Portfolio diversification



  • Morning all.

    Id like to make sure I diversify my portfolio in order to avoid the risk of any particular player having too much of an impact on its value (if he breaks a leg or finds himself being tried for rape!). Are there any general guidelines for what the maximum portfolio percentage you should in one player is?



  • No guidelines really ... depends on how diverse you want to be

    I worked on 10% max for a long time, now its 5% max although as prices change , it complicates things.

    -A highly diverse portfolio means you are basically investing in the index
    -A less diverse portfolio means you are investing in yourself to get your picks right



  • Your investment in one player should be how much of your portfolio are you prepared to lose if his price went down the gutter. I believe there is a trader here who originally sunk everything into two or three players, and it payed off for him rapid rise wise (tongue-twister there). Permanently lose a player and 33-50% can be gone. Have 20 players and lose only 5% if a player bombs out. It's what level of risk you feel comfortable with.



  • @Ollie does that mean of "your" portfolio each player holds 5% of the total value? ie. if your portfolio was £100 each player's value x amount held would equal £5? Therefore £5 being your max loss on a player and so on based on %age hold. Sorry but just trying to get my head around it. My max hold is 13% which I can accept, it's just out of 40 players I have 3 that account for 30% of it and maybe I should look at that scenario also if all 3 went t*ts up.



  • 5% max if risk-averse, 5-10% max if you're risk-tolerant, anything over 10% then you're asking for trouble long-term in any investment (yes, you might get lucky now and then, but if you're talking about diversification, then you have none).

    Regardless of budget (remember always be prepared to lose it all, if not, then don't invest), I'd aim for between 20-25 players at between 3-5% holdings, and then diversify your players between; MB players (hazard, pogba, etc.), PB players, and young potential players.

    The larger your initial budget the more MB players you should have (easier to predict dividends). With a smaller initial budget, aim for the £1-3 player brackets with a couple of 'luxury' £4-6 PB players.

    Hope that helps.



  • @NewUser173532 just one thing springs to mind and please correct me if I'm talking daft, but does not having 40 players as opposed to 20 not diversify your portfolio more?



  • @Weedster

    at a very basic level, yes, the more players you have, the more diversified it becomes but you'd want to have a fairly decent budget to have 40 players in your portfolio.

    At the end of the day, you make an investment in any market in the hope of making money. If you're spread too much, then you're unlikely to make much at all (the risers will just cancel out the fallers). It's a fine line that depends upon many factors.

    I'd recommend the following starting amount of players based on your intial investment:

    £0-100 = 1-5 players
    £100-500 = 5-10 players
    £500-1000 = 10-20 players
    £1000-2000 = 20-30 players
    £2000-£10000 = 30-50 players



  • @Trading-Bear cheers bear, sounds about right as I am looking to cut my portfolio down in size.



  • @Ollie said in Portfolio diversification:

    Your investment in one player should be how much of your portfolio are you prepared to lose if his price went down the gutter. I believe there is a trader here who originally sunk everything into two or three players, and it payed off for him rapid rise wise (tongue-twister there). Permanently lose a player and 33-50% can be gone. Have 20 players and lose only 5% if a player bombs out. It's what level of risk you feel comfortable with.

    It depends how much you believe in a player as well. If you are certain a player is under-valued and you nail it so that he triples in price then realistically its not going to do much for your bottom line if you invested less than 5% in him.

    There are a certain amount of players who are almost index trackers like Messi and Naymar who will return decent dividends and will probably increase in line with the index. So you could say invest 5% max in these kind of players.

    But when you are certain a player is under-valued then back yourself and put 10% or even more in.



  • I’d dispute this. I’ve got 140 players with a portfolio at just over £10k. (Down from a peak of 170 players). Whilst the market continues to grow across the board, Id venture that 5 players are rising for every 1 that is falling. So it’s not that my risers just cancel out my fallers. I’m actually easily offsetting losses and then making a lot more on top.

    I’m aware this is effectively a tracker investment in the overall success of the Index. But Ive had solid growth for the past few weeks (regularly hitting 1% or £100 a day), where a lot of people have been having a spell of red because they’re overly exposed to Pogba/CR7 etc. At this stage in the Index growth trajectory I think heavy diversification is still a reasonable strategy.



  • @playingcards1 said in Portfolio diversification:

    I’d dispute this. I’ve got 140 players with a portfolio at just over £10k. (Down from a peak of 170 players). Whilst the market continues to grow across the board, Id venture that 5 players are rising for every 1 that is falling. So it’s not that my risers just cancel out my fallers. I’m actually easily offsetting losses and then making a lot more on top.

    I’m aware this is effectively a tracker investment in the overall success of the Index. But Ive had solid growth for the past few weeks (regularly hitting 1% or £100 a day), where a lot of people have been having a spell of red because they’re overly exposed to Pogba/CR7 etc. At this stage in the Index growth trajectory I think heavy diversification is still a reasonable strategy.

    This is certainly true, and worth bearing in mind at least for the next 6-12 months as FI continues to grow from a base product to more of a steady fully-grown market and acting as such.

    It's still very much in it's infancy and as playingcards has alluded too, you could chuck 100 darts at the index and 70-80 players would likely give you green figures in 6-12 months but as the market steadys out, it's worth thinking about stream-lining portfolio's.



  • The more diverse your portfolio is the less risky it is in general but it also restricts the growth potential. Having 100% in one player that doubles is a great result but very high risk, personally I try to have 1-2% max in any one player as it gives many more chances to hit PB/MB or just players that have potential price rises but the winners have less overall impact on my total portfolio value. The more you believe in both the player & their current price the higher % you can commit.

    This strategy also allows for buying in tranches & averaging down if prices fall, as I believe there are probably only a couple of hundred index players worth holding (a self selected tracker if you like) but getting a good price on everyone, especially the higher priced ones, is very difficult. So if your timing is wrong & they fall over time you can always buy more whilst still not exceeding 2%. Currently most players will rise over time with index growth so it's a good buying time but as the index saturates selecting the right player will become far more important & mistakes more hurtful.

    Essentially there's no right or wrong answer so long as you are comfortable with your strategy & it's ultimately profitable then stick to it.



  • There is no one size fits all portfolio design that we should all have, however I look at my portfolio in similar terms to an aggressively managed stock market portfolio which by design is trying to outperform a tracker by having less players and higher holdings. This involves having strong opinions and holding your nerve!

    Therefore my current portfolio is a best ideas portfolio of no more than 50 players at most, however there is usually about 45 at any one time.

    I try to limit exposure to no more than 5% in any one player and always to have 10% cash available to advantage of opportunities without having to sell a player.

    This additional cash I also use to go over the 5% max if I believe there is further short term upside in any of my best ideas. A good example of this was buying additional Hazard last week. However I often quickly sell this for the profit it hopefully quickly makes.

    Players are bought for MB and PB but if I start to reach 50 players I identify the weakest and sell otherwise I end up with a tracker which is the exact opposite of what I am trying to achieve.

    Hope this helps



  • I hold around 20 players. I have 5-10% invested in each. I have 21k invested in the index. I go for young players with potential or are already world class.



  • I have 4 players and 10k investment! :)



  • @NewUser113421 which 4? its a bold move, surely its a constant rollercoaser?!



  • Fascinating insight into various strategies.

    I joined a few weeks ago after a recommendation from a friend. After a couple of 'Risk-Free' mulligans and a few weeks glued to FI to acclimatise, I recently started from scratch and my strategy for the foreseeable is long-term holds with PB and MB potential. 20% of my portfolio is invested in each of Neymar, Messi and Hazard - risky given that 60% of my portfolio rests with those three, but I was keen to invest strongly in the big boys after the Share Split results. Fairly strong mandate for the share split to happen soon, and I agree with others that this will create a decent upside in the Top 5-10.

    I'll probably look to get closer to the 10% of total portfolio per player limit in the future, but for now I'm content with my med to high risk strategy. Ask me again after a leg break, event leading to a dip in dividends, or a criminal trial put the cat among the pigeons...



  • I have 87 players. 12 in the red, all the rest green.

    Only invested £670. Really wish I could invest more but I just don't have the cash 😪


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