The recent dividend announcement by Football Index added a new (and for many, unexpected) dimension to our trading: goalkeepers.
With the flick of a switch, their value changed dramatically. This blog looks at the psychology of trading goalkeepers and will explore why holding them in your portfolio will be quite a different experience to that of outfield players.
The Positives – Why Your Head Will Logically Say We Should Buy Goalkeepers
Thinking rationally and clinically, goalkeepers appear a good bet. They stand a higher likelihood of winning dividends due to the following three reasons:
1. Length of Career
Goalkeepers tend to play longer and retire later than outfield players. Anecdotally, we know this is true (out of four players to feature in 5 world cup squads, two of them are goalkeepers).
Likewise, a recent research paper found that strikers in PB leagues peak at 25, with midfielders peaking between 25-27. As for goalkeepers (and curiously centre backs), this researcher stated that “their peak performance can be maintained longer, until an age of about 31 years age”. Essentially, they play for longer, maintain their peak over more time and retire later.
To put that into context, that means to think of goalkeepers age relative to outfield players, you can minus up to 5 years. So for example, Donnarumma at AC Milan winning dividends this season age 21, is the equivalent of a 16-year-old outfield player doing so.
2. Available for selection
A rather fascinating study found that goalkeepers suffer less injuries than outfield players. Curiously, the level of injury occurring on matchday is similar, with the difference occurring due to them being less likely to get injured in training.
This means that the likes of Ederson, Alisson and Neur are all more likely to be available for selection then their outfield team-mates. Add to the fact that goalkeepers are less likely to be subbed for tactical reasons, their expected time on the pitch is likely to be higher
3. Less competition
Let us do a quick experiment. Would you rather have a 1 in 100 chance of winning 3p, or a 1 in 400 chance of winning 10p? Logic would suggest you go for the former, as the latter has four times as much competition for a chance to win only three times the amount.
That is essentially the equation on a matchday weekend when holding goalkeepers, as they compete for less dividends but against an incredibly small pool of players for it (truth be told it is actually a lot more nuanced and complex than that, as on one-hand IPD’s for goalkeepers are much easier to predict than outfield ones, but outfield players are far more likely to win star man pay-outs). Basically, goalkeepers give you a good chance of winning small dividends regularly, but outfield players give you a much smaller chance of winning big amounts.
So, to summarise, their peak performances last longer and they retire later. They are more likely to play and it is easier to win dividends from them as they compete with less players in their category. So, thinking with our head, that sounds good. But what about when we factor in thinking with our heart?
The Negatives – Why Your Heart Will Emotionally Say We Shouldn’t Buy Goalkeepers
We have to acknowledge that the vast majority of traders make more money with players price rising than we do with dividends. Therefore, market sentiment, which often drives purchasing decisions more so than data, must be factored in when deciding who to buy. So why may our heart stop us buying goalkeepers?
1. Action Bias
Did you know that goalkeepers are twice more likely to save a penalty if they stand still in the middle, then if they dive to one side? Yet, they don’t, due to an ‘action bias’, which is where people like doing something more than nothing. The same is true for football fans/football index traders.
We get more excited about action (i.e. goals) than nothing (i.e. clean sheets). This means I’d expect to see higher rises in strikers off a great performance than I would from goalkeepers. Having less dramatic rises means less FOMO which means less irrational rises. All of which means they will probably be less exciting to hold.
A lot of traders who have been on football index for a number of years will have it fairly ingrained in their mind that goalkeepers are not worth a lot (or indeed, almost anything). Changing that opinion will take a lot of time, as it is anchored and entrenched in the psyche.
This mean, that (at least in the short-term), a lot of traders will be put off for buying them.
Holding goalkeepers will require a lot of patience. As predicting when they will win dividends is difficult, as a fair amount of randomness will cause a high goalkeeper PB score on any given day (i.e. saving a penalty).
Given the short-term nature of many traders within this market, these may be the first players they sell when they are looking to free up funds to jump on other more explosive rises. As such, it would not surprise me to see spreads change dramatically on some of these moving forward.
To buy or not to buy is the big question many are facing. It probably depends if you trade more with your head or your heart (both are important). Your head might tell you to buy, but your heart may decide how long you end up keeping them for. As with all other areas of the market, initial analysis suggest some are still incredibly cheap given their intrinsic value (even despite them having big rises in the first few days post-announcement), whereas others already looked slightly over-cooked.
What we do know for sure, is that this has definitely added another layer of thinking on who we decide to buy and what criteria we use for doing so.