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Messages - Edward Reid

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Understanding returns page - i see a lot more outliers today that are beating the normal returns of LendingClub. Do you think that LC is putting them there as a carrot in front of our noses?

Does anyone know how the dots actually get there? The scatter plot is NOT an image sent from the LendingClub web server. It appears to be generated by JavaScript on the page. The combination of my knowledge of how complex JS works, and the fact that at least some of the JS is minified, making it very hard to read, results in my being unable to quickly determine what's going on. Plus some of the JS is not even in the main page but is loaded from an external file.

It takes a long time to generate the scatter plot -- many seconds on my computer. Even switching to that tab is slow. That was my first clue that it's not an image; examining the web page just verified it.

I can see that the JS might do one of two things.

1) It might call the server and ask for a lot of data, then plot it.

2) It might get statistical parameters from the server (which might be in one of those external JS files), and then plot random dots matching the statistical distribution.

I would consider either method to be valid. If they are using the second method, that would explain some of the outliers, especially when they appear to be impossible.

The first method might even be considered to be releasing too much data about individual accounts, even though it's anonymized.



Adjusted Net Annualized Return:    10.54%
Weighted Average Interest Rate:    13.09%
Weighted Average Age of Portfolio:    7.0 mos
Number of Notes:    279

Grade A (1.5%) B (6.1%) C (89.3%) D (3.2%) E (0.0%) F (0.0%) G (0.0%)
Term 36 (2.6%) 60 (97.4%)

vs All Accounts:
vs Similar Age Accounts:
vs Similar Age and WAIR Accounts:


Not long before my previous report (last August), I changed my selection criteria. In the notes invested in since then, I've had no late payments. Current 8 of my 237 notes are late or in default; the 8 are all in the 165 notes I acquired under my "old" criteria and none in the 89 notes under "new" criteria (which constitute about 70% of my P2P investment). Of course I don't expect perfect performance forever, and obviously these have a lower average age, but so far I'm happy with the results.

Adjusted Net Annualized Return:   10.63%
Weighted Average Interest Rate:   13.04%
Weighted Average Age of Portfolio:   7.5 mos
Number of Notes:   255

A(1.8%) B (7.3%) C(86.9%) D(4.0%) E(0.0%) F(0.0%) G(0.0%)
Payments  36(3.2%) 60(96.8%)

vs All Accounts:
vs Similar Age Accounts:
vs Similar Age and WAIR Accounts:

Investors - LC / Re: only A/B notes available?
« on: September 23, 2015, 06:04:14 PM »
Thanks for the points about EOQ, and to lascott for the link.



Investors - LC / Re: only A/B notes available?
« on: September 23, 2015, 11:45:19 AM »
Thanks ... is your "capacity timeline" grabbed from the web, or is it your proprietary 8) construction?

At least there are still B5 loans available ... clearly whoever is hoovering all the C+ loans is stopping at the B/C boundary. Of course I'm not surprised, since I too concluded that C is the sweet point given my situation. And B5 isn't that far from C1.

Your chart also reminded me that I need to be thinking Pacific Time, not Eastern.

From the time I started P2P, I've been saying that a major limitation is that the demand for investing might outpace the demand for borrowing. Obviously it's happening. I'm not familiar with all the numbers, but it's not clear that there's a good way to adjust it. Of course, lowering interest rates would have a balancing effect, but I don't know how low they can go and still be certain of covering charge-offs.


Investors - LC / only A/B notes available?
« on: September 23, 2015, 10:48:00 AM »
As of a few minutes ago -- 10:40 EDT -- only A and B notes are available. I was startled when my normal search said "none available", so I expanded it -- relaxed every single filter to show all notes available, double-checked and triple-checked the Interest Rate filter. First there were 246 A/B loans, and over a few minutes that dropped (no surprise) to 245, then 244. Absolutely no C/D/E/F/G -- easy to scan the list because of the colors.

What's going on? Where did the C notes go, not to mention all the lower grades?


In regards to the underlined above. LendingClub's stats show where each grade, on average, ends up with chargeoffs/defaults. AdjustedNAR/ANAR incorporates those charge offs (and lates) at your *current* point in time.

Ah, got it. I should also be paying attention to the "historical returns" on my account summary page, conveniently right under the ANAR ... I suppose I was thrown off because it's not shown quite in parallel. Apparently that's even personalized based on class distribution, though I suspect not by term.



Investors - LC / Re: New lows for LC stock
« on: August 28, 2015, 03:47:30 PM »
If the stock price of LC continues to fall, will it eventually have a negative effect on us loan investors?

As long as LC is solvent and is bringing in enough cash to operate properly -- in particular to collect payments -- then the stock price makes absolutely no difference to loan investors. It does not even matter to us whether LC makes a profit, as long as they can operate.

These days, stock prices are almost entirely based on emotions and impressions, not on fundamentals.

When I started investing in P2P loans, my gf's response was "oh, I heard about that on Cramer, do you think it's safe". Vast abyss. I own no individual securities, only funds, and I check them every few months. She is deep into monitoring the stock market hourly -- obsessed with it, to the point it's seriously interfering with our relationship, and she's putting a lot of money at risk unnecessarily. Took a long time to get across to her that I didn't give a whit about the stock price -- I actually did not even know it was a public company when I started P2P investing -- and that only the quality of the loans mattered to me.


Investors - LC / Re: Desired Grade Distribution
« on: August 28, 2015, 03:32:14 PM »
I started out looking for some diversification in grades, but centered on C-D. As I built my portfolio, I realized there was little point to this. For me, the sweet spot in terms of balance between return and risk is C-D based on current stats. However, looking at older stats, I saw that after the 2008-2009 downturn, D loans tanked badly -- even went into negative returns -- whereas C loans were much more stable. Since then I've only been looking at C grade.

Of course, this is based on my situation. Those who can afford to gamble a bit more buy a lot of E-F notes. You see that in some of the distributions posted -- those investors have few A-B notes. Someone who needs to be more conservative should stick to A-B notes -- adding riskier notes does not diversify them, but merely increases their risk.

I'm also almost entirely in 60-month notes. My time horizon is long enough for that, and I like the higher returns. Even if returns should change so that 36-months notes are better, I'm not stuck for all that long.

I have a couple hundred notes. I started out with 25s but switched to 100s, and I'm looking to move toward all 100s. That will take five years due to having bought a lot of five-year 25s, and by that time I might have a bit more to invest, and increase the note size as I build up. The diversification charts show that owning more than 200 notes reduces the variation in performance very little, and more than 500 virtually not at all, so my goal is to keep the ratio of total investment to note size between 200 and 500. I'll probably stay at the lower end (fewer notes) so that I can take more time studying the ones I invest in.


Here's mine. Very young account -- max age barely 4 months. No blue dot on the chart because average age < 3 months. Looks much better than "similar" accounts but that's probably because mine is mostly 60-month, and I don't see any way to compare by term.

I'm a little confused by one thing on the Understanding page: my ANAR is 13.63% and my WAIR is 13.10%. How can ANAR be greater than WAIR? I realize that since all my notes are current, I have no downward adjustments on that score. But I figure with the fee taking a chunk, that alone should pull the ANAR down. Is it just a matter of payment timing? Or what?

And is there a way to get a NAR that's adjusted for predicted future charge-offs, even when all notes are current right now? ANAR is nice but it's still only a snapshot, not a prediction based on all available information. I understand uncertainty very well, so I realize that no computation is going to tell me what my return is going to be tomorrow (much less over five years), but it still seems that historical data on chargeoffs could be usefully incorporated. OK, maybe this should be in another thread, so feel free to ignore me and and eventually I'll do that.  8)


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