Paul Pogba, the question mark that is for all football index holders. A monster in dividends, especially for media, but a rollercoaster for profit and loss in everyones portfolios. Is Pogba worth the hold ? Everyone has asked themselves this at one point.
In this article I will discuss the recent up and down share price of Paul Pogba, the media surrounding him, the psychology of traders relating to it and a conclusion with a bit of over laying advice. This will be followed by something which will be included in all these pieces, and that is my own personal verdict as relates to me. Any added or following information relating the issue will be added as follows at the bottom
Yesterday sparked a major incident in the Pogba summer transfer saga when the footballer spoke of wanting a new challenge next season. Meaning of course that the old trafford star does not want to play his football in Manchester next season. So where is next? Real Madrid? Back to Juventus? Well we know that both clubs are interested in the superstar but quoted as wanting a “new” challenge would indicate that the out of favour midfielder favours a headline gripping move to the Spanish capital.
But, regardless of location, anywhere but Manchester for the super star will not sit well with traders. This is due to influence in media scores the english press has and also of course the word ‘united’ being in articles along side his name gaining him a higher score.
As we seen yesterday, when the story broke there was a huge sell off resulting in more than a 5% decrease in the player up to -37p. We see this often with player injuries and controversal news stories. Much recent examples being Callum Hudson Odois long term injury, neymars rape accusations and of course now this Pogba transfer saga. So with these cases its important to look at the psychologly behind traders mindset in their decision making. Is it all sheep mentality or do people have valid reasons. Lets take a look using yesterday and Pogba as a prime example.
- First of all, as already stated, Pogba holders fear a move away for the united superstar. And it can be understood. (Unlike in my opinion, the sell off of Hazard when he moved to Madrid as I feel he will dominate PB dividends). Pogba will always be in the headlines, regardless of location but in Italy and Spain, perhaps not at as much.
- Another interesting observation is the increase in the likes of Marcus Rashford and Martial. Rashford up as much as 23p and Martial 6p. This can be explained as traders who sold Pogba looking to put their money else where. Now assuming Pogbas departure United will need a new superstar to be the masscott of the club, people seemed to assume the likes of the young talented Rashford will take that place.
- The selling/buying habits of Pogba share holders are another important aspect to look into. During times like these you have people who hold on maintaining and telling themselves long term it will bounce back. You have people who panic sell the minute they see the drop and you have people who see an opportunity to top up or get on at a significant lower price. The most efficient thing to do in this event is sell off as quick as possible when you know (or see)something like this will happen and jump back on when you think the lowest possible price has been reached, this can be hard to predict but if done, can be extremely beneficial.
Above all, the underlying principle, which applies to all your players and holds, and that is, to remember why you purchased the player and when you plan to/are happy to sell. (This is something I will focus an entire article on later on). If you bought Pogba for capital appreciation then it can be a rollercoster experience and something unfavourable and probably not worth it unless entered early. If you bought for dividends well you are loving this. But its important to make sure your dividends out weigh any potential loses.
My personal verdict: Pogba holds a 7% stake in my portfolio, rather large considering a 95 player spread. I have him solely for dividends and any capital appreciation is a plus in my eyes.
NOTE: As of writing this piece Manchester United have officially announced that they don’t believe Pogba is leaving the club this summer and is a key part for next years plans (sky sports).
Meaning.. those that cashed out and re entered at a low point are seeing the extreme benefits of this strategy, all topped off by media dividends on the daily. And those who had the patience to hold out are seeing their shares go back up.
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