My initial reactions to the new dividends:
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.
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.
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.
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.
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.
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.
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.
- 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.
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!