How to always win on the Football Index even during a market crash
How to win:
...Okay, I'll go into more detail, but that is literally all you have to do. Buy players at good value and sell them when they become over priced.
What is value?
In terms of Football Index, Value is the amount a player can return in dividends from now until the end of their career.
Why over their career and not 3 years?
Your shares are only valid for 3 years but you should still value based on their whole future career. This is because you SHOULD always be able to buy and sell your shares in order to recycle them. I understand in the current market, there are a number of players without a sell price, however I feel this is a very short term unique situation and am confident that you will find it possible almost all of the time within your 3 years to sell your shares and buy them back. But what if your player drops in price over those 3 years? Even if your player drops to 5p that would mean you could still buy him back for 5p so you will only lose out on the commission.
Example: You value a player at £5 (meaning you expect him to return £5 in dividends over his career from now). You expect him to play 5 more years of football.
You buy him for £2
Year 1-3 he earns £4 in dividends but he drops from £2 to £0.5.
You sell him for £0.5 (£0.49 with commission) and then buy him back for £0.5
Years 4-5 he earns £1 in dividends but then retires and so drops from £0.5 to £0
Profit = Sale - Purchase + Dividends won
Profit = (£0.49) - (£2 + £0.5) + (£4 + £1) = £2.99
This example shows that if your valuations are accurate, and you have the ability to recycle shares within 3 years (even if its at a loss) you will come out in profit due to the dividends won.
How do you value a player?
Every trader will come to different conclusions as to what specific players are worth. This is because it is impossible to know the future and so is based upon individual trader's educated opinions and calculations. Different traders may have different ways for calculating value. Here is the list of variables I consider when calculating value :
How many years of dividend eligible (ie top 5 leagues) football does the player have left?
How much PB will they win on average each year? (They may hit peak form for a few years and lose a bit as they get older, so I try and come up with an average after considering both factors).
How many times a year will they be in Team of the month?
How many transfers do you expect them to make? And how much media will they win from these transfers?
How much media will they win on average each year (without including transfer speculation)
How many Goals + Assists will they get each year for In Play Dividends (This is only valid if you have the ability to recycle shares every 30days so you may want to either exclude it or divide it by say half for example to make it more realistic and achievable)
For more detail check out this video : https://www.youtube.com/watch?v=8YyH2SlMUM0&t=15s
These answers are all still very vague and only estimates and so will need constant monitoring and editing as things change, for example a player may suddenly hit amazing form and prove to be a much better PB hold than you first thought, or a player may move to the Chinese league making him much less valuable as he can't win PB dividends.
How to use value to buy and sell?
Once you have an estimate of value for a player you can then compare it to his market price (or price you paid for him). If the market price is below your estimate then he is good value and if he is above your estimate he is bad value suggesting you should not buy and in fact sell if you have current shares.
For this to be effective you will need your valuations to be accurate which of course is difficult so perhaps it is worth giving yourself some extra room in your valuations when buying to reduce risk.
The take away here is to buy players when they are priced below value and then sell them as they move towards their true value or above.
You value Haland at £14 so you buy him at £8
His price then rises to £14 but in your eyes his value is still the same.
You sell for £14 and have made £6 profit per share (Plus any dividends you picked up along the way)
What if I believe in my valuations but the prices never rise?
As we are seeing now, every player's price is declining due to a number of external factors such as liquidity issues and negative sentiment. These are not value based and so are not reasons to exit a long term trade. If your player's price never rises to what you believe his true value to be, there is nothing to worry about as you will still earn the dividends which will surpass the price you paid for him (assuming your valuation was correct). This is less ideal as of course it will take longer to earn the profits than if the players price just increased to where you wanted to sell. However it is reassuring to remember that as long as your valuations are accurate, even if the market doesn't react as expected, you will still come out on top through the dividend yields.
So to conclude, (assuming you have the ability to sell your holds and re buy within a 3 year period), if you can accurately predict value of players in terms of what they can return in dividends you will always come out on top. It may take a long time if the market is on a downward spiral but worst case scenario and your holds price drops dramatically, you will still profit overtime through their dividend returns if you bought at good value.
If you found this article useful check out my social media and youtube channel where I go into more detail about valuations and things to remind yourself during a market crash