Author Topic: The Importance of Being Earnest (or better still NeverLate)  (Read 10878 times)

Rob L

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After what seems forever (since 5/9) I finally completed all of the planning, "strategery" and software to begin listing notes to slowly liquidate my portfolio. I'll admit to some nervousness listing some 3000 notes for the first time with the new software, but it went very well.

My "ask" pricing model only has three major inputs; NeverLate, FICO change since origination, and remaining payments.  I'm only listing "current" notes at the present time as that represents 90%+ of my holdings. There have been enough sales now to identify some buyer preferences (you know who you are).

First, it certainly appears the inefficiency of the Folio market may be highly exaggerated (as have, per Mark Twain, claims of my demise). Given NeverLate TRUE, buyers have purchased notes across the full spectrum of fico change and remaining payments with one exception. In that one exception my pricing model did not adequately compensate buyers for fico change in one bin over a more risky bin and NO sales were made in the more risky bin. Very cool! Appears the buyers are pretty savvy. But for this one exception the pricing model and buyer expectations have been reasonably well aligned. Notes sold at a premium have out numbered notes sold at a discount by a very considerable margin.

Secondly, I've yet to sell a single note that wasn't NeverLate. Obviously my pricing model is way off here; or maybe the buyers aren't interested in these. Possibly both. No matter as almost all of my notes are NeverLate so if I continue to sell them I'll be just fine.

All my notes are 36 months. The sweet spot seems to be NeverLate notes with 18 - 24 months to go at a premium decided FICO change. Buyers are willing to pay up for these and seems very reasonable they do so.

NeverLate appears to be the most important buyer criteria (like one of those NASA go/no go things) but is extremely difficult for a seller to ascertain. I have only been able to accomplish this with great difficulty and it is subject to staleness requiring inefficient refreshes to keep it current. It shouldn't be this hard, but having put in the effort it may give me a bit of an edge.




jheizer

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Re: The Importance of Being Earnest (or better still NeverLate)
« Reply #1 on: June 27, 2016, 09:31:51 PM »
Good to hear it is going so well for you.  Things have definitely chilled in folio lately.  The crazy discounts have dried up.  I've had to start accepting less of a discount to pick up my very picky notes.  I've surprisingly bought a dozen or so today so maybe I helped out out.  Probably not though as you would have priced them too smart for me to "steal" them.
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Fred

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Re: The Importance of Being Earnest (or better still NeverLate)
« Reply #2 on: June 28, 2016, 02:36:05 AM »
First, it certainly appears the inefficiency of the Folio market may be highly exaggerated (as have, per Mark Twain, claims of my demise). Given NeverLate TRUE, buyers have purchased notes across the full spectrum of fico change and remaining payments with one exception.

Try NeverLate=False, you'll find Folio's inefficiency to be much more interesting.

RT45

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Re: The Importance of Being Earnest (or better still NeverLate)
« Reply #3 on: June 28, 2016, 03:18:18 AM »
The volume of notes available since 5/9 has more than doubled as of today, from around 330k to 675k on Folio so should be a lot going on there.

Rob L

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Re: The Importance of Being Earnest (or better still NeverLate)
« Reply #4 on: June 28, 2016, 06:12:19 PM »
Good to hear it is going so well for you.  Things have definitely chilled in folio lately.  The crazy discounts have dried up.  I've had to start accepting less of a discount to pick up my very picky notes.  I've surprisingly bought a dozen or so today so maybe I helped out out.  Probably not though as you would have priced them too smart for me to "steal" them.

Hey, if you stole them I'm happy for you. At least my new software listed the offers as designed and that's all I could want. There was one note where the "competitive" part of my pricing algo went a little bit overboard so I'll fix that the next time I list offerings. Otherwise, if you're happy so am I. If you want to post or PM me those noteid's I'll let you know if they were mine.

Rob L

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Re: The Importance of Being Earnest (or better still NeverLate)
« Reply #5 on: June 28, 2016, 06:22:13 PM »
First, it certainly appears the inefficiency of the Folio market may be highly exaggerated (as have, per Mark Twain, claims of my demise). Given NeverLate TRUE, buyers have purchased notes across the full spectrum of fico change and remaining payments with one exception.

Try NeverLate=False, you'll find Folio's inefficiency to be much more interesting.

Yeah, now I've sold two, yeah count'em, two notes NeverLate=FALSE notes.
Guess I'll have to get around to that "rabbit hole" sooner or later.

Rob L

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Re: The Importance of Being Earnest (or better still NeverLate)
« Reply #6 on: June 28, 2016, 06:33:00 PM »
The volume of notes available since 5/9 has more than doubled as of today, from around 330k to 675k on Folio so should be a lot going on there.

Well, I'm here because of 5/9 and sounds like I have a lot of company. Maybe the big discounts have gone but there are definitely still some sellers more motivated than I. My initial view was that the Folio door is small and my liquidation will take a long time. I've seen nothing yet to change my mind.

fliphusker

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Re: The Importance of Being Earnest (or better still NeverLate)
« Reply #7 on: June 28, 2016, 07:17:13 PM »
What I see in folio is the panicked sellers rid themselves of their portfolios,  or they realized they lost lots of money due to too steep of discounts.   Others realized that the whole LP thing was no big deal and decided to continue as business as usual..  Are there tons of notes on folio?   Ya but the majority are priced not to sell.

Rob L

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Re: The Importance of Being Earnest (or better still NeverLate)
« Reply #8 on: June 28, 2016, 07:42:29 PM »
What I see in folio is the panicked sellers rid themselves of their portfolios,  or they realized they lost lots of money due to too steep of discounts.   Others realized that the whole LP thing was no big deal and decided to continue as business as usual..  Are there tons of notes on folio?   Ya but the majority are priced not to sell.

Someone recently accused me of being of the "Chicago" school of thought. Nicest complement I've ever had. If they were priced to sell they would be gone already (aka Chicago thinking). The right price is one where buyers and sellers agree and it's a close call for both. Meanwhile I'm in the middle of panic versus all-is-well. IMHO all is not well but I have plenty of time and I will take advantage of that. If all is well that's a good thing and I'll be back someday. Meanwhile I'm willing to forgo profits and take some losses to reduce my exposure.

dompazz

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Re: The Importance of Being Earnest (or better still NeverLate)
« Reply #9 on: June 28, 2016, 08:42:35 PM »
Someone recently accused me of being of the "Chicago" school of thought. Nicest complement I've ever had.
I believe that was me and I meant it as a tongue in cheek compliment.  I meant it more toward the markets are efficient all the time crowd.  I was making, in a short hand way, the joke about an economist not picking up the $20 bill because if it were real, someone would have already picked it up.

I have a hard time believing that after looking at the .com bubble, no-doc liar mortgages, flash crash, etc.  It wasn't a swipe at you or the Chicago boys.

I personally believe there are times where markets are not fully efficient, or to put it another way, irrational fear or greed push the risk/reward out of balance.  That's why myself and other stepped into FOLIO to buy good loans at stupid discounts.  The market cleared and balanced. 

In the long term (we're all dead) risk and reward balance and markets clear.  We're saying the same thing.

rubicon

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Re: The Importance of Being Earnest (or better still NeverLate)
« Reply #10 on: June 28, 2016, 10:27:42 PM »
I suspect I bought a lot of your notes

I have been buying notes < 24 months remaining, Never Late, UP FICO score over the last two months. In the last couple of weeks, volume has dried up dramatically.

Rob L

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Re: The Importance of Being Earnest (or better still NeverLate)
« Reply #11 on: June 28, 2016, 11:07:58 PM »
Someone recently accused me of being of the "Chicago" school of thought. Nicest complement I've ever had.
I believe that was me and I meant it as a tongue in cheek compliment.  I meant it more toward the markets are efficient all the time crowd.  I was making, in a short hand way, the joke about an economist not picking up the $20 bill because if it were real, someone would have already picked it up.

I have a hard time believing that after looking at the .com bubble, no-doc liar mortgages, flash crash, etc.  It wasn't a swipe at you or the Chicago boys.

I personally believe there are times where markets are not fully efficient, or to put it another way, irrational fear or greed push the risk/reward out of balance.  That's why myself and other stepped into FOLIO to buy good loans at stupid discounts.  The market cleared and balanced. 

In the long term (we're all dead) risk and reward balance and markets clear.  We're saying the same thing.

Believe me; I took no offence to the Chicago reference in any way. I'll guarantee the good folks at the CBOT / MERC and CBOE don't think the markets are fully efficient all of the time and I side with them. That's my Chicago. Having Keynes quote on my tombstone would be apropos:  "His Market Cleared RIP".

Rob L

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Re: The Importance of Being Earnest (or better still NeverLate)
« Reply #12 on: June 28, 2016, 11:23:46 PM »
I suspect I bought a lot of your notes

I have been buying notes < 24 months remaining, Never Late, UP FICO score over the last two months. In the last couple of weeks, volume has dried up dramatically.

Wouldn't be surprised. Those are exactly the ones that are selling the best. It sound's self serving, but if I were a buyer I would find them attractive too. I was hoping the less desirable notes would sell at a discount first, but buyers are willing to pay a modest premium for notes that have a long history of neverlate. Wish I'd figured that out a few years ago.

jheizer

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Re: The Importance of Being Earnest (or better still NeverLate)
« Reply #13 on: June 29, 2016, 01:26:32 PM »
Good to hear it is going so well for you.  Things have definitely chilled in folio lately.  The crazy discounts have dried up.  I've had to start accepting less of a discount to pick up my very picky notes.  I've surprisingly bought a dozen or so today so maybe I helped out out.  Probably not though as you would have priced them too smart for me to "steal" them.

Hey, if you stole them I'm happy for you. At least my new software listed the offers as designed and that's all I could want. There was one note where the "competitive" part of my pricing algo went a little bit overboard so I'll fix that the next time I list offerings. Otherwise, if you're happy so am I. If you want to post or PM me those noteid's I'll let you know if they were mine.

What I meant was all mine are at enough of a discount I don't think there's any way they would be yours.  I watch for the odd ball UP never late, never even grace superstars at 2-4% discount.
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Rob L

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Re: The Importance of Being Earnest (or better still NeverLate)
« Reply #14 on: June 29, 2016, 02:27:48 PM »
Good to hear it is going so well for you.  Things have definitely chilled in folio lately.  The crazy discounts have dried up.  I've had to start accepting less of a discount to pick up my very picky notes.  I've surprisingly bought a dozen or so today so maybe I helped out out.  Probably not though as you would have priced them too smart for me to "steal" them.

Hey, if you stole them I'm happy for you. At least my new software listed the offers as designed and that's all I could want. There was one note where the "competitive" part of my pricing algo went a little bit overboard so I'll fix that the next time I list offerings. Otherwise, if you're happy so am I. If you want to post or PM me those noteid's I'll let you know if they were mine.

What I meant was all mine are at enough of a discount I don't think there's any way they would be yours.  I watch for the odd ball UP never late, never even grace superstars at 2-4% discount.

Yeah, those are in my 2% to 4% markup range depending on FICO change since origination and remaining payments.

Meanwhile, I haven't had any luck selling recently issued notes (say 30 - 36 remaining payments). Think I overpriced them so I'm going to discount them more and re-list. Guess every time I change the pricing I'll learn a bit more on what sells and what doesn't for how much.