Lend Academy Network Forum

Lending Club Discussion => Investors - LC => Topic started by: rawraw on September 18, 2014, 03:54:08 PM

Title: FolioFN Return Calculation!!!!!!!
Post by: rawraw on September 18, 2014, 03:54:08 PM
It has finally arrived!!

Title: Re: FolioFN Return Calculation!!!!!!!
Post by: GS on September 18, 2014, 04:11:32 PM
Man, that just goes to show what I had suspected all along.  According that, my return on "traded" notes is 15.87%, while my return on primary/held notes is 9.5% ...  I haven't sold any notes this year, due to the IRA rule.

I was working a very nice buy/hold/trade plan last year ... sucks that they shut it down.

Now, they need to figure out a way to get it back.  Pronto!
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: jpildis on September 18, 2014, 04:21:14 PM
Very nice.  As an active trader and inventor for the past two years, I've had to rely on my own XIRR calculation (currently showing 16%) to gauge my success.  LC is showing:

- 18% on primary
- 17.79% on traded
- 17.86% on combined

Not sure why LCs numbers are so much higher
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: GS on September 18, 2014, 04:27:28 PM
Not sure why LCs numbers are so much higher

Because LC's numbers are usually higher than XIRR, because LC does not account for "cash lag".  Idle cash is excluded from their calculations.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: TonySaunders on September 18, 2014, 04:46:56 PM
It's the same as my own calculated value:

Title: Re: FolioFN Return Calculation!!!!!!!
Post by: TonySaunders on September 18, 2014, 04:50:22 PM
It's cool that there's a standard way of comparing our relative performance. I'm instantly jealous of anyone whose doing better than me.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: TonySaunders on September 18, 2014, 04:52:29 PM
... I've had to rely on my own XIRR calculation.... 

Not sure why LCs numbers are so much higher

It's higher because ANAR is not the same thing as XIRR. ANAR ought to be higher, depending how much idle cash you tend to have.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: TonySaunders on September 18, 2014, 04:55:27 PM
Aaahaha! Check this out. Actually, I'm quite surprised it's not negative because I only sell notes that are having problems and I don't really buy any on Folio.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: rawraw on September 18, 2014, 06:20:16 PM
My Folio notes are overwhelming sales of either grace period notes before the processing patch and negative FICO.  I'm a little amazed I've kept a mark up that high for those notes, which reduce my defaults drastically.

Also, they redid the compare returns graph to where it only compares LC loans to LC loans.  I'm significantly above the peer group of similiar interest rate, and up there with people with much higher interest rates.  Got to love avoiding defaults
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: rawraw on September 18, 2014, 06:24:07 PM
Also, I'm curious to see Core's and NJ's Folio NAR
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: core on September 18, 2014, 07:43:41 PM
Also, I'm curious to see Core's and NJ's Folio NAR

As I posted in the other thread, I do not know what mine is because it just says 100%+.  Apparently LendingClub's poor Atari server cannot display actual numbers.  This is bogus.

(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Fs24.postimg.org%2Fht04zmsk5%2Flc_nar.png&hash=d8b9f3cf21ea68569d1788d4a268598a)
Title: Re: Re: FolioFN Return Calculation!!!!!!!
Post by: rawraw on September 18, 2014, 07:45:02 PM
Also, I'm curious to see Core's and NJ's Folio NAR

As I posted in the other thread, I do not know what mine is because it just says 100%+.  Apparently LendingClub's poor Atari server cannot display actual numbers.  This is bogus.
Ha ha ha ha! They set an upper limit? That cracks me up

Did they limit the number of traded notes as well? I assume you have a ton
Title: Re: Re: FolioFN Return Calculation!!!!!!!
Post by: core on September 18, 2014, 09:13:08 PM
Ha ha ha ha! They set an upper limit? That cracks me up

Yeah, although I can't say I find it so funny.  Displaying the number, regardless of what it is, would have been easier for them.  They went out of their way, 4x as much code, to put in an upper limit.  Why?  There is no good reason.  Who was the genius who decided there should be a limit?  This is yet another example of Lending Club's incompetence.

Did they limit the number of traded notes as well? I assume you have a ton

No, there's no limit that I know of.  Maybe I haven't hit it yet.  I've traded less than 50k notes.  I just blacked it out.  I'm quite sure LC already knows who I am but in case they're too stupid to have figured it out already, I don't want to make it easier for them by posting exact numbers.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: rawraw on September 18, 2014, 09:15:09 PM
Surely took competence to write four extra pages :-)
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: PeerSocialLending on September 18, 2014, 09:30:51 PM
So I commonly use my personal estimates assuming worse case scenario (100% charge off for IGP through Default).  My anar shows actually higher (over 16%) when I use my estimates vs. Lending Clubs (13%). Am I missing something or have I found a bug?  Anyone else see the same behavior?
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: Randawl on September 18, 2014, 10:34:07 PM
So I commonly use my personal estimates assuming worse case scenario (100% charge off for IGP through Default).  My anar shows actually higher (over 16%) when I use my estimates vs. Lending Clubs (13%). Am I missing something or have I found a bug?  Anyone else see the same behavior?

By saying "my anar" do you mean using those late note loss estimates "(100% charge off for IGP through Default)" results in 16% "anar" vs LC's ANAR estimates which show 13% at this particular point in time?  That would be a little odd.  Or by "my anar" do you mean using those loss estimates on your account and applied to an XIRR formula?
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: Fred on September 19, 2014, 05:51:47 AM
(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Fs24.postimg.org%2Fht04zmsk5%2Flc_nar.png&hash=d8b9f3cf21ea68569d1788d4a268598a)

(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Fwww.lendacademy.com%2Fforum%2Findex.php%3Faction%3Ddlattach%3Btopic%3D2661.0%3Battach%3D786%3Bimage&hash=8648c55fa9555c5bd3bab53e1c3a6e5e)

core, I found your image is a bit different than others:

1. There is no little triangular arrow on the left side of your blue box.
2. The upper and bottom left corners of your blue box are rounded.
3. The font is a bit skinnier.
4. The words "Understanding" and "Your Traded Note Returns" are split into 2 lines. Somehow this is never the case for my Chrome and IE.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: core on September 19, 2014, 06:15:52 AM
core, I found your image is a bit different than others:

Now that's what I like:  A good suspicious mind!  But I can assure you I did not fake a screenshot just to have an excuse to bash Lending Club.  Also all it would take is one person to say theirs says a valid number above 100% and the game would be up.

For one, I am on Firefox 31, not Chrome nor IE.  Screen about 800px wide.  Also (and I think this is the major difference), I'm in a Folio-only state.  I can have no "primary notes" therefore I have no white area off to the left where you can select one of the three NAR options.  The only NAR I can see is the traded notes one.

Here's what that whole area of the page looks like for me.  I don't even see where that 3-option selection would even fit.  Am I not looking at the same screen you guys are?

(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Fs21.postimg.org%2Faxgczup9z%2Flc_nar2.png&hash=a9b8aaefbfa912526adada0bd4905f26)

Edit:  Tried it on IE and the boxes are in fact square like you say.  But nothing else looks different.  Still no white area with the 3 selections and there still wouldn't be any room for it unless the 3rd box (interest received & total payments) was moved down a row or something.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: hoggy1 on September 19, 2014, 06:34:32 AM
I don't think they have it split out correctly yet. If you switch on and off the "Adjust account value and returns for past-due Notes" the adjustment is the same for all 3. That just can't be right. I'm not even certain the traded note count is correct. What if I bought the note on the trading platform and sold it on Folio? Is that is the traded category?
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: rawraw on September 19, 2014, 08:12:29 AM
I don't think they have it split out correctly yet. If you switch on and off the "Adjust account value and returns for past-due Notes" the adjustment is the same for all 3. That just can't be right. I'm not even certain the traded note count is correct. What if I bought the note on the trading platform and sold it on Folio? Is that is the traded category?
Yes, I think it is in the trading platform. The two columns would capture the return.  Left column for holding period, right column for comparison of sale to contractual payments remaining.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: Fred on September 19, 2014, 11:16:16 AM
Also (and I think this is the major difference), I'm in a Folio-only state.

Yep, this is the difference.

Having 100%+ returns on 50k notes is truly remarkable.  Congrats on the sustained performance!
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: rawraw on September 19, 2014, 11:57:11 AM
Also (and I think this is the major difference), I'm in a Folio-only state.

Yep, this is the difference.

Having 100%+ returns on 50k notes is truly remarkable.  Congrats on the sustained performance!
Are you sharing your FolioFn stats?
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: PeerSocialLending on September 19, 2014, 12:32:49 PM
So I commonly use my personal estimates assuming worse case scenario (100% charge off for IGP through Default).  My anar shows actually higher (over 16%) when I use my estimates vs. Lending Clubs (13%). Am I missing something or have I found a bug?  Anyone else see the same behavior?

By saying "my anar" do you mean using those late note loss estimates "(100% charge off for IGP through Default)" results in 16% "anar" vs LC's ANAR estimates which show 13% at this particular point in time?  That would be a little odd.  Or by "my anar" do you mean using those loss estimates on your account and applied to an XIRR formula?


That is correct (nothing to do with XIRR) and screenshots to better explain.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: turing on September 19, 2014, 01:47:09 PM
For one, I am on Firefox 31, not Chrome nor IE.  Screen about 800px wide.  a Folio-only state.  I can have no "primary notes" therefore I have no white area off to the left where you can select one of the three NAR options.  The only NAR I can see is the traded notes one.

Here's what that whole area of the page looks like for me.  I don't even see where that 3-option selection would even fit.  Am I not looking at the same screen you guys are?

I can confirm what Core sees.  Here is a comparison screen shot of my account with some trading and one without.

The "interest received' box is missing entirely if there are traded and primary notes.  If you have one or the other, you see three boxes.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: Lovinglifestyle on September 19, 2014, 02:25:09 PM
My screens don't have the "Historical Returns" line.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: core on September 19, 2014, 04:35:37 PM
The "interest received' box is missing entirely if there are traded and primary notes.

That solves the mystery of where everything would fit.  It doesn't!  Those of you who have the 3 NAR options pay for it by losing your interest received data.

Having 100%+ returns on 50k notes is truly remarkable.  Congrats on the sustained performance!

That's just it though, it isn't "sustained".  If they are using lifetime stats to come up with the figure, and I believe they are, then your recent performance or lack thereof isn't really reflected.  Keep in mind it was far easier to make a ton of money back in the "old days".  These days it's closer to 50-60% I'd guess.  Maybe less.  I have not been trading as actively recently.

I still do not understand why there is this silly limit when nothing is to be gained by either party.  If the calculations use an iterative solution then yes maybe there is some speed to be gained by bailing early, but only in very rare cases.  At the cost of increased code complexity.  It makes no sense.

I would be interested to see what LC's actual number is, so hopefully they will "fix" this.  Not that I put much stock in LC's calculations.  My lifetime XIRR is 396% but I have a feeling LC would show some insanely high number, possibly nearly double that.  Because from what I've read here, LC never takes into account idle cash.  I usually keep 10-20k sitting around when I can so LC is going to ignore this and show inflated numbers.

Before anyone points out that it's financially silly to leave so much cash idle earning nothing... When some investor has a medical emergency or gets divorced and has to quickly liquidate their entire portfolio, I want to be ready.  The best way to profit is from the misery of others!  It has worked out well for me so far.  So keep those divorces coming guys.  DanB has a fine selection of little fillies if you need a better one.  And as my attorney always says to clients (because it helps his pocketbook), "Drive fast and take chances".
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: hoggy1 on September 19, 2014, 06:29:20 PM
Before anyone points out that it's financially silly to leave so much cash idle earning nothing... When some investor has a medical emergency ...."

I don't think its silly. In fact I don't think idle cash should be included in any ROI, NAR, or other such calculation. Idle cash is just that - it has nothing to due with the performance of the investment I have made which is what I want to measure. This represents investment I haven't made - my fault - not the fault of my notes. Now LC fees and delays in investment are properly included within the NAR calculation because they are an integral part of this investment vehicle.
 
If you insist I count the "cash drag" of cash I keep in my LC account, why not add in the $30-40K in my non-interest bearing checking account, or the $200-300K I have in useless realestate I continue to pay tax on. Where I choose to keep cash is unrelated to any other investment vehicle. That's my read.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: core on September 19, 2014, 06:51:05 PM
If you insist I count the "cash drag" of cash I keep in my LC account, why not add in the $30-40K in my non-interest bearing checking account

I don't think that's quite the same thing.  If you're just keeping cash in LC solely because you don't want to be bothered with moving it elsewhere, then fine I agree it shouldn't necessarily be counted.  But on the other hand if that cash is required to be sitting there to enable you to make your investments, then it is effectively tied up.

It is that cash that enables you to make your returns.  This can be because your strategy depends on large amounts of cash (as mine does), or perhaps the note selection is so poor that finding filter matches is unpredictable and come in large blocks when they do.  In either case, if you didn't have the cash sitting there you wouldn't make anything.  If the cash is required it should be counted IMO.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: hoggy1 on September 19, 2014, 07:33:23 PM
I agree, if your investment strategy depends on the cash being available then it is an integral part of the investment vehicle as you implement it. But most people on the board are not in that situation and there are often repeated references to cash drag and inclusion of idle cash in NAR calculations none of which I have ever understood.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: rawraw on September 19, 2014, 07:38:27 PM
I agree, if your investment strategy depends on the cash being available then it is an integral part of the investment vehicle as you implement it. But most people on the board are not in that situation and there are often repeated references to cash drag and inclusion of idle cash in NAR calculations none of which I have ever understood.
Cash drag also takes into account time till fund, notes that get rejected and have to be reinvested, etc.  All of which are part of the investment
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: GS on September 19, 2014, 08:17:14 PM
I can see my interest received data by expanding the "Payments" sections  on the same page.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: hoggy1 on September 19, 2014, 09:31:23 PM

Cash drag also takes into account time till fund, notes that get rejected and have to be reinvested, etc.  All of which are part of the investment

Now LC fees and delays in investment are properly included ...
rawraw, thats exactly what I said above. But whether I choose to keep an excess $40k in my LC account or in my checking account is immaterial. All that should matter is money invested from the day it is no longer available for withdrawal (cash) till the day it is again withdrawable (cash).
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: Fred on September 19, 2014, 09:55:56 PM
Are you sharing your FolioFn stats?

Sure, this is from one account:
(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Fi.imgur.com%2Fs1lm5IA.png&hash=912cfcda72e211c62f5c9fa1aeaa1e74)
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: Ran on September 20, 2014, 08:39:40 AM
I think there are some problems with LC's Trade Note ANAR calculation. I buy and hold Folio notes, half of which are Late 16 or 31+ notes when I bought them. My XIRR is ~40% for >$50k invested in Folio notes. On Thursday when LC's calculation first came out my Trade Note ANAR showed 22% and today shows -8%. But my XIRR barely changed in the last 2 days. Clearly LC is doing something wrong.
I think LC are shooting themselves on feet when they are doing principal/interest accounting and amortization stuff. They should have gone XIRR's route, etc., calculating returns based on bank transactions(deposit and withdraws) and end of period account market value. It's simple and clear and is actually what investors really care about at the end of the day. Just like operating a fund, when you report fund return, you should not report stock/bond return, but how much money the fund investors pooled together and how much the fund is worth today.  If cash is not invested but held in LC account, it's still part of investment earning 0% ANAR return, plain and simple.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: hoggy1 on September 20, 2014, 09:03:19 AM


That is correct (nothing to do with XIRR) and screenshots to better explain.

MISSING LINK
I used the "View and customize adjustment" link to reach the adjustment page below. But now when I turn the adjustments on it displays :Adjusted values reflect custom assumptions for past-due notes, and not Lending Club estimates" BUT THE LINK IS GONE. I can't get back to alter them further.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: SBryantMS on September 20, 2014, 09:14:53 AM


That is correct (nothing to do with XIRR) and screenshots to better explain.

MISSING LINK
I used the "View and customize adjustment" link to reach the adjustment page below. But now when I turn the adjustments on it displays :Adjusted values reflect custom assumptions for past-due notes, and not Lending Club estimates" BUT THE LINK IS GONE. I can't get back to alter them further.

This is called Agile Development -- The IT department throws some crap out on the webpage -- then use customers as unpaid testers of the code.  Only way something gets changed (I did not say fixed) is to complain.  The new IT development model -- short sprints -- fall down -- repeat.  IMO, expect crap to appear regularly -- if you don't like the smell complain.   
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: hoggy1 on September 20, 2014, 09:33:19 AM


That is correct (nothing to do with XIRR) and screenshots to better explain.

MISSING LINK
I used the "View and customize adjustment" link to reach the adjustment page below. But now when I turn the adjustments on it displays :Adjusted values reflect custom assumptions for past-due notes, and not Lending Club estimates" BUT THE LINK IS GONE. I can't get back to alter them further.

This is called Agile Development -- The IT department throws some crap out on the webpage -- then use customers as unpaid testers of the code.  Only way something gets changed (I did not say fixed) is to complain.  The new IT development model -- short sprints -- fall down -- repeat.  IMO, expect crap to appear regularly -- if you don't like the smell complain.

Have you seen this: http://www.youtube.com/watch?v=GM5DrvOjQn0

I agree. But I know Agile Development and Extreme Programing. I have worked in both environments but the releases still had to go through testing and release review. I think they still have a few organizational holes to fill.

Can anyone give me the URL to get to the adjustment page before it disappears for everyone (except for the HTML jockeys who can always find anything)?
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: Rob L on September 20, 2014, 10:43:56 AM
MISSING LINK
I used the "View and customize adjustment" link to reach the adjustment page below. But now when I turn the adjustments on it displays :Adjusted values reflect custom assumptions for past-due notes, and not Lending Club estimates" BUT THE LINK IS GONE. I can't get back to alter them further.

Should anyone wonder, the link shaded in red is now missing whether I view Primary, Traded or Combined:

(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Fi.imgur.com%2Fbww9Zgq.png&hash=228583be53bd4f28cfb91b6ee78a4c2d)
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: PeerSocialLending on September 20, 2014, 10:47:33 AM
And the changes keep rolling in. No more custom adjustments...



Title: Re: FolioFN Return Calculation!!!!!!!
Post by: Rob L on September 20, 2014, 12:11:20 PM
And the changes keep rolling in. No more custom adjustments...

Actually it's still using my custom adjustments.
I no longer have the ability to switch to / from the LC defaults nor modify my custom adjustments.
Think they'll probably just bring back the link, but who knows.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: SBryantMS on September 20, 2014, 12:19:27 PM


That is correct (nothing to do with XIRR) and screenshots to better explain.

MISSING LINK
I used the "View and customize adjustment" link to reach the adjustment page below. But now when I turn the adjustments on it displays :Adjusted values reflect custom assumptions for past-due notes, and not Lending Club estimates" BUT THE LINK IS GONE. I can't get back to alter them further.

This is called Agile Development -- The IT department throws some crap out on the webpage -- then use customers as unpaid testers of the code.  Only way something gets changed (I did not say fixed) is to complain.  The new IT development model -- short sprints -- fall down -- repeat.  IMO, expect crap to appear regularly -- if you don't like the smell complain.

Have you seen this: http://www.youtube.com/watch?v=GM5DrvOjQn0

I agree. But I know Agile Development and Extreme Programing. I have worked in both environments but the releases still had to go through testing and release review. I think they still have a few organizational holes to fill.

Can anyone give me the URL to get to the adjustment page before it disappears for everyone (except for the HTML jockeys who can always find anything)?

Based on my three years as a "customer" of Lending Club -- I don't think they have a  "testing and release review" process as I see it. 

Everything is crap when first released to the customer.  We ARE the testing department. 

I have also seen bugs reappear when new "changes" are implemented which leads me to believe that they do not have a robust "release control" process.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: core on September 20, 2014, 08:28:30 PM
Ok, so the link is gone.  Presumably everyone had their settings exactly where they wanted them.  So what are we so mad about here?  The fact that you can't change it to settings that you don't want? :)

Anyway here is the link.  It still appears to function fine.
https://www.lendingclub.com/account/investorReturnsAdjustments.action

During today's cowboy coding, what they certainly did not fix is the limit.  It is still stuck at 100%.  By the way I have no problem with cowboy coding in a production environment.  That's the way I've always done it.  Usually while polishing off a case of Bud Light in the office at my desk, too.  Customers liked the fast changes.  It seemed to piss off other employees though, especially customer support who were taken by surprise.  Too bad for them.  Then again I was not working in finance... big difference.  Also I do not make mistakes.  Well except for that one time when an Oracle cascading delete took me by surprise.  That was a two case job that night to restore stuff.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: Rob L on September 20, 2014, 09:25:44 PM
Ok, so the link is gone.  Presumably everyone had their settings exactly where they wanted them.  So what are we so mad about here?  The fact that you can't change it to settings that you don't want? :)

Actually I'm just fine without being able to change it; or for that matter not having ANAR at all. Just bells and whistles.
If they don't bring back the link I'll get over it.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: hoggy1 on September 21, 2014, 08:39:19 AM
\They should have gone XIRR's route, etc., calculating returns based on bank transactions(deposit and withdraws) and end of period account market value. It's simple and clear and is actually what investors really care about at the end of the day. Just like operating a fund, when you report fund return, you should not report stock/bond return, but how much money the fund investors pooled together and how much the fund is worth today.  If cash is not invested but held in LC account, it's still part of investment earning 0% ANAR return, plain and simple.

I disagree at least in part. Our LC accounts are different than a fund. A fund is managed by a third party and their choice to hold cash A) is nothing to do with my choices as an individual and B) certainly does affect my returns on the investment in that fund. That is not the case with self directed P2P accounts.

Let me put this case to you: Two LC investors hold precisely the same collection of 1000 loans, worth $20,000. One has $0 cash balance and the other has $10,000 cash in his account that he will use next month to pay for Junior's tuition. They both have the same investment and both will have the same return on that investment. The cash held by the one is a non-investment which he individually has chosen to maintain. The return on his investment is unaffected by his decision.
 
Now Core correctly pointed out a possible exception as it applies to him. If, in an actively traded account, large cash balances are required to execute the trading strategy (i.e. if the cash wasn't there, there would be no money making opportunity) then that cash is integral to the investment and should be included in return calculations.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: Ran on September 21, 2014, 11:46:44 AM
\They should have gone XIRR's route, etc., calculating returns based on bank transactions(deposit and withdraws) and end of period account market value. It's simple and clear and is actually what investors really care about at the end of the day. Just like operating a fund, when you report fund return, you should not report stock/bond return, but how much money the fund investors pooled together and how much the fund is worth today.  If cash is not invested but held in LC account, it's still part of investment earning 0% ANAR return, plain and simple.

I disagree at least in part. Our LC accounts are different than a fund. A fund is managed by a third party and their choice to hold cash A) is nothing to do with my choices as an individual and B) certainly does affect my returns on the investment in that fund. That is not the case with self directed P2P accounts.

Let me put this case to you: Two LC investors hold precisely the same collection of 1000 loans, worth $20,000. One has $0 cash balance and the other has $10,000 cash in his account that he will use next month to pay for Junior's tuition. They both have the same investment and both will have the same return on that investment. The cash held by the one is a non-investment which he individually has chosen to maintain. The return on his investment is unaffected by his decision.
 
Now Core correctly pointed out a possible exception as it applies to him. If, in an actively traded account, large cash balances are required to execute the trading strategy (i.e. if the cash wasn't there, there would be no money making opportunity) then that cash is integral to the investment and should be included in return calculations.

This argument is not strong. Why would someone spend 5 business days to deposit $10k, sit there at 0% interest for 15 days, then spend another 5 business days to withdraw? The only reason someone puts money in LC is to invest and the money should count since money in LC has no another options available. This is opportunity cost, and why people demand interest for US treasury notes even it's risk free.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: hoggy1 on September 21, 2014, 12:21:46 PM
\They should have gone XIRR's route, etc., calculating returns based on bank transactions(deposit and withdraws) and end of period account market value. It's simple and clear and is actually what investors really care about at the end of the day. Just like operating a fund, when you report fund return, you should not report stock/bond return, but how much money the fund investors pooled together and how much the fund is worth today.  If cash is not invested but held in LC account, it's still part of investment earning 0% ANAR return, plain and simple.

I disagree at least in part. Our LC accounts are different than a fund. A fund is managed by a third party and their choice to hold cash A) is nothing to do with my choices as an individual and B) certainly does affect my returns on the investment in that fund. That is not the case with self directed P2P accounts.

Let me put this case to you: Two LC investors hold precisely the same collection of 1000 loans, worth $20,000. One has $0 cash balance and the other has $10,000 cash in his account that he will use next month to pay for Junior's tuition. They both have the same investment and both will have the same return on that investment. The cash held by the one is a non-investment which he individually has chosen to maintain. The return on his investment is unaffected by his decision.
 
Now Core correctly pointed out a possible exception as it applies to him. If, in an actively traded account, large cash balances are required to execute the trading strategy (i.e. if the cash wasn't there, there would be no money making opportunity) then that cash is integral to the investment and should be included in return calculations.

This argument is not strong. Why would someone spend 5 business days to deposit $10k, sit there at 0% interest for 15 days, then spend another 5 business days to withdraw? The only reason someone puts money in LC is to invest and the money should count since money in LC has no another options available. This is opportunity cost, and why people demand interest for US treasury notes even it's risk free.

I agree no, one is likely to do what you describe, but you are presuming facts not in evidence. Suppose the guy with $10k cash had that money invested and has been building the cash reserve for months knowing junior's tuition would come due next month.  Or maybe he did precisely what you describe intending to invest the money but got cold feet after reading something on this forum that made him reconsider the risk. Why the cash is there, how it got there, and why he chooses to keep it in cash (un-invested) are irreverent. Cash is by definition not an investment and just like the guy with no cash he is interested in what the return on his actual investment is, and should calculate it in precisely the same way the other guys does.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: hoggy1 on September 21, 2014, 01:05:56 PM
Anyway here is the link.  It still appears to function fine.
https://www.lendingclub.com/account/investorReturnsAdjustments.action

Bless you Core, I feel in control again (spoken in the "I am Hanz and he is Franz and we are here to pump you up"  dialect)

Then again I was not working in finance... big difference. 
Yes, or other mission critical software involving lives or multibillion dollar decisions.

Customers liked the fast changes.
Also agree and I have made may instant changes to satisfy individual customers. But this is a release affecting 10s of thousand of users at the same time. Makes you question the entire LC enterprise!
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: Randawl on September 21, 2014, 02:41:40 PM
\They should have gone XIRR's route, etc., calculating returns based on bank transactions(deposit and withdraws) and end of period account market value. It's simple and clear and is actually what investors really care about at the end of the day. Just like operating a fund, when you report fund return, you should not report stock/bond return, but how much money the fund investors pooled together and how much the fund is worth today.  If cash is not invested but held in LC account, it's still part of investment earning 0% ANAR return, plain and simple.

I disagree at least in part. Our LC accounts are different than a fund. A fund is managed by a third party and their choice to hold cash A) is nothing to do with my choices as an individual and B) certainly does affect my returns on the investment in that fund. That is not the case with self directed P2P accounts.

Let me put this case to you: Two LC investors hold precisely the same collection of 1000 loans, worth $20,000. One has $0 cash balance and the other has $10,000 cash in his account that he will use next month to pay for Junior's tuition. They both have the same investment and both will have the same return on that investment. The cash held by the one is a non-investment which he individually has chosen to maintain. The return on his investment is unaffected by his decision.
 
Now Core correctly pointed out a possible exception as it applies to him. If, in an actively traded account, large cash balances are required to execute the trading strategy (i.e. if the cash wasn't there, there would be no money making opportunity) then that cash is integral to the investment and should be included in return calculations.

This argument is not strong. Why would someone spend 5 business days to deposit $10k, sit there at 0% interest for 15 days, then spend another 5 business days to withdraw? The only reason someone puts money in LC is to invest and the money should count since money in LC has no another options available. This is opportunity cost, and why people demand interest for US treasury notes even it's risk free.

I agree no, one is likely to do what you describe, but you are presuming facts not in evidence. Suppose the guy with $10k cash had that money invested and has been building the cash reserve for months knowing junior's tuition would come due next month.  Or maybe he did precisely what you describe intending to invest the money but got cold feet after reading something on this forum that made him reconsider the risk. Why the cash is there, how it got there, and why he chooses to keep it in cash (un-invested) are irreverent. Cash is by definition not an investment and just like the guy with no cash he is interested in what the return on his actual investment is, and should calculate it in precisely the same way the other guys does.

I agree there are many individual scenarios in which idle cash is intentionally being built up and probably then shouldn't be considered in return calculations. 

However, and though it's speculation, I think it's fair to say that in the majority of accounts idle cash is unintentionally accumulated because people are actively trying to invest it and should be included in return calculations as part of cash drag.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: Lovinglifestyle on September 21, 2014, 06:15:43 PM
My screens don't have the "Historical Returns" line.

Is there any known reason for this?  For example, do only accounts which have not bought on Folio have "Historical Returns"?
Does it have anything to do with a browser?  Should I ask LC if/when it really bothers me that much (it doesn't, yet), in about a month?
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: hoggy1 on September 22, 2014, 05:47:09 AM
THE LINK IS BACK.
Title: Re: FolioFN Return Calculation!!!!!!!
Post by: core on September 30, 2014, 07:39:18 AM
I spoke with Lending Club about the 100% limit last week.  I don't know why I even bothered with the direct approach this time.  Bashing them here on the forum seems to work better for fixes.

They refused to spend development time for working on something which only affects a handful of investors.  Ok, I can understand that.  But when I asked what possible work would have to be done since the system already calculates the number (to know that it's over 100%) I didn't receive a good answer.  Maybe I got a chuckle out of him.  I think the rep was placed in the unfortunate situation of defending something that was obviously silly.

I did learn one interesting tidbit though:  There is also a lower limit of -100%.  At the time this made sense to me, but I was in error because I forgot that this is annualized.  It most certainly would be possible to have a traded notes return way under -100%.  Last year I think I traded with some people sporting such returns. :)

So it seems Lending Club doesn't want to show returns which are "too" good.  But they also don't want to display returns which are too poor.  How convenient.

Stay tuned for the next episode when they decide limits of -15% to +15% would be better for their PR purposes, and use the "vast majority" as an excuse.