Cumulative ROI by Vintage Beginning 14Q1 - One Year Update

[Rob L]

This is an update of the following post I made one year ago:
https://forum.lendacademy.com/index.php/topic,4785.0.html

As before the tables are another way to look at the Cumulative ROI numbers provided in graph form by Insikt's excellent web site.
I think the data speaks for itself (or at least we will all have our own personal interpretations of it). Gee we had it good in 14Q1!



True to most expectations 16Q2 was the low water mark (vintage) over the period covered for all loan grades.
It appears 17Q1 is something of a minor high water mark (post 16Q2 Apocalypse) and 17Q4 isn't looking so great. Your mileage will vary.
It seems that by MOB 12 one can get a fairly good sense of how the vintage will play out over time (assuming no financial "shocks" such as recession).

For the higher risk D&E loans I placed a bold border around 14Q4 and 15Q4. To me they look like a set of tire tracks from the bus that ran over investors in these grades at those times. You can say all you want about credit cycles and consumer behavior but I find the "step change" magnitude of the ROI from the previous vintages compelling evidence that LC greatly lowered underwriting standards at the expense of its investors in these loans. Of course this isn't news coming from me, it's why I'm leaving LC.

[SLCPaladin]

Thanks for compiling this Rob. I have always appreciated your thoughtful posts, along with Fred's. I have gone from about $125k in LC investments and I am now down to $20k. I wish LC had raised their interest rates enough so that ROI was high enough across all grades, but the difference in returns that I think I will get in returns between risk-free CDs (I recently opened up a 4% 5-year) and LC notes is not worth the risk premium, especially considering tax treatment. I still want to believe in LC, but I haven't deployed any new money for a very long time. I'm open to the possibility of doing so, but I would have to see the facts on the ground justify it.

[Rob L]

Thanks for compiling this Rob. I have always appreciated your thoughtful posts, along with Fred's. I have gone from about $125k in LC investments and I am now down to $20k. I wish LC had raised their interest rates enough so that ROI was high enough across all grades, but the difference in returns that I think I will get in returns between risk-free CDs (I recently opened up a 4% 5-year) and LC notes is not worth the risk premium, especially considering tax treatment. I still want to believe in LC, but I haven't deployed any new money for a very long time. I'm open to the possibility of doing so, but I would have to see the facts on the ground justify it.

Those 4% for 5 year CD's weren't around long. Glad you were able to get into one!