Read on Twitter
Seen alot of back and forth in relation to @12Expert posts today. My thoughts for anyone interested:
Football Index is a gambling platform whereby every asset is given intrinsic value by dividends. However, there are multiple ways of looking at value. The strictest way is based on Firm Foundation Theory whereby a players price should be roughly as follows: Take the amount of...
expected dividends to be earned over time share is held, minus buy price, plus sell price. That gives you a total return. Divide that return over number of years held and that gives you your annualised return.
E.g. Messi has 2 years left playing and is £2. He's estimated to
E.g. Messi has 2 years left playing and is £2. He's estimated to
earn £3 in dividends over that time before falling to £0. Total return is therefore £3 - £2 + £0 = £1. Annualised return is £1 ÷ 2 years = 50% per year.
The Castle In The Sky noise relates to the fact that no one has any firm idea of how dividends will increase annually.
The Castle In The Sky noise relates to the fact that no one has any firm idea of how dividends will increase annually.
So when you then apply a career dividend earning model to value a player, you can get to extremely high valuations based on factoring in future dividend increases. These are estimated, not guaranteed, hence the Castles In The Sky argument. But the fact is, we are at a stage in
FI's growth where in order to actually grow the userbase dividend rises are essential in the short-term to increase the capacity in the market. Many prices appear overvalued based on current dividends as traders are making the very reasonable assumption of dividend increases.
But as time goes on and the userbase growth saturates one would expect less significant dividend increases annually. However, that's not to say that there won't be any. My view is that these will be linked to the performance of the market itself, but it's too early to say...
And that's linked to another point - it's not smart to make definitive negative judgments on an evolving platform. Many features we have today (like IS) did not exist a few years ago and the same will be said in the next few years when we look back on today.
It is not unreasonable to expect some level of annual inflation determined by FI to be a feature of the market, much like our actual economic system. But again, I expect this to be far less impactful to traders profits than it is now as we scale.
At that point, the market will be one where trading in shorter timeframes and higher frequency will be necessary to generate profits. i.e. a trading platform. This will be because there will be less of a "Castle in the Sky element" and more of a "Firm Foundation" element where..
player prices will be much more closely linked to present day estimates of future dividend returns. This process will of course be facilitated by order books which are the final frontier for FI. If we take March numbers of £65m traded and £2m paid out, that would suggest £1.3m...
of this was via commission and £700 was via placed bets (shares bought). These proportions are already far better than those of previous years and crucially are at a time where there are no order books to facilitate trading between the spreads. It is quite clear that...
with order books, FI would have easily generated well in excess of the £2m paid out from commissions alone.
Regardless of this, the point about value is that this is a gambling platform. People pay whatever they want to pay for a player based on their own view of the player...
Regardless of this, the point about value is that this is a gambling platform. People pay whatever they want to pay for a player based on their own view of the player...
, FI as a business and the product's direction. ĺ think its unreasonable to conclusively negatively judge FI in the middle of a roadmap to a final product. There are those that will see and back the vision and there will be those that don't. Both views are understandable..
However when you read arguments that suggest that FI prices should be linked to real world discounts of valuations due to COVID19 it is clear that there are some far less valid arguments from lack of knowledge. Ideally we should be seeking to engage and inform those people.
Lastly, regarding value, there is always going to be a speculative element to many prices based on traders anticipating what other traders would do outside of "Firm Foundation" value. This is the central beauty of a trading platform and needs to be understood as permanent.
Part of the issue I see is that people are not specific with the words they use and their knowledge about FI as a product and business when attacking OR defending FI. So in many ways, both are a waste of time. I would advise anyone not on FI to get involved with a small..
amount to enjoy a really innovative and exciting way to gamble on football over the long term. And I would advise anyone on FI to genuinely gamble responsibly and enjoy it. Much of the responses today seem rooted in a witch hunt mentality that conveys a lack of true confidence..
in FI rather than genuine confidence.
This is a constantly evolving and developing market, product and business that not everyone will "get". As with anything, if ultimately successful the earlier adopters enjoy the greater share of rewards. But they also bear greater risk...
This is a constantly evolving and developing market, product and business that not everyone will "get". As with anything, if ultimately successful the earlier adopters enjoy the greater share of rewards. But they also bear greater risk...
in the event of failure. Make your own decisions, try and engage sceptics positively and let people have their own opinions on FI.
But most importantly...make sure we improve the god awful scoring matrix!
Stay safe everyone and enjoy what you can of the long weekend!
But most importantly...make sure we improve the god awful scoring matrix!
Stay safe everyone and enjoy what you can of the long weekend!
