The below article was originally released in Feb 2019 but is still highly relevant today. Don has also provided us an update on his current position and an update on his strategy .
Welcome to the first edition of tricks of the trade, a weekly article series that plans to dig into different trading strategies used on Football Index. As more players and dividend types continue to be added to the platform, we’ve seen a multitude of different ways of skinning the same cat to come out with a shed load of profit. Some people use a generic strategy whilst others have distinct methods and are renowned for doing it well. These are the traders I’m looking to dig deep with to find out the motives and results of their not so common strategies in order to give other investors trading ideas or simply provide an interesting perspective you may not have considered.
In this week’s edition, I got an insight into the Big Don’s (@IndexBig) portfolio, which holds more players than you could imagine and he's got some interesting reasons for it! Let’s kick things off with the basics:
How long have you been on Football Index now? How profitable has your time on here been?
Big Don: I joined Football Index on 23rd November 2017. My Portfolio today is £256,721. Net deposits are £159,236. So £97,485 net profit.
How would you describe your strategy in your own words? How many players do you own right now?
Big Don: I own 1167 players right now. I guess that’s quite a lot! My strategy is to buy players that I deem to have more upside than downside over a decent time period. My aim is to hold a player for as long as possible unless he gives me a good reason to sell. I’m certainly not into short term trades as it kind of goes against my nature as a trader.
To further explain the reasons behind having a lot of players….
• Diversity, and it suits the fact that my football knowledge is limited.
• It complements the way that I do a lot of my traditional gambling with covering possibilities.
• Other traders say that it’s too many players to have, and I want to be different, maybe for the sake of it!
• Having a lot of players gives me a good oversight of player price movements. I’ll often buy more of one of my players that hasn’t risen much if I think he’s missed a growth spurt or similar players have shot up. My portfolio gives me a good info guide.
• I love the concept of Football Index, so I fancied that there might be a lot of growth. And I didn’t feel that I was particularly late to the party. So by having a lot of players, yes, it is like investing in the company. I sort of view my portfolio as a sponge. I wanted it to soak in as much growth as possible. That being said, I do try and buy good players and do try to have more of my favourite players!
• At the London meeting, Adam Cole made reference to the “3-year bet”. That sort of stuck with me. To get the maximum dividend value from a player I would need to hold for the 3 years. Of course, you have to be careful with applying this fully. There is going to be times when you need to sell due to trading reasons, but my tactic is to hold a player for as long as I deem it profitable or he gives me a good reason to sell, such as a move to China etc. There is no rush to get rid, generally.
• Lastly, I heard Lex Van Dam (the guest at the London meeting), say that as a trader you want to buy things that people will want to buy after you. Well, shares in footballers in a new stock market concept, where I think the dividends are good value ticks all the boxes!
When did you decide this was going to be your strategy?
Big Don: In the first couple of months I think I tried various strategies and wasn’t having too much success. My football knowledge is limited and I was spending time trying to find information to help me beat the market when I could have been doing other gambling/ betting (which is where I generally make my money). However, I loved the concept of Football Index from an early stage.
I didn’t opt for any particular strategy on any particular day. Rather, the strategy evolved over time. I realised that I had joined not too long after PB was introduced and subsequently the dividends increased. I don’t think this meant much to me straight away, but I slowly started forming an opinion that the dividends in their format were/ are good value in the long term.
After 3 months, I remember that my portfolio was running at a loss, but I wasn’t worried. My view was that it was early days and that the dividends that were rolling in would give me good value over time. Everything happened quite steadily…I didn’t always have 1167 players and my deposits have been spread through the 14 months that I have been on Football Index.
I went to the London Trader Meet last February and after the meeting there was a mini-boom and my portfolio went into profit and steadily rose from then. I would have been quite happy to have a level profit and reap the dividend yield, but as it’s turned out, the product has grown and profits have gone up, which is great. I’ve been to 3 trader meets…London, Manchester and Dublin. I’ve been impressed by them all. They helped give me confidence in the company. Hearing Fig’s podcasts have helped give confidence, like when A.S.P said he had put so much money in, and he seemed to be talking a bit of sense! Then people like EJ on twitter come along, and you get the feeling that people are willing to put their “balls on the line”, so to speak. Well if others are doing it, then why not me?!
Also, Index Gain have helped with data and being able to share ideas with other traders. The very fact that such projects are sprouting up in unison with Football Index, gives me confidence in the future of the concept. Index Gain also gives you somewhere, other than Twitter, of course, to voice your opinions and get ideas of how other traders work. There are so many variables in trading styles.
How important are risk and dividends in your plan?
Big Don: It spreads the risk for sure. I get regular dividends. Investing in the concept is part of it. My overall betting strategy is to bet on things with more upside than downside. This is quite easy to apply when doing traditional gambling. The bet is either mathematical value or it is not. I have ways to measure this, one being Betfair’s betting exchange. Most of the odds there represent the true probability of an event happening. So if a bookmaker is offering better odds than the probability, then we have a value bet. And value bets might lose on the day, but over time they will (certainly) be profitable.
With Football Index, it is a bit harder or different to assess value as the bet lasts for up to 3 years, rather than being finished at a given time. I think my experience in traditional betting and gambling has given me a good sense of direction when it comes to identifying value, and Football Index has given me 1167 upside occurrences so far. That is not to say I have been right every time, but I have confidence that I am right most of the time. And most of the time is good enough!
What do you think is more important to you, dividends or capital appreciation?
Big Don: Dividends. I will be happy to be level on capital appreciation if my dividends pay out a good return.
Do you think this is a strategy anyone can adopt or do you think a large amount of money is needed realistically?
Big Don: I don’t think it is a strategy where you just go out on day 1 and buy that many players. The strategy is carried out over time. I think it is a viable strategy for any level of money. You start with a few players and add to your portfolio over time. Nothing in Football Index happens here and now. Let it evolve!
With the “Kid boom” at the moment, we’ve seen huge rises in young players, having so many players, I imagine you own a few? are young players a big part of your strategy?
Big Don: I do own a few, but I wouldn’t say that I overuse it as a strategy. I think it does fit into a longer-term strategy though. If you can buy “A Young Player” at a low price, say less than £1 because you think he’s got potential, then go for it. More upside than downside perhaps. The wrong way to do it might be to buy after the hype when “A Young Player” is priced at £5 plus. Of course, there are exceptions where £5 for a young player that you missed might end up being a good buy. Jadon Sancho, springs to mind!
Do you ever not win a dividend?
Big Don: I never get a nil return these days. Too many players for that to happen!
A few quick fire portfolio stats:
• Largest hold? "Axel Witsel, 668 shares. Largest value hold is Pogba."
• Average number of shares you hold in players? "118 average shares per player"
• How often do you usually hold a player for? "generally 2 months to 3 years. I like to give them a good chance to give me something. I’ll likely do a couple of big portfolio reviews per year. Then apart from that, wait till the player gives me a good reason to sell."
• Largest % gain in your portfolio at the moment? "Jovic is biggest % gain….1313% increase. Bought for 38p, now £5.37. I think I bought him over a year ago. Jovic highlights a trading weakness in myself. I bought originally for 38p and could never bring myself to top up at the higher prices. It’s hard to buy at £2 when you’ve originally bought so cheaply. But as it turns out, £2 was a cheap price too! Always learning!"
Finally, Don’s Does and Don’ts!
1) Do trust your decisions. If you are having a red day and it seems like everyone else is having a green day, don’t necessarily go on a selling spree. Maybe your next green day will occur when everyone else is having a doom and gloom fest! Patience!
2) Don’t deposit into Football Index more than you can afford (I’ve been guilty of this). I’m not preaching here, there are good reasons. Football Index is a long term bet, so it ties your money up. Yes, you can sell your players to release your cash, and FI are good quick payers, but if you have too much money in (for you), you end up making bad trading decisions. You might sell a player because you need to pay bills, rather than because you’ve started to think he’s shit! You want to be playing freely, with money that you do not need to live off. And it’s a bad idea to, say, buy a player for 2 weeks and then plan to sell after the 2 weeks because you need the cash then. You are inhibiting your chances of success.
Don's portfolio is worth £520,569! From net deposits of £197,803 making his all time trading profit £322,757!
He's what Don had to say on his current strategy:
My strategy is similar to the original article (1st February 2019). I still want to maximize the 3 year bet, but I’m taking more notice of market situations and forming more opinions from watching football and reading articles etc. I like to think that my strategy can evolve as time moves on. I think I’m pretty good at spotting good PB players from watching games. I used to watch a lot of football in the 1980’s and am enjoying being interested in football again.
I’ve got 1347 players now, so still a lot of coverage. I do tend to sell more if a player is doing nothing, and doesn’t have much prospect of doing anything. My overall strategy is to hold for as long as possible unless the player gives me a good reason to sell at any given time.
I’ve been criticised for having a lot of ‘Opportunity Cost’ which is fair enough, but then the flip side would be that I don’t over trade, and pay minimal commission. The big phrase you hear from Traders is, “I wish I never sold him”! A few people have said that Don has zero skill and is only in profit because he got in early. Well that is the whole point of trading, in any form…get in early and buy at a low price before the masses pile in. That’s what Don did….and is still doing now!
In the original article I said I had limited football knowledge, but this is improving from watching games and reading articles. Also, I’m seeing the market from day to day which gives you a lot of information on trends and patterns. I still like holding a lot of players, even if for no other reason that most other people think it’s bad trading, yet I see evidence to the contrary! I actually play Football Index in a similar way to how I gamble in other forms….taking the long view, and not being derailed by losses. “If you can’t lose, then you can’t win”!
Also, if you deposit within your means, then you can trade in a more relaxed manner, and likely make better decisions (Top Tip Number 1!). I think my strategy is still evolving as time moves on. In November my bets will start hitting the 3 year mark, so I’d better get good at selling!
Recently, my portfolio got hammered with the Coronavirus sell off. On 22nd February my Trading Profit was £327,595. That dropped to £304,865 on 18th March. I’m back up to £322,757 now, so I’ve had a decent recovery.
Of course, in this time, a lot of Traders were having a record month in March, so psychologically it can get pretty tough. However, people have different results at different times…I’m staying on my own course. The March results weren’t necessarily made in March…rather they were the result of strategies and holds that had been months in the pipeline. It’s important to realize, with FI, that sometimes, it’s just not your time to shine, but maybe the month after will be!
So, that’s a brief update. Football Index seem to be handling the Coronavirus Crisis well so far, and confidence in the market is certainly there. Now we just need football to return….or the prospect of it!
Take care out there.
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