Thoughts on the new dividends

  • My initial reactions to the new dividends:

    FI approach

    1. FI are clearly very willing to do things that shake up the market. This is a gamble on their part. It might disturb some of their big long term investors who could take a big hit when the market is shaken up. The possibility of regular rule changes might strike big investors as being too risky. Having to change investment strategies too often is annoying - particularly when rule changes send values tumbling as well as climbing.

    2. They are clearly doing 1) purposefully to increase volatility and increase trading volumes. This earns them commission. They want people glued to their screens during matches. Even people (such as me) who won't be buying for goal/assist dividends on match days might sell during the price spikes on match days. This will earn them money.

    Implications for trading strategy
    3) If made permanent it could accelerate volatility around injuries - particularly for strikers. This is both an opportunity and a challenge.

    1. It will, and already has started to, prick the bubble of the promising young players who don't get a game. In a way, I think the market is over-reacting in this area. The dividend returns are small - it doesn't change the balance that much. But the 17 year olds at top clubs worth £3+ have long been over-valued. FI will probably be pleased to deflate this, as the long term hold style of trading probably makes them very little money.

    2. I wonder if, long term, the focus on increasing match day volatility will increase the profitability of FI. This could enable them to increase dividends, if they wanted, to attract even more people (snowball effect). Things that make FI more profitable without decreasing sensible traders' ability to make money should be welcomed.

    3. It could possibly increase the chance of being able to be more profitable by focusing on non goal scoring MB/PB players, by decreasing their prices. Kroos is an example of a player who's had a news story today suggesting he's unhappy at Real and might want to head to the Prem. This could be big news. And he's losing value as a result of this change.

    4. However, the real money here has always been through capital appreciation, rather than through the dividends themselves. If this change were to be made permanent, the increase in volatility might make selling at the right moment harder, and might make the capital appreciation from PB/MB wins a bit weaker. This could increase the sustainability of FI (capital appreciation can't go on forever without larger dividends) but would shift the balance of traders towards dividend seeking.

    Share split
    8) It shows FI are willing to offer 0.5p dividends. This means the suggested share split could happen with dividends being cut in half. They are less likely to be rounded up as a result.

    1. FI don't seem to be too concerned with the radical difference in price of the top players and the bottom ones. The top players are almost always more attacking players. This will further that imbalance. Which will make the share split almost inevitable, in my opinion.

    Parting thought
    10) I'm a bit nervous that FI want to make this more like a traditional betting site, playing on the addictive quality of instant wins/losses, etc. That is not the aspect of FI that I joined for. I joined for the sense of fulfillment you can get from a patient strategy well executed, rather than the short term thrill of selling at precisely the right second. I have no problem with people who want that - but it's just not me. If they are aiming to increase volatility, and as such make selling at the right moment harder/more effort, it will eventually put me off putting money in. I hope FI doesn't go too far in that direction!

    Overall, I'm pleased with the fact they're innovating and experimenting with raising dividends. But we'll see where we go from here - the change might not even be made permanent!

  • Really good analysis mate. Chimes with my own thoughts. I’m disappointed that they’ve done something like this without consultation - after all that work consulting the market on share splits as well - and I don’t like the trajectory of the market towards short term trading! But at least they’re trying to think creatively.

  • @NewUser149634 Spot on. They make money turning the whole market over leading up to the promo, then keep the volatility going every match day with people flipping for the goal dividends all the way up to midnight.

  • Personally I think they want a lot of people making a little money and not a few people making a lot of money, people with thousands invested might move away from the platform now and it's gonna be small investments but far more frequently, that's not what made foote index different, it's a sad day really

  • Does anyone think this commission making scheme today by FI is because they are short on cash? Just a thought...

  • @NewUser171924 Not really. If that was the case. We wouldn't have kit sponsorship, sky adverts, 10% bonus offers 3 times this year ect.

  • Can’t believe you have to sell and re buy players to be eligible for the dividend... current holdings don’t count

  • Not good is it.

    My big concern is that further falls are likely in defenders, midfielders and young players, as the market becomes even more volatile when goals are scored this weekend and people buy forwards before the ridiculous midnight deadline.

    Time to start cashing out.

    Mike_B is an absolute moron if he genuinely thought that people would love this idea.

  • The 2pm dividend should have been made midday to avoid goals scored in the early games across Europe. It's going to be interesting to see the price of players when the goals start flying in on Friday. Especially if a 50p defender gets on the score sheet. I don't think has been a good move and is, at best, ill considered. There will be a lot of volatility over the period.

  • @NewUser149634

    Absolutely fantastic write up. Agree with almost everything you've written.

    It's a good new angle that will bring in extra money (and also make FI a tonne more money), just hope it doesn't go too far along the short term betting route!

  • @NewUser149634

    Excellent post mate.

    Although, may I suggest you give yourself a more suitable username.

    Your current (new user****) moniker doesn't do you justice.

    It will also make it easier for users to pick out your insightful and well structured posts from the rest.

  • I lost 2.5% of my portfolio today, not good. I don't think it matters long term though as really it's just an extra dividend, so things will go up. However it does state it is only temporary dividends so we shall see whether this thing stays or not.
    I have sold a few defenders and added the money into Bertrand Traore, Kalu and Chiesa. Players with high PB that score goals and get assists. I however haven't completely changed things yet in case this thing disappears again.
    I still think the platform will rise 10x as much yet in money, if not more, and so I can only see player prices still increasing though more likely forwards mainly.

    I haven't got an opinion yet on whether I like this or not and shall give it time first.

  • @johnboywalker

    Good suggestion - done.

    And thanks for the comments everybody. We live in interesting times!

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