Index inflation metrics and spotting value

  • Hi all.

    I've been thinking about a way to measure relative, rather than absolute, value, across the Index. In economics terms, this is "real" value versus "nominal" value (where real takes into account general price inflation, and nominal doesn't). I would be doing this as one way of comparing relative value over time, and spotting where the best returns lie.

    For example, when I joined the index back in May, Harry Kane cost about £8.90. Now he costs £8.77.

    Sure, the world cup is over and he hasn't been scintillating this season (although still very good and looks to be returning to his best). But his fundamental 3 year dividend output value hasn't changed very much. He's still a world class English striker likely to earn you consistent (if unspectacular) dividends - whose short term dividend potential could zoom skywards if a big move looks likely.

    With this reading, his nominal price staying around the same makes sense. Except, the index as a whole has rocketed. As such, comparatively he is cheaper. And as a goal scorer the new dividend system should have improved his real ROI further.

    The question is - how best to do the relative value calculation? Matt-FI's stats could be useful. Could use the FI 1600? Or I could possibly use a more complicated index that reflected my general strategy (i.e. I don't buy over 32 or below 21, I prefer players with attacking threat, etc).

    What do people think? Anybody already do this? I think it's an important avenue to explore given the Index's tendency to increase despite dividends (broadly) staying the same. Value will be increasingly hard to find.

  • I think with harry Kane he's competing with neymar mbeppe salah(kinda) hazzard pogba at the high end of the market, and Although at a good club spurs players ain't hyped like some of the others and he ain't a media magnet, I no mbeppe ain't really that too but he could be the next FI king, I think if Kane burst into the seen now he'd be a lot higher I think it's a case of you buy into the unknown what if factor on here and in harry we all know🤷‍♂️ the seasons young tho I will add and judge his rise or fall nearer the end. Buy at the bottom sell at the top, maybe he's at the bottom so maybe a good punt, if I had a spare £850ish to invest would harry be the man ? I think so I think you've got more to gain than possibly losing, went on one there abit 😂

  • Remember Harry Kane shot up very quickly and was at one point in line to be the first £10 player ahead of the likes of Messi & Neymar a while back... I think this is just market correction and a slow down allowing others to catch up...?

    PB scores don't help because unlike Ronaldo he only needs one shot to score in a game rather than 8... MB doesn't provide the attention he perhaps should get probably because he's pretty boring, humble, loyal and consistent? I do think this new goal dividends might however give him another push along but regardless of what he could be... He's the eighth most expensive player on FI and in fairness he's probably something near the eighth best player in the world right now so in that case his value probably almost reflects his status?

  • Kane had a lot of hype for World Cup buzz and his price stayed around £9.50 then just slowly drift becuase he hasn’t really done anything, I held him around that time and decided to sell at the start of the season, I made a very small profit and actually instant sold.
    He could be a good buy down the road a bit as I’m sure he will get some links to real at some point. I think he will drop a l lot lower than he is though.

Log in to reply