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FI Thread
Time for a return to the much-forgotten and rarely regular #FootballIndex Monday Thread. These are difficult times in the market but it’s as important as ever to diagnose problems correctly and not get distracted by red herrings.
Time for a return to the much-forgotten and rarely regular #FootballIndex Monday Thread. These are difficult times in the market but it’s as important as ever to diagnose problems correctly and not get distracted by red herrings.
I’m hearing a lot of - well intentioned I’m sure - chat about “over supply” of shares this morning. I’d really like to address this as it’s not a problem now in the same way it wasn’t ever a problem when the market was rising.
Football Index isn’t like an equities or crypto market, the price equilibrium is set (poorly) by what traders think a share is worth - this is based on the inherent likely dividend returns that share will generate.
It is not set by the scarcity of the futures because these are not real shares, the dividends are not diluted when new shares are issued. This is critical to understand - with traditional shares the total dividend paid is a sum of money split by all the shares in circulation.
In the world of FI it doesn’t matter how many shares there are, the earnings per share is fixed. Please don’t become distracted by supply side issues, we have a problem with liquidity and confidence - these are hitting confidence and therefore demand.
But we do not have a supply side issue that needs addressing. The roadmap back is clear - inject liquidity, implement NASDAQ, fix the offer mechanic, allow prices to find natural equilibrium. Let’s hope we get there
