I have been a trader on the Football Index for almost 2 years now. When I first joined in March 2017, the only dividend pay-out was a media related dividend, and this was only a maximum of 5p a share.
The highest priced player on the Index at that time was about £6 or so a share, and there was only a maximum of 200 players available to buy at any one time. All other players were held in a ‘squad list’ until such time they were promoted to the top 200 and became available.
The Index has come a significantly long way since then. At the time of writing, there are now 2,950 players available to buy, with most expensive player, Neymar, in excess of £19 a share.
The amount and types of dividend pay-out have also increased. On non-eligible match days, the media dividend is now 8p a share for most ‘newsworthy’ player, 5p for second place and 2p for third.
In addition, various performance related dividends have been added. If you’re lucky, these can total up to 18p per share on treble match days. Furthermore, an additional dividend has been added recently for all goals and assists registered in qualifying matches over a 30-day period from when the shares are initially bought.
The exciting thing about the Index is that there is still plenty of room for further growth and expansion both home and abroad.
One of the problems the Football Index faced in terms of expanding and attracting new members is the share pricing. Potential new traders are likely to be put off by having to pay through the nose just to get a few shares in the biggest and best players. However, the solution to this is imminent, as the Index will implement a share split within the next couple of months. I discuss this more in my blog last month.
After the share split, shares prices will be instantly lower, and all the top players will be affordable again. 100 shares in Neymar right now would set you back around £1,900. If the shares are quartered, for example, 100 shares in Neymar would only cost you around £475 which is a massive difference.
Ultimately, whatever Neymar’s price is, or any player’s price for that matter, in my view there remains three fundamental questions each trader has to consider at any point; who to buy, how many shares to buy and when to sell the shares. Here is my answer to those questions.
Who to buy?
This is partly determined by your own individual trading strategy and budget. If you want to be an active trader and prefer short term results, then you are most likely to want for players who are likely to win either a media or performance dividend in the foreseeable future. The skill with short term trading is not only identifying which player(s) will rise, but then making sure you cash out with a profit at the right time. Cash out too early and you have missed out on potentially substantial further profit, cash out too late and you could lose money or be lumbered with shares you don’t want.
If you prefer a longer-term strategy, I would suggest that ideally you want a portfolio with a mixture of players that range between those who are ‘safe-holds’ because they are regular dividend winners, such as Pogba, Neymar and Messi, and those who represent good long term potential, e.g a young English talent with decent prospects of making it in a top 5 European league in the next 3 years, such as Mount, Gibbs-White, Nelson.
How many shares to buy?
Instead of focusing on the number of shares, I would try and focus on the amount of money you want to invest and the spread of your portfolio. If for example you have £1,000 to invest, think about which players you want as well as the spread of risk. If you are more risk averse, you may want a portfolio where say 80% of your funds are dedicated to lower value players with potential for growth. Depending on the number of players you want to hold, this may then determine the number of shares you are able to buy in each player. If you don’t mind taking a bit of a risk, your portfolio may end up consisting of a small number of shares in the highest priced players.
When to sell?
If you are concerned with guaranteeing yourself some sort a profit, then I would set a target for you to reach in terms of profit on a certain player, and I would then sell the shares, taking your profit. You may be kicking yourself that you could have sold the shares later on for more money, but remember any profit is good profit, no matter how small.
This question is also partly answered with reference to your attitude to risk. If you partial to taking a risk and are prepared to be patient, I would suggest you hold on to the shares you have, especially with a share split imminent. If you can afford to have the money held in the Index, then there really isn’t any reason to sell shares at the moment.
Generally, prices have risen across the board and I am confident they will continue to do so going forward. If you have shares now or buy shares before the share split, you will be very well placed to make money from the Index in the foreseeable future as it continues to expand and grow.
Onwards and upwards as they say!