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Messages - Edward Reid

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Scott, do you just think it's not worth continuing, or do you need someone else to take on the load? I'm not sure I could volunteer -- lots of things on my plate -- but I could think about it. Even with the small number of reports, it's been useful for me to see where I fit into the set of investors.



Adjusted Net Annualized Return: 8.22%
Weighted Average Interest Rate: 13.82%
Weighted Average Age of Portfolio: 16.0 mos
Number of Notes: 544

Grade: A (0.3%) B (1.5%) C (97.2%) D (1.0%) E (0.0%) F (0.0%) G (0.0%)
Term: Payments 36 (51.0%) 60 (49.0%)

vs All Accounts: 95.01
vs Similar Age Accounts: 99.22
vs Similar Age and WAIR Accounts: 99.59

Investors - LC / Re: Too Many Charged Off Loans - Help Needed
« on: November 01, 2017, 09:54:35 PM »
Is there a way to minimize the charge offs?
In the future, pick loans by hand.


Investors - LC / Re: Pulling out of Lending Club and Prosper
« on: November 01, 2017, 09:13:58 PM »
I continue to be quite happy with LC. At my chosen level of risk, I'm getting a far better return than I could anywhere else. (I can't say whether the same would be true for a different risk level.)

I consider LC to be more liquid than a stock fund. I hold a chunk of Vanguard Total Stock Market Index, VTSAX. If I'd had an emergency forcing me to sell my VTSAX holdings in early 2009, I might have lost as much as 45% of my value. I don't know how much I'd have to discount my LC holdings to liquidate quickly, but I imagine a 20% discount would do it, especially since it's a pretty solid portfolio. That's far smaller than the potential loss from forced liquidation of stocks.

This is why financial advisors -- at least the ones who know what they're talking about -- tell you that any money you might (might!) need in the next five years should not be in stocks. If you can wait five years, the stock market will almost certainly have recovered, and your LC holdings will have aged out.

Of course you CAN liquidate your holdings in either a stock fund or LC loans at any time. The question is how much you might have to lose to do so. As I see it, you might have to lose more to liquidate a broad-based stock fund holding (VTSAX, S&P500, or similar) than to liquidate a solid LC holding. And the time to exit safely is about three times as long for stocks as for LC holdings if you consider average investment (as Fred explained).

Skeptical wrote "A recession will affect notes like it will affect the stock market". Stats on say this is not true for ABC loans, which held up just fine in 2008-2009. D and below tanked. D investments went briefly negative, but nothing like the 45% the stock market dropped. (I never looked at anything riskier than D.)

I'm retired. A little over half my investments are bonds. The rest is stocks and LC, with the LC part growing slowly. When it looks like I'm going to need the non-bond part in the next five years (and at the moment, it looks like that may never happen), then I'll sell the stocks at an opportune time and stop reinvesting LC payments.



Adjusted Net Annualized Return:    7.68%
Weighted Average Interest Rate:    13.81%
Weighted Average Age of Portfolio:    15.4 mos
Number of Notes: 528

Grade: A (0.3%) B (1.6%) C (97.1%) D (1.0%) E (0.0%) F (0.0%) G (0.0%)
Term: Payments  36 (50.5%) 60 (49.5%)

vs All Accounts: 93.60
vs Similar Age Accounts: 98.66
vs Similar Age and WAIR Accounts: 98.94

(no folio)

2017-10-01 (since I never got around to posting it)

Adjusted Net Annualized Return:    7.60%
Weighted Average Interest Rate:    13.80%
Weighted Average Age of Portfolio:    15.1 mos
Number of Notes:    512

Grade: A (0.4%) B (1.6%) C (96.7%) D (1.3%) E (0.0%) F (0.0%) G (0.0%)
Term: Payments  36 (48.2%) 60 (51.8%)

vs All Accounts: 93.17
vs Similar Age Accounts: 98.31
vs Similar Age and WAIR Accounts: 98.58

(no folio)

35 is down.

Investors - LC / Re: Where is the sweet spot for loans? C,D,E? B,C,D?
« on: September 09, 2017, 09:37:47 AM »
Any one have comments on what is the best strategy for the grade of loans to invest in?

Know your risk tolerance.

As Fred explains, returns will vary by vintage, and you will only know afterward. The 2008-2009 period is a good lesson. When I started a couple of years ago, C and D loans were returning about the same. But back in 2008-2009, C loans held fairly steady, while D loans tanked, even giving negative returns for a while. You can get higher returns from riskier loans if you can tolerate the risk of losing money. Sound familiar? At least in P2P lending, losing big is a lot less likely than if you are in the stock market.



Adjusted Net Annualized Return:   7.44%
Weighted Average Interest Rate:   13.80%
Weighted Average Age of Portfolio:   14.6 mos
Number of Notes:   502

Grade: A (0.4%) B (1.7%) C (96.5%) D (1.4%) E (0.0%) F (0.0%) G (0.0%)
Term: Payments  36 (46.3%) 60 (53.7%)

vs All Accounts: 88.72
vs Similar Age Accounts: 97.31
vs Similar Age and WAIR Accounts: 97.70

(no folio)

Meanwhile, the DOW reached an all time high today.  Why should I keep my money at LC?
Diversification.  DOW will go down.
And lower volatility, depending on your choices. Those investing in E/F class may consider the risk similar to stocks. But I'm mostly in hand-picked class C, and evidence from the past is that this portfolio is far less volatile than stocks, not as safe as bonds but with far better returns than bonds and virtually no risk of loss of capital. My ANAR dropped under 8% the past few months and crept back up to 8%, and my portfolio is now old enough to have reached its likely minimum ANAR. I realize that it isn't likely to maintain 8% all the way to the end, but it still offers a combination of return and safety that's hard to find elsewhere.



Adjusted Net Annualized Return:   8.02%
Weighted Average Interest Rate:  13.78%
Weighted Average Age of Portfolio:  14.0 mos
Number of Notes:  492

Grade A (0.4%) B (1.8%) C (96.4%) D (1.5%) E (0.0%) F (0.0%) G (0.0%)
Term Payments  36 (44.4%) 60 (55.6%)

vs All Accounts: 88.92
vs Similar Age Accounts: 97.35
vs Similar Age and WAIR Accounts: 97.72

(no folio)

Under the circumstances, I'm sure everyone here will understandyour taking a few more days ... or weeks. Take care of yourself first.

Holy cow. Or rather, unholy deer! Very glad that both cars and eye surgery are far better than 50 years ago. I've been through cataract surgery and retinal surgery; neither was nearly as painful as inflammation of third cranial nerve, which among other things resulted in loss of control of one eye for a couple of months. Just saying I know how hard it is to try to do anything with one eye out of commission.


Adjusted Net Annualized Return:   7.75%
Weighted Average Interest Rate:   13.79%
Weighted Average Age of Portfolio:   13.3 mos
Number of Notes:   480

Grade: A (0.4%) B (1.9%) C (96.2%) D (1.6%) E (0.0%) F (0.0%) G (0.0%)
Term: Payments  36 (42.6%) 60 (57.4%)

vs All Accounts: 86.33
vs Similar Age Accounts: 95.52
vs Similar Age and WAIR Accounts: 96.36

(No folio)



Adjusted Net Annualized Return:   7.76%
Weighted Average Interest Rate:   13.76%
Weighted Average Age of Portfolio:   12.8 mos
Number of Notes:   464

Grade: A(0.4%) B (1.9%) C(96.0%) D(1.6%) E(0.0%) F(0.0%) G(0.0%)
Term: Payments  36(38.9%) 60(61.1%)

vs All Accounts: 86.99
vs Similar Age Accounts: 95.22
vs Similar Age and WAIR Accounts: 96.08

no folio

Investors - LC / Re: New Sign In Window
« on: May 10, 2017, 06:53:05 PM »
Fidelity is probably the most heavily targeted institution in the world. If it can play nicely with Last Pass then why can't everyone?

Because web developers have lots of new toys, and like playing with them. At most sites, new toys get priority over mundane security.


Investors - LC / Re: New to LC-Bad Timing?
« on: May 01, 2017, 03:38:40 PM »
What do you think of this chart?,3551.msg40027.html#msg40027

The whole report

Mostly what I see is 1) too much volatility to draw any conclusions (neither that individual investors are pulling out nor that they are staying in), and 2) a drop in individual originations, not in balance held.

What the heck happened in 2Q16? (True question. I assume someone here knows; I don't. It sort of looks like they decided to put a cap on originations.) You could say from the same chart that Other Insitutional are pulling out too. Maybe they are. (I don't know exactly what that category consists of.) Banks and Managed Accounts have been flip-flopping for the past four quarters. Obviously some things are changing fairly drastically from quarter to quarter, but I see no trend.

In any case, these are originations. There are clues that LC is exiting its fast growth stage and moving into something closer to a steady state. What's happening to total value of individual investor notes held? Is even the slightly lower funds in originations enough to keep the total investments growing? If it is, then there's no evidence of "pulling out", just that there are fewer new investors. Slower growth is a different animal from contraction. What's the average age of outstanding notes? I doubt LC gives us any data on that. If the average age of notes is older, that counterbalances a drop in originations.

See page 23 of the report, the Servicing Portfolio Balance. This is the only chart I find in the report which addresses balances held. It rather clearly shows the total balance leveling off in the past year. It does not give numbers for the categories, but eyeballing it, it looks to me like there's a tiny growth in Notes in the past year, with no Q/Q drop at any point. Certificates have dropped a tiny bit, and whole loans have expanded quite a bit.

Until we see a drop in balance held by individual investors, I don't believe there's any reason to say individual investors are pulling out.


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