Author Topic: Worst Month Yet  (Read 239123 times)

Rob L

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Re: Worst Month Yet
« Reply #450 on: March 07, 2017, 12:49:56 PM »
Feb 2017 was my best month in quite some time (5.3% annualized net profitable return).
The red and blue have converged so the effects of my selling last year have passed.
Red and blue will begin to diverge again as I have paused reinvestments.




However, as you see delinquencies seem to have leveled off at about 2X 18 months ago.





Fred93

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Re: Worst Month Yet
« Reply #451 on: March 07, 2017, 04:13:16 PM »
If you look at the ‘Understanding Your Returns’ chart, the interest rate falls very far over time. Once your portfolio is over 18-24 months, the returns really start slipping to between 6-8%

That is misleading.  Most of the data in that chart is from 36 month loans, and with a portfolio of 36 month loans, you really cant get beyond about 15 months average age unless you stop investing. I believe the data points for higher average age are people who have stopped investing.  It is possible that these people stopped investing because they were doing poorly.  That's a selection bias.

Hi Fred, now that 15 months have passed since you made your comment, I would like to hear what you have to say now that we have the benefit of time.

My position is the same.  However, I see that you have misquoted me, and misinterpreted what I said, so I'll explain that in more detail below.

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You said that the people with aged portfolios stopped investing because they were poor at investing at LC.

Bzzt.  I never said that.  The quote box above contains what I did say.  First I said "I believe the data points for higher average age are people who have stopped investing."  That's simple math.  As a result of this, we know that the mix of loans held by these accounts are different, and they are different in important ways that makes direct comparison of results flaky at best. 

There are several things that are different about these accounts.  I listed one of them.  Specifically that the people who stopped probably stopped for a reason.  I never said "they were poor at investing".  I never characterized the individuals or their skills in any way.  You wrote that in yourself.

Even if you believe that these people stopped investing for a really good reason (they're smarter than me) or perhaps no reason at all, we still have the situation that these portfolios that stopped investing before 2015 (for example) don't contain 2015 vintage loans, which we know perform more poorly.  Its an apples vs oranges comparison.

This apples vs oranges thing is important, because at the time of our earlier exchange, it was common for some folk to claim that LC's return numbers were somehow bogus because accounts that were run off had lower returns than accounts in steady state (near the middle of that curve).  Actually, if the loan qualities (vintages etc) were similar, they would have similar results.  The difference comes from comparing apples vs oranges.  Different stuff in the accounts.  At that time, most people saw the curve drifiting down toward the right.  Now most people see it as drifting up toward the right (which is easy to understand, because the recent vintage loans have performed more poorly.)

Your original statement, "Once your portfolio is over 18-24 months, the returns really start slipping" is just wrong.

It just doesn't make sense to compare points in the middle vs points at the right end.

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The people who stopped investing realized much earlier than you that LC was having poor returns.  With the current 'Understand Your Returns' chart it looks like the people who stopped investing and let their portfolios age out did much better than the currently active investors with portfolios in the 9-15 month range.

Perhaps.  Depends on how they deployed the money that they diverted.  If they left it in their bank account, then I did better.

If your argument is that you were more prescient than I, perhaps you are right, but golly we never saw you make a prediction about the performance of future vintages.  You didn't say "I predict that the 2015 and 2016 vintages will perform more poorly than recent year vintages".  What you said was "Once your portfolio is over 18-24 months, the returns really start slipping".

If you do believe in comparing points on that curve at different ages, then lets do that comparison now.  Under those rules, your statement can't be correct, because the curve moves UP as we move toward the right!  Under those rules your statement is backwards.

You can't have it both ways.


Half Right

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Re: Worst Month Yet
« Reply #452 on: March 09, 2017, 04:33:50 PM »
The average age of my portfolio is now 37.5 months.
I stopped reinvesting the minute the news hit about Laplance, having learned my lesson from Madoff, Platinum Partners etc.
By luck that was the right time to stop.
All my notes were 36 month notes and I withdraw funds daily.
I should have my initial investment out in about 3 more months.
As for the yield it has been staying at a consistent 6-7% since I stopped reinvesting.
No complaints, and I will probably keep reinvesting my earnings as soon as my principal is out.

investor88

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Re: Worst Month Yet
« Reply #453 on: March 10, 2017, 06:12:30 PM »
Perhaps.  Depends on how they deployed the money that they diverted.  If they left it in their bank account, then I did better.

If your argument is that you were more prescient than I, perhaps you are right, but golly we never saw you make a prediction about the performance of future vintages.  You didn't say "I predict that the 2015 and 2016 vintages will perform more poorly than recent year vintages".  What you said was "Once your portfolio is over 18-24 months, the returns really start slipping".

If you do believe in comparing points on that curve at different ages, then lets do that comparison now.  Under those rules, your statement can't be correct, because the curve moves UP as we move toward the right!  Under those rules your statement is backwards.

You can't have it both ways.

Rob started this thread because he noticed his portfolio of D and E notes were starting to do poorly and he had a very bad month.  I warned him that this was a problem with LC as his portfolio aged and that LC was performing really bad and to stop investing in it.   
Since Rob started this thread LC has underperformed almost every type of investment (bonds, stocks, reits, international). Probably it has also underperformed every investment if you look at 3-year, 5-year, 10-year period.  You mention that you did better than people who left their money in the bank earning 0%.  Look at the chart I posted a few days ago.  Many people are below zero.  All those dots earning less than 0%.  And as the portfolios age, the performance will go down.  The 5% average of 12-15 month portfolios will mean that in one year the 24-27 month portfolios will be averaging less than 5%... maybe as low as 2%.  Lending Club is a bad investment.  That is what I was saying to Rob in December 2015.  I will wait a year to check in on this thread and by then the 'Understanding Your Returns' chart will look like a bloodbath - if LC is still even willing to provide that chart.

Fred93

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Re: Worst Month Yet
« Reply #454 on: March 10, 2017, 08:11:55 PM »
Since Rob started this thread LC has underperformed almost every type of investment (bonds, stocks, reits, international).

... Look at the chart I posted a few days ago.  Many people are below zero.  All those dots earning less than 0%.

You are certainly correct that the D&E loans have degraded severely.  As for whether they will continue to get worse, I don't know.

I do think it is a little odd that you first seem to be recommending stocks, which as we all know crash by more than a factor of 2 every few years, and then in the same breath complain that some LC investors have earned less than 0%.   If you're trying to compare stock market returns to LC note returns you must consider the fact that stock market returns are sometimes considerably less than 0%. 

Most of us have money in stocks, but stocks have volatile periods, occasionally dropping by a factor of 2 or so, and we seek something to diversify away from the stock market risks.  That leads most to some kind of fixed income investment.  When comparing performance of LC notes to something, it therefore makes sense to compare vs fixed income investment alternatives.

In particular, it makes sense to compare LC notes vs other short duration fixed income things.  Short term corporate notes and CDs are earning below 1% nowadays.  (matched to the duration of LC notes)  In recent times I've been earning 4% to 6% on my LC notes (depending on how you account for estimated future defaults etc).  Sure this 4% to 6% is a lot less than the >10% I used to make here, so I'm bummed that the return fell.  The big picture however is that I'm still doin' better than other reasonably comparable fixed income alternatives.  The difference is no longer so big that it makes me as certain as I used to be, but I'm still doin' ok.

As for the future... I'm not good at the future, but I suspect that LC's public company situation is going to continue to make them feel pressured to grow, and that the competitive environment in lending is going to continue to get more competitive, so sadly it does seem likely that they may grow by pushing a lot of wrongly-priced junk.  In this, I suspect we are in agreement.

I'll try not to be the guy who buys the junk.  (I mean the future junk.  I already bought a lot of 2015 junk.)  Doesn't matter much to me how the distribution in that chart of all investors comes out at some date in the future.  Only matters to me where my dot is.  If I were the management of LC, I would care, but I'm not, and I have no power to influence them to value note investor returns over their earnings growth, so I gave up on worrying about that a long time ago. 

If they go too far, pushing too much junk, then all those banks they have worked so hard to gain as buyers of their stuff will go away, and the company will crash.  The company has sized up to support bank-sized customers, so is now dependent on them.

As I said, I do agree with some of what you are saying.


jheizer

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Re: Worst Month Yet
« Reply #455 on: April 03, 2017, 03:41:16 PM »
I had a net positive month!

Replacement to P2P Quant's Percentile Tool http://lc.geekminute.com

Rob L

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Re: Worst Month Yet
« Reply #456 on: April 03, 2017, 04:37:32 PM »
Congratulations!! Where's the party??  :)

Meanwhile, back at the ranch, I lost money again.  :(
This month for the first time since June of 16 my charge offs exceeded my 5 month lagged interest.
Also exceeded my interest this month; thus the net monthly loss.



No improvement in delinquencies either:



No way to put a positive spin on things other than my cash continues to rise and losses in dollar terms are quite small.
At least that's something.

lascott

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Re: Worst Month Yet
« Reply #457 on: April 07, 2017, 01:25:34 PM »
Taxable account - Nov & Dec were months where I loss more than earned but things are looking up.


ROTH account - this account was even more conservative than my taxable one but had very similar patterns
I have been withdrawing from this account for several months. I plan on start reinvesting in a 2 or 3 months when I hit an set amount.



Looking forward to seeing everyone's numbers improve in this table too.

Via: http://forum.lendacademy.com/index.php/topic,3365.570.html
« Last Edit: April 07, 2017, 01:27:22 PM by lascott »
Tools I use: (main) BlueVestment: https://www.bluevestment.com/app/pricing + https://www.interestradar.com/ , (others) Lending Robot referral link: https://www.lendingrobot.com/ref/scott473/  & Peercube referral code: DFVA9Y

Fred93

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Re: Worst Month Yet
« Reply #458 on: April 08, 2017, 02:49:28 AM »
Update for March.



The 3 mo moving average looks like its still moving up. 

Rob L

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Re: Worst Month Yet
« Reply #459 on: May 03, 2017, 10:51:39 PM »
Another month, another loss. That's losses in 7 of the past 9 months.
Watched "The Big Short" again last night. Feels like my LC portfolio is one big sub-prime MBS (okay its tiny).
And, I know, it could get a whole lot worse.





jheizer

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Re: Worst Month Yet
« Reply #460 on: May 03, 2017, 11:15:33 PM »
I almost exactly match last month.  Though interestingly enough the amount of interest and the loss amount is rather different.


Number of lates are still trending down
Replacement to P2P Quant's Percentile Tool http://lc.geekminute.com

lascott

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Re: Worst Month Yet
« Reply #461 on: May 04, 2017, 01:10:30 AM »
Number of lates are still trending down


Is that because they are moving to the charged off bucket sooner or more quickly than the past? That red charged off line is fairly steep.

My taxable $ chart that includes loss:


My roth $ chart that includes loss:
Tools I use: (main) BlueVestment: https://www.bluevestment.com/app/pricing + https://www.interestradar.com/ , (others) Lending Robot referral link: https://www.lendingrobot.com/ref/scott473/  & Peercube referral code: DFVA9Y

Fred93

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Re: Worst Month Yet
« Reply #462 on: May 04, 2017, 01:16:40 AM »
Is that because they are moving to the charged off bucket sooner or more quickly than the past?

I think no.

Quote
That red charged off line is fairly steep.

My analysis (of my account) shows that the chargeoff rate (ie slope of that red curve) correlates pretty strongly to the delinquency rate TWO MONTHS AGO.  If you look at those charts, I think they show same relationship.  That there is a delay from delinquency to chargeoff seems reasonable.  If this relationship continues to hold, then lower delinquency rate now will mean lower chargeoff rate a couple of months from now.

Mind you ... no guarantees  ::)

rawraw

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Re: Worst Month Yet
« Reply #463 on: May 04, 2017, 09:17:13 AM »
Is that because they are moving to the charged off bucket sooner or more quickly than the past?

I think no.

Quote
That red charged off line is fairly steep.

My analysis (of my account) shows that the chargeoff rate (ie slope of that red curve) correlates pretty strongly to the delinquency rate TWO MONTHS AGO.  If you look at those charts, I think they show same relationship.  That there is a delay from delinquency to chargeoff seems reasonable.  If this relationship continues to hold, then lower delinquency rate now will mean lower chargeoff rate a couple of months from now.

Mind you ... no guarantees  ::)
By definition, doesn't the past dues have to go up for charge offs to increase? I get what you are saying though. The pull through rate of past due notes to charge off is the missing variable I guess

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fliphusker

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Re: Worst Month Yet
« Reply #464 on: May 04, 2017, 09:59:21 PM »
In the midst of a pretty good bloodbath myself. April was solid, but now a very big spike in BKs. Dumb me, part was my fault with buying the same note 4x on FOLIO. One of the big pitfalls with using NSR.
Bad luck, or bad strategy on my part? Starting to wonder. My returns are still good for what I expect, just not as good as I want.