Author Topic: Hold or Sell?  (Read 5314 times)

SkaXc0re77

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Hold or Sell?
« on: March 10, 2013, 10:15:52 AM »
I invest only in $25 notes.  When I realized I invested too heavily in A's I went to sell them off.  Most of them only made one payment (approx $.77) otherwise they made no payments. I was able to sell almost half of the ones listed within 3 days at $25. (12 sold, 16 did not yet.)

That's about $.50 profit from both the payment and the sale after the fees in a 2 month span or 3 bucks for the year, giving me a 12% return for the year. 

Which makes me poss the question... Is it better to try and make money on the secondary market or just hold long term?

SarahV

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Re: Hold or Sell?
« Reply #1 on: March 10, 2013, 11:04:24 AM »
If you can sell A notes for a quick profit, I'd do it. You get the initial profit and then you get to reuse the money to make more profit with higher-interest notes. I had a terrible time selling off A grade notes after making the same mistake, no one wanted to buy them. Still have some...

yojoakak

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Re: Hold or Sell?
« Reply #2 on: March 10, 2013, 11:44:18 AM »
In my experience it's impossible to predict what going to sell or not sell.

My advice: Don't buy anything you wouldn't feel comfortable holding until maturity.

PennySaved

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Re: Hold or Sell?
« Reply #3 on: March 10, 2013, 04:50:32 PM »
Don't forget you pay a  1% fee when you sell, correct? So 1% of $25 is $0.25.  There goes half your profit.  There was another poster who say he buys notes, keeps them for a few months to collect the highest monthly interest payments, and then resells them before they can go late or default.  Then reinvests.   This could work but takes time.

Buyers on the secondary market are looking for quality notes, so just not any notes will resell.  Quality notes would have higher income, lower debt to income ratio, no recent delinquencies and preferably no inquiries.  Plus whatever other factors people consider less risky.

lender_john

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Re: Hold or Sell?
« Reply #4 on: March 10, 2013, 05:28:50 PM »
I can only use the secondary market, so my perspective may be a bit different.

In the beginning I started off with mainly A and B notes thinking that was a safe way to go.  Before too long I realized that this wasn't going to give me the return I wanted and even the lowest risk do not guarantee anything.
Over the course of some time I ended up selling 100s of notes that didn't fit into my new criteria and buying ones that did. 

My main goal was to rebalance my portfolio, but I also ended up making a bit of money on the sales.

rawraw

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Re: Hold or Sell?
« Reply #5 on: March 10, 2013, 05:35:52 PM »


Buyers on the secondary market are looking for quality notes, so just not any notes will resell.  Quality notes would have higher income, lower debt to income ratio, no recent delinquencies and preferably no inquiries.  Plus whatever other factors people consider less risky.
I disagree.  Buyers are looking for notes with appropriately priced risk.  Any note can sell.   It's just a matter of haircuts.

BulldogLender

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Re: Hold or Sell?
« Reply #6 on: March 10, 2013, 08:36:42 PM »
My best advice is only buy what you are willing to hold until maturity as another poster noted above.  I have tried "note flipping", mainly buying  notes on Folio and then marking them up and reselling them.  I have had some huge successes on some notes and ended up holding quite a few until they were written off with no buyer.  All and all it varies note to note and day to day.  I can tell you it is extremely hard to predict which notes will sell and which won't.  I have sold 100's of notes on folio  and honestly I think it is best to only sell notes when there is a real reason ie) late, slow paying etc. vs trying to make quick profit. 
« Last Edit: March 10, 2013, 08:45:36 PM by BulldogLender »

New Jersey Guy

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Re: Hold or Sell?
« Reply #7 on: March 10, 2013, 10:32:42 PM »
"I disagree.  Buyers are looking for notes with appropriately priced risk.  Any note can sell.   It's just a matter of haircuts. "

100% totally agree.
I sold some notes cheap (and at a profit) at the first part of this month only to notice they already defaulted to the new buyers.

It's still hard to predict what's going to sell and what isn't, but buyers have different objectives.  Not everybody is a quality player.
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writing2reality

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Re: Hold or Sell?
« Reply #8 on: March 11, 2013, 09:50:51 AM »
"I disagree.  Buyers are looking for notes with appropriately priced risk.  Any note can sell.   It's just a matter of haircuts. "

100% totally agree.
I sold some notes cheap (and at a profit) at the first part of this month only to notice they already defaulted to the new buyers.

It's still hard to predict what's going to sell and what isn't, but buyers have different objectives.  Not everybody is a quality player.

Hit the nail on the head with the lack of ability to predict sales or sales price. Folio is tremendously inconsistent. Last fall when I was doing a big sell-off of notes I could get 3-4% above my accrued interest amount one week, and the next nothing would move with lower pricing.
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SkaXc0re77

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Re: Hold or Sell?
« Reply #9 on: March 11, 2013, 10:05:46 AM »
Is there a way to filter Folio rather then click threw thousands of pages of notes to find what your looking for?

SBryantMS

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Re: Hold or Sell?
« Reply #10 on: March 11, 2013, 10:10:55 AM »
Check out Interest Radar:

http://www.interestradar.com

They offer a 30 day free trial.  I use it for all my Folio searches. 

There is also a forum here devoted to the site. 

SkaXc0re77

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Re: Hold or Sell?
« Reply #11 on: March 11, 2013, 10:47:18 AM »
ya that works for now but the yearly fee doesn't make sense for me since I only have around 2000 invest ATM.  Even at a 10% return that fee cuts my gains drastically. 

That's the only way?

New Jersey Guy

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Re: Hold or Sell?
« Reply #12 on: March 11, 2013, 11:01:50 AM »
"Folio is tremendously inconsistent."

That's a total understatement! Since early fall, I've experimented with different stratigies using various types of notes (IE: Grace Period, 16-30 days late, etc).  I was able to make good money on notes that would go back current.  $8 to $15 per note was quite common.  It's the notes that didn't sell that would eventually come back and bite me in the ass.  Most I had to price cheap and take a loss.  Some I even had priced at $1.25 that didn't sell, and went into default.

One consistancy I have found out is that current notes sell regardless of the past payment history or age of the loan.  I've had current notes sell within minutes of listing.  The longest it ever took me to sell one was 72-hours.

  If you want to hedge your rate of return, look for a Grace Period note that you really feel has a better-than-average chance of going current and get it for a 50% discount or higher.  Once current, you can sell it for a few points under par, give your buyer a discount and rack up a nice gain for yourself.

Totally stay away from 16-30 day late notes.
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yojoakak

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Re: Hold or Sell?
« Reply #13 on: March 12, 2013, 07:19:46 PM »
Is there a way to filter Folio rather then click threw thousands of pages of notes to find what your looking for?

you might try my greasemonkey script

http://userscripts.org/scripts/show/103295