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Lending Club Discussion => Foliofn - LC => Topic started by: Randawl on January 15, 2014, 09:59:47 AM

Title: When 59% is >70%
Post by: Randawl on January 15, 2014, 09:59:47 AM
Supposedly the rules are that you can not list a note with a negative YTM nor any note with a positive YTM but >70% markup - it must be 70% or less mark up and generate a positive YTM.  However, it has long been that even when the YTM is positive, Folio will randomly tell me that a note I have at 69% or 68% "...can only be listed for sale with up to a 70% premium..."  Occasionally it would tell me that a note at 67% is still >70% and I have just dealt with it and lowered the price.  But in the last few weeks it has gotten worse and even notes at 59% premium (with a positive YTM) I get told that it's >70% and I need to reduce it!  I had to list it at 58.72% - it wouldn't even accept 58.81%.  This is occurring randomly as other notes list without issue at ~69%.  More fuzzy math. . .
Title: Re: When 59% is >70%
Post by: core on January 15, 2014, 10:08:28 AM
In this case it's not Lending Club's infamous fuzzy math, but rather a mistake in the displayed message.  The 70% limit is calculated based on outstanding principal only.  If you have a note  with $10.00 remaining principal and $1 accrued interest then the max you could sell it for would be $17.00 and the markup would be 54%.  It has always been this way.  At least it has since I've been involved with LC.
Title: Re: When 59% is >70%
Post by: Randawl on January 15, 2014, 10:21:24 AM
Good thought.  I already listed that batch, but those numbers were excluding accrued interest.  That's why I think it's strange.  I'll post the next one with its numbers and we'll see if I'm crazy, haha.
Title: Re: When 59% is >70%
Post by: core on January 15, 2014, 10:33:20 AM
Good thought.  I already listed that batch, but those numbers were excluding accrued interest.

I see.  I had just assumed that's what it was when I saw:
I had to list it at 58.72% - it wouldn't even accept 58.81%.

LC does not display such numbers anywhere, so you're saying you sat there with a calculator and figured out those numbers out to 2 decimal places just for the purpose of this post.  *nod*

The only other thing I can think of is these were notes where a payment had just been made and the numbers were out of sync (like they always are).  You were being shown the old outstanding principal and punched that into your calculator but LC's 70% nanny was using the newer lower figure.
Title: Re: When 59% is >70%
Post by: Bohb Daishi on January 15, 2014, 11:07:30 AM
In this case it's not Lending Club's infamous fuzzy math, but rather a mistake in the displayed message.  The 70% limit is calculated based on outstanding principal only.  If you have a note  with $10.00 remaining principal and $1 accrued interest then the max you could sell it for would be $17.00 and the markup would be 54%.  It has always been this way.  At least it has since I've been involved with LC.

Huh. I always thought it was based on the principal + accrued. Then again, I have only recently started marking up my investment notes to 0% YTM...
Title: Re: When 59% is >70%
Post by: Randawl on January 15, 2014, 12:10:25 PM
Core is right on this one, the 70% LC nanny applies to principal only.  Any accrued interest can not be marked-up or even included in the asking price (as it applies to the 70%).  That's what I get for doing math post-call.    ???
Title: Re: When 59% is >70%
Post by: yojoakak on January 15, 2014, 12:43:35 PM
I had to list it at 58.72% - it wouldn't even accept 58.81%.

LC does not display such numbers anywhere, so you're saying you sat there with a calculator and figured out those numbers out to 2 decimal places just for the purpose of this post.  *nod*


It's 2 decimal places on the Sell Page, isn't it? But that's a lot of trial an error. I hope he's using a script.

Given LendingClub's "funny math" I would be pleasantly surprised if anyone could actually reproduce these numbers using a calculator. ;-)
Title: Re: When 59% is >70%
Post by: core on January 15, 2014, 01:12:27 PM
It's 2 decimal places on the Sell Page, isn't it?

Yes it is, but the displayed markup on the sell page is based on the included accrued interest.  Which you can't use for the 70% limit.  That's what made me think Randawl wasn't running the calcs correctly.  You cannot use the sell page numbers to find the limit, it must be calculated externally.

One thing that comes up is.. the javascript uses a slightly different calculation than the server side stuff does.  So via trial and error you may get past the javascript warning but the server will still tell you it's too high.  It's never more than a penny difference.  I'm guessing rounding issues.

Given LendingClub's "funny math" I would be pleasantly surprised if anyone could actually reproduce these numbers using a calculator. ;-)

You just have to buy the right calculator.  This one on Amazon (http://www.amazon.com/Wrongulator-Calculator-always-gives-answer/dp/B005K97THS) might be an inexpensive solution.  Otherwise if you have an old Intel P5 Pentium machine with a flawed FPU lying around you might have some luck with that.
Title: Re: When 59% is >70%
Post by: Randawl on January 15, 2014, 02:26:30 PM
I had to list it at 58.72% - it wouldn't even accept 58.81%.

LC does not display such numbers anywhere, so you're saying you sat there with a calculator and figured out those numbers out to 2 decimal places just for the purpose of this post.  *nod*


It's 2 decimal places on the Sell Page, isn't it? But that's a lot of trial an error. I hope he's using a script.


Yes, indeed.  Today I was using the one you made, in fact!    ;)

LC does not display such numbers anywhere, so you're saying you sat there with a calculator and figured out those numbers out to 2 decimal places just for the purpose of this post.  *nod*

Yes it is, but the displayed markup on the sell page is based on the included accrued interest.  Which you can't use for the 70% limit.  That's what made me think Randawl wasn't running the calcs correctly.  You cannot use the sell page numbers to find the limit, it must be calculated externally.
     

It is displayed out to two decimal places on the sell page with a script.

Edit:  It's not that hard to find the sub 70% principal number by decreasing the price in small increments until it's satisfactory.  It's usually not far off the ~0.01% YTM in those cases.
Title: Re: When 59% is >70%
Post by: neals384 on January 15, 2014, 10:13:04 PM
Do you get a lot of buyers for the 50%+ markup?
Title: Re: When 59% is >70%
Post by: Bohb Daishi on January 16, 2014, 02:46:01 AM
Do you get a lot of buyers for the 50%+ markup?

I've been dangling the carrot for about a month now but I haven't had any bites yet. Core claims that it happens (or used to happen) "frequently", but I'm sure the new filters and nanny policies put an end to it for the most part.

Has anyone actually tried purchasing a note at that high of markup just to see if there are any alerts or popups?
Title: Re: When 59% is >70%
Post by: core on January 16, 2014, 01:06:15 PM
I've been dangling the carrot for about a month now but I haven't had any bites yet. Core claims that it happens (or used to happen) "frequently", but I'm sure the new filters and nanny policies put an end to it for the most part.

Correct, it used to happen frequently enough to make it worth the trouble.  Lending Club's nanny policies haven't put an end to anything, they just forced a slight change in that strategy.  Visibility is quite important when it comes to overpriced notes.

Has anyone actually tried purchasing a note at that high of markup just to see if there are any alerts or popups?

Nope, I haven't.  Please let us know how it goes.  :)

Somewhat related to that:  I heard that many many months ago they added a warning when selling notes for too cheap.  I've never seen it myself.  Does anyone know under what conditions it appears?  Is it a fixed discount threshold for all notes or is it based on the note's current status?
Title: Re: When 59% is >70%
Post by: Lovinglifestyle on January 16, 2014, 07:53:07 PM
I get the warning box a lot.  It says I am about to list a note at a discount of 20% or more.  Not sure how consistent the warning is--seems to be capricious at the lower end, not showing up around 25-35%, but I could be wrong.  Anyway, for sure it was just there on an 80% off note.  (I have four 16-30 day lates in collections).
Title: Re: When 59% is >70%
Post by: Fred on January 17, 2014, 02:42:38 AM
I saw many notes for sale on FOLIOfn with markup around 67% - 68% today:.

(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Fs30.postimg.org%2Fq2wupxtgh%2FCapture.png&hash=fa75b747db07fbeff9f23ee6043fd4bf)

Also, if you hover on the question mark above the Markup/Discount header, it does mention "sum of Outstanding Principal and  Accrued Interest."
Title: Re: When 59% is >70%
Post by: Bohb Daishi on January 17, 2014, 03:00:41 AM
Somewhat related to that:  I heard that many many months ago they added a warning when selling notes for too cheap.  I've never seen it myself.  Does anyone know under what conditions it appears?  Is it a fixed discount threshold for all notes or is it based on the note's current status?

Here's the message that pops up: "You are about to list one or more of your Notes at a discount of 20% or more. Listing a Note at a discount means you are offering it to other investors at a price that is below the current face value of the Note. If you list the Note at this price and an investor buys the Note, you will not be able to reverse the sale on the grounds that you made a mistake."

Not sure how consistent the warning is--seems to be capricious at the lower end, not showing up around 25-35%, but I could be wrong.  Anyway, for sure it was just there on an 80% off note.  (I have four 16-30 day lates in collections).

The warning appears to trigger only when you sell a note for an 80% discount or cheaper.
Title: Re: When 59% is >70%
Post by: core on January 17, 2014, 10:06:17 AM
I saw many notes for sale on FOLIOfn with markup around 67% - 68% today:.

Also, if you hover on the question mark above the Markup/Discount header, it does mention "sum of Outstanding Principal and  Accrued Interest."

Yes the markup/discount column is calculated based on P+I.  But the 70% limit is calculated based on principal.  The asking prices on all the notes in your screen shot were all under 70% based on principal alone.  This is the reason you see plenty of ~68% notes but rarely any 69.99-70.00%.  Back when they didn't cancel listings when a payment started processing you could update the expiration date of the sale right before the payment was about to post and have some insane 100%+ markups listed for a while.
Title: Re: When 59% is >70%
Post by: Fred on January 17, 2014, 10:49:48 AM
Yes the markup/discount column is calculated based on P+I.  But the 70% limit is calculated based on principal.

I see; I have never encountered this limit personally, but this makes sense.  We know that markup is a continuously-decreasing number on a daily basis (as interests accrue), so it makes sense to base a limit on a more stable number (outstanding principal).

Overall, though, I view this limit in the same light as the maximum interest rate a credit card company can charge consumers -- to limit damages on predatory lending/trading.  I personally do not agree with this limit -- there is no such limit in bond/stock markets, isn't there? -- but I am willing to live with it as long as this P2P lending-trading environment is profitable.
Title: Re: When 59% is >70%
Post by: constontino on January 23, 2014, 04:29:24 PM

I always wondered who the people were posting ridiculous markups and what the rationale was behind them.  It infuriated me to no end because I just looked at those notes as weeds and cluttered up the folio inventory.

My suspicion was that it was people who were hoping to catch people slipping and accidentally purchase notes at usurious rates.

It boggles my mind that LC allows this to go on.  I must admit that I accidentally purchased one of these notes once when I first joined a year ago and paid a couple dollars more than I should have.  With the new laser focused filters though there is very little chance of that happening again.

You are all grown men and women so I can't tell you what to do.  But from my personal ethics and values, I would not list notes knowing that they will be picked up by the mistake, ignorance of someone else.
Title: Re: When 59% is >70%
Post by: Randawl on January 23, 2014, 06:41:14 PM

I always wondered who the people were posting ridiculous markups and what the rationale was behind them.  It infuriated me to no end because I just looked at those notes as weeds and cluttered up the folio inventory.

My suspicion was that it was people who were hoping to catch people slipping and accidentally purchase notes at usurious rates.

It boggles my mind that LC allows this to go on.  I must admit that I accidentally purchased one of these notes once when I first joined a year ago and paid a couple dollars more than I should have.  With the new laser focused filters though there is very little chance of that happening again.

You are all grown men and women so I can't tell you what to do.  But from my personal ethics and values, I would not list notes knowing that they will be picked up by the mistake, ignorance of someone else.

Not to explicitly disagree with your implications entirely, but by definition that is how most of the trading works in this world.
Title: Re: When 59% is >70%
Post by: core on January 23, 2014, 07:01:47 PM
It boggles my mind that LC allows this to go on.

They've already added the nanny rule about no negative YTM listings.  The filter defaults are now somewhat strict.  What more do you want?  Maybe a panel of bureaucrats to decide what is your "fair share" when you go to sell a note?  'Change we can believe in'...
Title: Re: When 59% is >70%
Post by: constontino on January 23, 2014, 07:06:27 PM
This is coming from the person who was trying to take notes from one of the other members for 10%.  When I see shady I call it out...  Shady to the Core.
Title: Re: When 59% is >70%
Post by: core on January 23, 2014, 07:15:20 PM
This is coming from the person who was trying to take notes from one of the other members for 10%.  When I see shady I call it out...  Shady to the Core.

I see you have been reading a lot of old posts this week.  I don't remember that one.  If you're talking about how I bought 5 notes from Bohb Daichi for around -90%, well all those recently defaulted and I lost everything on that transaction.  He got a good deal on those.  10% isn't always a bad price.
Title: Re: When 59% is >70%
Post by: Bohb Daishi on January 24, 2014, 03:47:27 AM
This is coming from the person who was trying to take notes from one of the other members for 10%.  When I see shady I call it out...  Shady to the Core.

I see you have been reading a lot of old posts this week.  I don't remember that one.  If you're talking about how I bought 5 notes from Bohb Daichi for around -90%, well all those recently defaulted and I lost everything on that transaction.  He got a good deal on those.  10% isn't always a bad price.

It's true. If it wasn't for our deal at -85%, I would have ended up losing a few more dollars on those...  ;D

But from my personal ethics and values, I would not list notes knowing that they will be picked up by the mistake, ignorance of someone else.

How do you know that the people aren't purchasing the 0% YTM notes as an experiment, knowing full well that they will end up losing a few dollars? People make stupid purchases all the time (think: extended warranties at Best Buy) knowing full well that they probably will lose money on it.

The bottom line is, if someone purchases a bunch of notes at 0% YTM, it's their own fault and they should "man up" to their mistake. The best way to teach a kid not to touch a hot stove is to simply let them touch it.
Title: Re: When 59% is >70%
Post by: core on January 24, 2014, 04:15:03 AM
I must admit that I accidentally purchased one of these notes once when I first joined a year ago and paid a couple dollars more than I should have.

Thank you.  Your money went to a very good cause.  It was also a cheap price to pay.  In the stock, real estate, and just about any other kind of markets, learning something can be very costly.  A couple bucks is nothing.

When I see shady I call it out...  Shady to the Core.

My vocabulary isn't quite up to snuff.  I had to enlist the help of Google to help me discover the meaning of "shady".  I found a cyber squatter who registered every ParkCity[fill-in-blank-resort].com domain he could think of.  (One of which was later turned into a Chinese dating-type site which makes for some very interesting reading when translated through Google.)  I found a business using a .biz domain (shady!) without any names listed (shady) with a PO box (shady) for an address.  The very same PO box that is (or was) used by a so-called nonprofit/charity in Michigan.

But from my personal ethics and values, I would not list notes knowing that they will be picked up by the mistake, ignorance of someone else.

Personal ethics and values prevents you from making a dollar or two from some unsuspecting victim.  Ok, I understand that.  Admirable, even.  What about an unsuspecting victim that could have been (but was not) hit by an UNLICENSED driver driving an UNINSURED car in Illlinois back in 2005?  That would have cost that innocent person a lot more than $2.  Just sayin'.  We were talking about ethics and values and calling people shady, weren't we.

If anyone else wants a turn just speak right up.
Title: Re: When 59% is >70%
Post by: Bohb Daishi on January 24, 2014, 04:34:56 AM
If anyone else wants a turn just speak right up.

*raises hand*  ME ME ME!!!
Title: Re: When 59% is >70%
Post by: core on January 24, 2014, 04:49:54 AM
*raises hand*  ME ME ME!!!

I already gave you the business, weeks back, Mr. Eagle Scout.  I didn't go as far as pulling your criminal record though.  Then again you didn't call me shady.

That reminds me, as you're looking at your front door, in the alley to the right I remember there was this weird small room half-suspended over the alley, top floor of the building to the right.  I meant to ask you what the heck that was.  Skyway romper room I guess.

About the original topic, yes we are all adults here and if two adults want to make a trade let them.  Lending Club has already put in place the YTM restrictions.  You can't sell while a payment is in progress.  Now no selling of BK notes.  I don't see what more you can ask for.  Now you have to try _really_ hard to be an idiot.  And guess what, people still do.  These people are creative enough that they will find a way to lose money no matter what restrictions you add.  It's becoming pure comedy.  And isn't really cutting into my profits all that much.
Title: Re: When 59% is >70%
Post by: Bohb Daishi on January 24, 2014, 06:17:30 AM
That reminds me, as you're looking at your front door, in the alley to the right I remember there was this weird small room half-suspended over the alley, top floor of the building to the right.  I meant to ask you what the heck that was.  Skyway romper room I guess.

I live in a really old neighborhood, so it's one of those where the bedroom has an alcove that extends beyond the outside structure of the house and is covered with windows. Typically they are round, but this particular one is square. For the life of me, I can't remember what they are called. But you see them all the time with older architecture.


I already gave you the business, weeks back, Mr. Eagle Scout.  I didn't go as far as pulling your criminal record though.  Then again you didn't call me shady.

"...let he who is without sin cast the first stone." I have no desire to shun the activities that I, myself, participate in. But let's be honest, Core, you are a bit shady  ;)

Where is DanB when you need him? This thread is ripe for a name-calling fest.