insight, provoked some further thoughts on one player in particular that I should back more strongly but money will have to come from my port.
@Harford-is-God thanks man. Its hard at the moment to re jig the portfolio but when football starts again I will be going even harder in some players and getting rid of the deadwood. There is definitely nothing wrong with diversity but for me I want to try and maximise gains from my "best" players.