Mean Reversion Machine

Mean Reversion Machine – GW16: Chaos theory

A regular excuse to use fantasy football as a metaphor for portfolio management

Whether it be the FCA deciding it might be worth trying to boost UK capital markets by no longer making it obligatory first and foremost to scare the wits out of potential investors, or FPL offering five free transfers ahead of a handful of key fantasy league targets heading off to the Africa Cup of Nations, maybe we just shouldn’t look a gift-horse in the mouth.

In both instances, my immediate instinct was to be sniffy. Sure, it would have been nice if the regulator had decided maybe a decade or two sooner to call a halt to its groundbreaking experiment to emphasise only the risks of collective investing – in the process encouraging punters out of cash and straight into crypto, NFTs and meme stocks while skipping a crucial step in-between. On the other hand … better late than never, I suppose.

As for those Afcon transfers, am I the only one who felt a bit, well, dirty whenever I went to use one? Offering a whole third of wildcard to negotiate the possible loss of, say, Mbeumo or Dango Ouattara or that bloke who used to play on the right wing for Liverpool just seemed to cheapen the game. And I felt that way right up to the moment I looked at my squad and saw 80% of my defenders were carrying flags of varying hues.

Funny thing, principles. Anyway, what was always going to be a chaotic week in FPL, as many managers treated their extra free transfers with all the self-restraint of a toddler on Christmas morning, turned even more so after a string of high-profile players became unavailable. Most strikingly, the entire first-choice back four at Arsenal, plus one understudy, have all been flagged as injured, suspended or doubtful.

Then there was the Phil Foden bandwagon – the City midfielder going from featuring in one in 20 teams just three weeks ago to, I suspect, one in three by the time Gameweek 16 begins – the newfound love for the two United midfield Brunos, at Manchester and Newcastle, the injury to the ‘never-injured’ Munoz at Crystal Palace and … well, long story short (Too late. Ed), it has been a tricky week to construct an index.

Unless, that is, the index-constructor has been wondering for weeks how to use his Free Hit chip in an even vaguely investment-oriented way – and what better use could there be than trying to ensure the integrity of the MeanReversionMachine index? It means we can simply field the game’s 11 most-owned players – as set out in 4-3-3 formation below – and then, with luck, the market should have settled down in a week’s time.

“What was always going to be a chaotic week in FPL, as many managers treated their extra free transfers with all the self-restraint of a toddler on Christmas morning, turned even more so after a string of high-profile players became unavailable.

Source: Fantasy Premier League

Source: Fantasy Premier League

In addition to Foden and Brentford’s Thiago, who have been hugely prominent in our ‘Herdwatch’ tables over recent weeks, the other changes are a return for Liverpool captain Virgil – a slight surprise but one explained by the Munoz injury and the Chelsea defensive vote being split between Cucurella and Chalobah – and a one-off appearance for Everton’s Dewsbury-Hall. His Herdwatch billing below makes him an appropriate call, I reckon.

Then, next week, we will put those degrading Afcon transfers to work – cementing Foden and Thiago and likely welcoming Bruno F in place of team-mate Mbeumo, while funding our extravagance by replacing Chelsea’s Joao Pedro with his cut-price understudy Marc Guiu. That at least is the idea – all the time remembering Mike Tyson’s eternal words of wisdom for FPL players: “Everybody has a plan until they get punched in the face’.

In the meantime, as you can see in our next illustration, the current iteration of the MeanReversionMachine index had another solidly second-quartile week, with gratifying if unspectacular showings from Mbeumo, Rice and three-quarters of the defence – while our three-man attack, including perma-captain Haaland, mustered a whole seven points between them.

Focusing in on the Herdwatch tables below, the broader market continues to laugh in the face of the law of mean reversion – as, to be fair, does Phil Foden, who has now scored 44 points over the last three gameweeks. The popularity of the lesser-owned Cash of Aston Villa (now in some 11% of teams) and Dewsbury-Hall (8%) is more interesting, though – and I confess I had not spotted the great run of fixtures Everton shortly embark upon.

As for the three-week view offered by the bottom right-hand table, the mass-buyers ahead of Gameweek 13 can so far only point to the purchase of Thiago with any sense of pride – and certainly not Eze and Timber (yet). For their part, the mass-sellers will be delighted to have offloaded Pedro and Caicedo but, after his 13-pointer versus Leeds last weekend, may be watching Liverpool striker Ekitiké’s next few games with some unease.

Source: Fantasy Premier League

Source: Fantasy Premier League