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Topics - investforfreedom

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Investors - P / Prosper--OK, you win!
« on: January 20, 2014, 12:38:00 PM »
I have been investing with Prosper for a year and a half now, but I have not been able to pick up any good D and E loans that meet my criteria lately.  The really good ones are gone literally in the first few seconds of listing, whereas there was a sufficient supply (if not an abundance) of these a year ago. 

I know the competition for loans has been heating up.  But I am not reinvesting my payments into Prosper for several reasons:

1.  As I wrote before, if I can't get at least 11%, there is no point in doing this actively.  I have mutual funds that have been churning out 12% on average for the past 10 years without myself doing anything.  And given the drought of good D and E loans, I don't believe I can maintain 11% returns.  In fact, good C loans get filled very quickly as well.  And the drop in interest rates doesn't help either. 

2.  Prosper is not interested in leveling the playing field for small investors.  How can the small fish have a fighting chance if they just let the big boys pick up half of the loan or the full loan in the first few seconds?  We have been talking about imposing percentage and time moratorium on this, but it has fallen on deaf ears.

3.  I definitely understand that not everyone has the time to manually pick the loans, and there is a reason for auto-invest and APIs.  But as I pointed out many times before, this would lead to cut-throat type of frontrunning just like what they have with high-frequency trading in the stock market.  And eventually, only the ones with the best APIs and fastest servers will grab the best loans.  And who is most likely to win in this game?  Again the institutional players with deep pockets.  Prosper allows this to happen more than LC. 

You guys will have one less competitor. 

Investors - LC / $1.7 Million in Revolving Credit Balance!
« on: November 17, 2013, 01:53:12 PM »
Wow. I have seen many loan listings with hundreds of thousands of dollars of revolving debt, but this is the first time I have seen seven figures: $1,746,716.00!

And this borrower has a credit score of 740-744 despite carrying such a gigantic revolving debt.  What could explain this? 

Investors - LC / $250,000/Month and Borrow $3675 at 26%!
« on: October 17, 2013, 01:17:19 PM »
This is the first of its kind I have seen after reviewing thousands if not tens of thousands of loans over the past couple of years:

Even if the borrower needs money for a quick turnaround, it is hard to imagine that anyone making $3 million a year doesn't have $3675 in their bank account or under their mattress.  And there is no reported major derogatory, nothing on public record and no reported delinquency.

Investing - General (not P2P) / No QE Tapering?!
« on: September 18, 2013, 10:39:54 PM »
Most people, pundits as well as average market participants, had been expecting the Fed to start tapering off QE today.  I, for one, in fact wanted tapering, but by a vote of 9 to 1, the Fed decided to continue to pump $85 billion a month into the system.  I simply don't see the value of pumping all this money into the system any more.  Labor participation has been at a historic low since 1978 (, while part-time employment has been staying at elevated levels (, despite all this steroid injection.  It may goose the market for another leg up, but it will only make the eventual correction/crash more painful. 

What are your thoughts on this?

Investors - LC / "Borrower Contacted LendingClub," etc.
« on: August 26, 2013, 06:21:57 PM »
Would you still sell a late note on Folio if the collection log keeps saying, "Borrower contacted LendingClub"?  How about "Borrower contacted Collection Agency"?  What are the chances of borrowers making good their late payments if they contacted LC or collection agencies? 

I have read that upon IPO, LC can accept investors from all 50 states, as opposed to 27(?) states right now.  Presumably, this will increase substantially the demand for loans on the LC platform itself.  However, currently some 43 states are already allowed to borrow, so going from 43 to 50 wouldn't increase the pool of potential borrowers as dramatically as going from 27 to 50 would the pool of potential lenders.  (

If it is not already hard enough for those of us here to find a good loan to invest, then it would be even harder to find one after LC goes into IPO, since there will always be institutions and big shots throwing money indiscriminately at whatever that produces yields in this type of environment.  And from LC's point of view, the more loans it can originate--and the quicker it can originate, the more profitable it is going to be. 

My question is this:  At some point, would it be more profitable to invest in LC itself upon IPO than invest in the LC loans themselves? 

Would it be like investing in credit card companies such as American Express (AXP), Discover Financial Services(DFS) or MasterCard (MA)?  That is, presumably you don't directly invest in the individual consumer loans themselves, but in the company.  And indeed from the lows of 2009, AXP has gone from around $9 to nearly $74; DFS from $4.50 to around $50; and, MA from $111 to over $600.  Not bad at all. 

What are your thoughts? (I don't have a business background and don't know much about IPO. Feel free to correct me if I am wrong.)

Investors - LC / A Question about $50 notes on Folio
« on: August 23, 2013, 01:28:51 PM »
Because of the fast evaporation of loans on the LC platform, I am contemplating going from $25 to $50 loan fractions.  I have sold some $25 notes on Folio before, so I have some sense of the markups and markdowns.  I just have a question about selling $50 notes over there:

Are the markups and markdowns--in terms of percentage--for $50 and $25 notes roughly the same?  Or do you have to mark down more for $50 notes?

Thanks for your pointers.

Ron Suber of Prosper mentioned in the recent Lendit afternoon keynote address that "an insurance option" and "loan securitization" could be one of the future possibilities for the fast evolving p2p industry.  Given that we have barely come clean out of the woods with the 2008-09 subprime mortgage meltdown (thanks to credit default swaps and what not), when I heard those words from Ron, I felt a bit disconcerted. 

I know I am getting too far ahead of myself here, but I think it is well worth discussing.  When and in what shape would p2p become a financial bubble?  What would be the telltale signs?  What do you guys think?

(The speakers at that conference were trying to instill a sense of vision for the industry. So were the many industry "experts" and analysts in the late 1990s with the advent of the internet revolution.  But we all know what happened afterwards with the tech crash.)

Investors - P / The paucity of good D & E loans
« on: July 04, 2013, 09:09:16 PM »
I am not sure if this is just me.  I have found it increasingly difficult in the past couple of weeks to put money into D & E loans that meet my criteria--let alone HR loans.  They have certainly generated a lot of loan volume in the past few months, but the paucity of good quality higher risk loans is frustrating.  Some good loans just disappeared within the first couple of minutes in front of my screen, with presumably one big institutional investor taking 50% of the bite and a couple of other investors taking the rest.  I am not even going for 16-17% return investing predominantly in higher risk loans: my portfolio is fairly well diversified.  But I doubt if I can maintain my current level of return (13-14%) if the drought of good D & E loans persists.  What's more, the rates of both Prosper and LC have been dropping.  Bigger doesn't mean better (for the retail investors).  That's what I pointed out last year, and that seems to be the direction this industry is heading. 

Investors - P / Help me understand this!
« on: April 12, 2013, 12:20:16 PM »
This listing doesn't make sense to me.

This borrower has $463,881 delinquent--the highest I have ever seen on Prosper (and LC)--and yet the debt/income ratio is listed as only 6%.  How does Prosper do the numbers?  Unless this electric engineer is making millions, it simply doesn't add up.  And with 59 delinquencies in the last 7 years, why would anyone want to sink money into this loan?  (I don't even want to comment on whether this individual is buying a motorcycle out of necessity or just for fun with this level of debt.)

Investors - LC / The Most Effective Deterrent against Default
« on: April 03, 2013, 02:17:13 PM »
I know this is not going to work in the U. S. or in Western countries, where privacy is held as sacrosanct.  But here is what p2p lending companies in China do to you if you don't pay up or declare bankruptcy after making only one payment, etc.  Post photos of you all over the internet so you don't have a place to hide:

"Naming and shaming usually works to pry at least some money out of overdue borrowers,..." (

Take a look at, where borrowers have to post a photo of themselves before they can borrow.

For those of us who have seen borrowers default after making one payment or no payment at all, we might want to see that implemented as well here in the U. S.!  ;)

Investors - P / Selling notes on Prosper's Folio
« on: March 08, 2013, 12:18:22 PM »
I have yet to sell any note on Prosper's Folio trade platform.  From what I have read, it is not as actively as the one on LC and you can't sell notes that are late.  What is your experience?  In particular, I would like to know if there is some kind of recurring fee (quarterly or monthly) that they charge for using Prosper's Folio platform.   Thanks, guys.

Investors - P / Is this real?
« on: February 08, 2013, 08:30:14 AM »
33 public records in the last 10 years?!  :o

And Prosper would allow that to be listed?!  It is really caveat emptor. 

I hope it is just a typo.

Investors - LC / Has LC loan quality dropped?
« on: December 22, 2012, 11:26:12 AM »
I don't know if my observation is correct.  It seems that the quality of LC loans has dropped lately.  I have noticed more loans with "Last Major Derogatory" coming on their pipeline than before.  And I have not been able to find loans that fit my criteria as quickly as I did in the past.  I was able to find at least 1 or 2 loans using the same criteria just a couple of months ago but now I have to go for days without being able to put any money to work.  (And it seems that there are more 60-month C loans coming on the platform as well.)

Can someone shed some light on this? 

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