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Messages - RussG

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I hope this was your emotional rant as it lacks any rational and objectivity. You are freaked out about ~$300 (~0.2%) loss in last ~6 months on a 6,000 loans (potentially 6,000 x $25 = $150,000) portfolio. It may be better for your health if you give up managing your own investment portfolio. You may want to focus on things that you are good at that give you the ability to put $150K in a largely unproven investment.

Since you brought up the subjects of rationality and objectivity I hardly think what I wrote could be rationally or objectively qualified as an "emotional rant" or an indication that I am "freaked out". Those are just silly characterizations. As to your advise that I give up managing my own investment portfolio, in fact you have no idea who does or does not manage my investments or what my returns might be. Oh, and I don't recall asking for your advice, nor based on your approach do I think I would ever take it. I will also leave advice as to matters of my health to my medical team, but thanks for yours just the same.

Previously I wrote: there should be no possible scenario under which an investor should lose money

I would like to know any investment that guarantees no loss. There is none including investing in loans from Lending Club. Even US Treasury notes that are considered almost risk free has non-zero risk of losing money.

You are right of course, there is no risk free investment, and the bold-faced quote (above) of what I had previously written taken as a fragment of out of the larger context of what I meant I think you may be missing the big picture of what I was saying in favor of nitpicking my choice of words. I'll take responsibility for that. My intent was to write about diminishing returns over time until they finally started to become negative. I have, over the years, watched my returns in Lending Club get smaller, and smaller, and smaller, from the 8-10% range to 2-4% and now negative. That's the intended takeaway and enough for me to bail on Lending Club. Never before have I seen a 5 month period where my returns were negative and it would be a stretch, I think, to blame that performance on the allocation of loan grades within my book. Now it may be true that carefully watching all the trends in P2P and more actively managing my loans would result in a better return. I don't doubt that, but I don't have the time or inclination for that level of involvement and in the past it wasn't necessary.

My point in all this is that making money in Lending Club has become more and more difficult and less and less likely. You are free to disagree, but my experience has been what it has been regardless of what you or others may believe about P2P. I have been making less and less and less as time goes by. There can be no arguing with that. It's time to bail.

Could I have done things better or smarter? Sure, we can all say that about pretty much anything we do, but for me LC is not the place to be. I believe, rightly or wrongly, that I can do better elsewhere and that will be my suggestion to others with the possible exception of those that want to be very actively engaged. Bad advice? Maybe, but since you brought up Treasuries even the return on those would be better than the negative return I've had in Lending Club recently. For someone with my level of knowledge or lack thereof, and time to devote to investing activities, Lending Club does not represent a good place to put one's money, IMHO. That is the takeaway I want people to come away with.

You decided which grade notes (and whatever other criteria) to invest in.  Grade D and worse loans from 2015 and 2016 have performed badly.  Your portfolio surely contains a large amount of those now.

I suggest you might consider moving your criteria back to A&B loans.

I'm sure you are right, but my attitude is that regardless of the grades I invest in I should make money--there should be no possible scenario under which an investor should lose money when he is diversified across thousands (or just dozens) of loans. If he does then it's a bad investment, IMHO. My advice to people going forward will be to steer clear of Lending Club.

I have had my Lending Club account since 2011. I have it set to reinvest automatically. Nearly 80% of my nearly 6000 loans are in C & D grade loans although this has changed from time to time (see attachment). The account has been fully invested. My returns for 2017 YTD, Jan.-May inclusive is ($303.99). Yep, that's a loss of just about $400. There were no deposits or withdrawals made during the period and the account has been fully invested. Last year's returns were in the area of 4%. I have turned off automatic reinvesting and will close out of Lending Club altogether via Folio or just waiting until everything settles out on its own accord.

LC provided good returns early on but now I think it may would definitely be better to put my money under the mattress.

Investors - P / Prosper Results 2016
« on: February 04, 2017, 03:12:57 PM »
I opened my Prosper IRA and Standard accounts in 2013. I made no deposits or withdrawals during 2016. My accounts are set to auto-invest. At some point during 2016 my cash balances grew quite a bit because of a breakdown in the auto-invest system, one that, BTW, I was not informed of by Prosper but rather discovered by chance myself. (I have Prosper and Lending Club accounts. This breakdown was in Prosper, wasn't it? I'm not mixing them up, am I?)

Balance Dec. 31, 2015: $24,338.03.
Balance Dec. 31, 2016: $25,189.75
Net gain: Net Gain: $806.72, 3.2% for the year.

Standard Accountt:
Balance 12/31/15: $23549.40
Balance 12/31/16: $24275.63
Net Gain $726.23, 3.1% for the year

Meanwhile, Prosper claims on my main account page for my Standard account that the Annualized Net Returns as well as Seasoned Annualized Net Returns for the account are both 11.2%; for my Roth they say my Annualized Net Gains are 10.93%. I donít care how you slice and dice the numbers and Prosper can sing and dance all day long if they want to, but the simple fact is that in 2016 my account values grew a paltry 3.2% and 3.1%. Do you think Prosper lies? I do. Time to close my accounts.

Investors - P / Re: Don't Be Fooled
« on: April 21, 2016, 03:42:34 PM »
Please note: Subsequent to my original post I discovered an error. I was looking at the wrong statements. I had them mixed up. Prosper, in it's not-so-infinite-wisdom does not put account numbers on their statements. Personally, I regard this as nothing short of over-the-top-idiocy. I have more than once confused statements from my Standard and Roth IRA accounts. In recalculating the numbers I came up with a marginally better interest rate of 2.37%.

Investors - P / Re: Don't Be Fooled
« on: April 21, 2016, 01:55:29 PM »
Seems like you missed a $1k withdrawal somewhere.  Prosper's return calculation isn't perfect as it doesn't discount delinquent loans, cash drag, & uninvested funds, but it shouldn't be that far off for what you describe.  I've been investing for close to 3.5 years.  Multiple 6 figure accounts with average loan inception age between 6 and 29 months.   I have calculated returns directly from the monthly payment extracts & and get returns very similar to Prosper's calculation (+/- .50%).   

Could you set up your account on NSR and see what they calculate?

I wish I had missed a withdrawal. I just checked my statements again. I don't think I missed anything--withdrawals or deposits. I don't think I've ever made any withdrawals from this account which I opened in 2013.

I looked at the link you provided and didn't understand what I was looking at. There was no information I could find about how the site works. I chatted with a rep and asked about a tutorial--none available. Besides, the simple interest calculation I used is about as simple as anything can be. I don't think an outside service is warranted.

I don't see any reason for complicating things by looking at seasoned or unseasoned notes, delinquent loans, invested funds, etc. No. All that needs to be considered, IMHO, is the account value at the beginning of the period and its value as the end. That represents the actual gains or losses. Period. That's the number to use when comparing investments as far as I'm concerned.

I think I can do better elsewhere and will focus my attention on getting out of this investment.

Investors - P / Re: Annualized Return: what's yours?
« on: April 20, 2016, 02:26:36 PM »
Seasoned: 20.59%
All Notes: 18.02%
Last updated on Apr-05-2016

My 12-month XIRR (3/31/2015-3/31/2016) is 9.54%.

How is it that the Seasoned and All Notes ROR shown by Prosper are so far above XIRR? In my case, I just posted results of 2.23%, simple interest, for a 12 month period:

Does anybody else think Propser's numbers preposterous?

Investors - P / Don't Be Fooled
« on: April 20, 2016, 02:22:29 PM »
Don't be fooled by the interest rate Prosper says you are earning when you log on to their web site. Compared to the way I do the math the numbers seem wildly inflated. Perhaps my analysis will, if not flawed, prove valuable to present and potential investors.

[Please note: Subsequent to my original post I discovered an error. I was looking at the wrong statements. I had them mixed up. Prosper, in it's not-so-infinite-wisdom does not put account numbers on their statements. Personally, I regard this as nothing short of over-the-top-idiocy. I have more than once confused statements from my Standard and Roth IRA accounts. In recalculating the numbers I came up with a marginally better interest rate of 2.37%]

As of January 31, 2015 the balances at my Prosper account were as follows:
Cash: $2,051.34
Notes: $21,436.19
Total Account Value: $23487.53
(My account had already been open for a long time so there was no matter of the initial cash deposit needing additional time to be fully invested.)

One year later, January 31, 2016, a year during which no deposits or withdrawals were made to or from the account, the balances were:
Cash: $1,237.54
Notes: $22,774.32
Total: $24,011.86

Over the course of 12 months my account grew in value by $524.33. Divide that amount by the account value at the beginning of that one year period to get this: .0223. Multiply .0223 by 100 to get the interest rate of 2.23%. This is simple interest. No fancy numbers manipulation to make things seem like something that they are not. This is an actual reflection of the growth of the account value over a one year period expressed as a percentage.

Logging onto my Prosper page today the company reports two interest rates: Seasoned Only Notes 10.19%, All Notes (current year) 9.94%. Yes, it is now a couple months past the end of the one year period for which Iím calculating interest, but as I recall the numbers reported by Prosper today arenít all that different than those reported during the 12 month period I have analyzed.

I have excluded from the Jan. 2016 account value (above) the amount of $316.34 that Prosper lists on my Jan. 2016 statement as Pending Payments. Prosperís definition of Pending Payment: ďA principal debit adjustment for payments that were initiated during the statement period and which are pending receipt for the next period.Ē Well, if the money ďainít been received it ainít been receivedĒ. Tagging onto my statement an amount I will be, or may be receiving during the next immediate month might be OK if itís done consistently, but since no such pending payments calculations were included by Prosper on statements until the beginning of 2016 it would skew the results for the purposes of this particular analysis which includes most of 2015.

Just for the heck of it, letís pretend that those pending funds had actually been deposited into my account. That would raise the interest earned on the account to 3.6%. Still a far cry from what it seems Prosper wants me to believe Iíve been earning.

One can complicate matters by thinking of the cash balance and the amount invested in notes as two separate things and to somehow make an effort to exclude cash from the interest rate-of-return calculation. To me, this is something of a red herring. I look at the lump sum I've turned over to Prosper as my investment, upon which the percentage rate of return should be compared to other investments. (Risk adjustment calculations are beyond my ken, so for me KISS is the motto.)

I do not do the note picking for my account myself. I let Prosper handle this for me. If I wanted to do it myself then perhaps Iíd earn more. Thatís not the point Iím making. Iím suggesting that the interest rates Prosper reports on individual investors web pages may, at least in some cases, be inflated--significantly.

It gets complicated trying to calculate interest rates when deposits and withdrawals are made during the period being analyzed. In the past Iíve used the Excel XIRR function to calculate rates for my Prosper and Lending Club accounts when I've made deposits or withdrawals. In those cases too, as I recall, both Lending Club and Prosper seem to wanted me to believe that I was earning more than what it seemed to me I really was.

To me, the particular analysis Iíve done here, that of simple interest over a 12 month period, where no deposits or withdrawals have been made is just as straight forward, simple, and factual as you can get. 2.23%. Admittedly, Iím a math dummy, so if Iím wrong somebody please show me how. G-d, I really want to be wrong!

Has anyone else performed a simple interest rate of return calculation for some period of time on an account that has had no deposits or withdrawals, and come up with either s similar or disparate result?

Can somebody tell me why I wouldn't be better off selling my notes and investing my money in an S&P 500 index fund? Alternatively, how much time would I need to spend doing the not picking for my account myself in order to quadruple the rate of return I'm getting now.

Investors - LC / Re: My Lending Club Returns: 6.5%
« on: January 20, 2016, 12:47:46 PM »
My math makes no such assumption. My account with LC was not new at the beginning of the period. It was several years old. It would have been as fully invested as LC could make it. Regardless of how much uninvested cash there might have been at that time, I think it's reasonable, for the purpose of comparing investments, to look at any investment in terms of how much was deposited and how much returned. From that point of view it is irrelevant how much cash is uninvested at any given time. The question is "what rate return did I get on the funds I deposited".

There may be ways for me to make more ad LC and I should take your suggestion to look at the available tools. Thanks.

LC has typically reported rates of return from about 2-5% higher than my math would indicate, if memory serves me well.

Investors - LC / My Lending Club Returns: 6.5%
« on: January 19, 2016, 09:08:20 PM »
Iím posting this so that others who invest like me might get an idea of what to expect investing with Lending Club, and maybe because someone will say something that will make me smarter or help me make more money  :)

Itís pretty well known that there are different ways to calculate interest earned. I recall from my early schooling that in order to calculate simple interest you can divide the interest received by the initial investment and formulate the answer as a percentage.

Now, if you start with a certain amount invested and a year later divide the interest earned by the beginning principle you can figure the simple interest earned for that year. Right?

At the very beginning of 2015 I had $46,096.55 in my Lending Club account. I made no deposits or withdrawals during the year and on December 31, 2015, my account was worth $49,077.67. This represents a gain of $2981.12, or 6.5% per annum rounding up. The actual number was 6.467121726029%.

It needs to be said that I have Lending Club handle all the investing stuff. I donít want to be bothered with it. Other people, people who do their own loan picking may often make more. I suppose that even some other folks who let Lending Club do the investing for them may do better than me, depending on the instructions they give to Lending Club in terms of how to allocate their funds. Iíve asked LC to invest in the various loan grades using the following target allocations:
B   10%
C   45%
D   40%
E   5%

When I log into my Lending Club account online and look at what they say my Adjusted Net Annual Returns are, they are invariably quite a bit higher than I have ever been able to calculate. Whenever I have spoken to my representative there I have been give some complicated, convoluted story as to what my returns really are; how it depends on how old the loans in my account are, how many loans are late and by how much, why the sky is blue, what President Obama had for breakfast and how that compares to what I fed my goldfish. In the end Iím going to go with my way if cipheringí Just sayingÖ At Prosper where I have another account my 2015 returns were 4.5%.

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