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Messages - apc3161

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31
Investors - LC / Re: a view of LC's deteriorating investor returns
« on: February 21, 2017, 10:22:53 AM »
The correct strategy should have been this: You have your filters (with their known returns), and you stick with them. If lending standards got worse and/or interest rates were lowered, this would have resulted in a lot of unused cash in your account. This cash should have then been withdrawn and put in stocks, bonds, real estate etc. If/once your filters started to find matches again, you can bring that cash back into LC.

32
Investors - LC / Re: LC prepayments rising
« on: February 20, 2017, 06:27:53 PM »
I just asked LC in an email if they could tell me what percentage of pre-payed loans are due to LC's own refinancing. They couldn't/wouldn't provide this info:

"All the information we display public ally is located on our Statistics page and we currently do not have the data for how many of the pre paid loans are from refinancing. Thank you for your understanding."

33
Investors - LC / Re: I'm thinking of pulling the plug on this experiment
« on: February 17, 2017, 03:02:53 AM »
I get it, it's emotional, however I do feel very similarly to the OP here. When we are in a strong and growing economy, and consumer defaults (overall) are at very low levels, is 6% really the new expectation that you are comfortable with?

We're not talking about 6% being the long term average. We're talking about 6% being the average when conditions are not only strong, but not likely to significantly improve. What is going to happen when these conditions deteriorate? We're starting to cut profits pretty thin in a market with already arguable liquidity (selling at a significant loss in folio doesn't make it liquid IMO), and I'm not interested in taking a bath here.

If the best upside is 6% (+~2% for you master pickers), and the downside is yet to be seen(but most likely not pretty), what is it that you are hoping for here? Not trying to be inciting, just genuinely curious.

If you look at the most recent investor presentation, 38% of individual investor money has been withdrawn in the past year. Perhaps LC doesn't care (since we represent only 10-20% of their funding). But they know individual investors are not happy. I think that is why we are getting barraged with IRA offers. That money is a lot more "sticky" and can't be pulled out as easily.

34
Investors - LC / Re: I'm thinking of pulling the plug on this experiment
« on: February 13, 2017, 03:57:33 PM »
As much as I don't like low returns, what has been upsetting me more is the disconnect between LC's interests and investor interest. For me, the prime example is LC's own re-financing of high interest rate loans.

Basically, we took risk on these high interest rate loans, with the idea that some would default, but the interest rates from the those who don't will make up for this. However, LC then goes and sends emails to all these on-time borrowers and says "hey, want to refinance at a lower rate? No pre-payment fee!". They then collect another 6% processing fee, take away your performing loan (leaving you with non-performing loans), and then charge you a 1% fee just to get your principal back. This is why something like 10% of LC loans go to completion. Honestly, it's total bullshit. It's a total disconnect between your interests and theirs. They literally benefit at your expense.

Until they address this and fix it (prepayment fees, sharing the new origination fee, dropping the 1% fee altogether, etc.), I'm basically not investing any more money and am slowly withdrawing my money as it comes in.

35
Investors - LC / Re: Does LC Suffer Fools Gladly?
« on: January 18, 2017, 08:17:34 PM »
From the most recent Loan Stats File for 2016 Q3 (policy 1 code loans only):



I'm reasonably sure LC makes most of its money from origination fees. My understanding of banks is that they are going with the sure thing A's. Maybe they drop to the B's; I dunno. Let's call the C's "no man's land" (or "many man's land"). Too risky for banks to put on their books but seen as reasonably conservative to individual investors and perhaps others. Finally there's the D, E, F and G "land of extreme risk" or as some would say "the land of the intellectually challenged". These extreme risk loans represent about 25% of LC's current originations. No small amount and I would guess almost exclusively retail investors fund them. LC has described retail lenders as "sticky money". It would be most unfortunate if they had the misconception that we are "dumb money". That said, I do not think LC has yet done enough to protect its "extreme risk" lenders. Many months have passed and our ship is still sinking. Additional actions are needed to "right the ship" or the "intellectually challenged" money funding 25% of LC's loans will dry up.

The only way to get their attention is to pull out your money as payments come in. Show them your money isn't "sticky" and you expect high returns given 1) the risk and 2)the bad tax status of these investments.

On a side note, they've been offering a lot of incentives to open an IRA with them. I would imagine that is because IRA money is a lot more "sticky", you can't just take it out whenever you want.

36
Investors - LC / Re: Worst Month Yet
« on: January 05, 2017, 07:55:27 AM »
My full year losses were nearly 80% of the interest I earned.  My early years with LC this ratio was more of a constant 33%.  My last few months, the losses have exceeded my interest earned.  This better improve soon.  I've stopped reinvesting my taxable account for the foreseeable future.

Same here. I wonder what LC's most recent quarterly report is going to say. I would imagine a lot of people are pulling their money out. I'm currently at a 1-2% return this year. No reason to keep my money with them.

37
Investors - LC / Re: Question from a newbie
« on: January 02, 2017, 01:32:04 AM »
I know that some will say that I don't have enough diversification, but six notes out of 85 is still a hefty percentage.

One problem with insufficient diversification is that it's hard to tell whether such numbers are the result of chance or of bad choices.

Quote
How are your numbers doing as of late?

There's another thread here where you can compare. But to summarize, if you were to add your numbers to that chart, you would be #45 out of 45 on ANAR. You would be getting 7%+ at this point if you simply invested in a random collection of class A notes. See https://www.lendingclub.com/info/statistics-performance.action.

Edward

Do you work for LC? That "7%+" is a very deceiving statement.

38
Investors - LC / Re: Worst Month Yet
« on: December 20, 2016, 10:30:56 PM »
Is anybody NOT taking money out? I know I am taking out all the cash as it comes in now and investing elsewhere. I mean c'mon, tax free bonds have better returns than LC p2p right now. Do they think investors will just accept these returns? 4-5% is not worth the trouble/risk.

39
Investors - LC / Re: Worst Month Yet
« on: November 29, 2016, 08:51:14 AM »
New "investor" here. I started an account with $8K of mad money about a month ago as an educational project. I wanted to see what a passive source of funds would experience, so I let LC auto-invest for me evenly split A/B/C/D.

I thought I would share the experience here, since this isolates mid-to-late October issuance. First month quality:

165  issued notes
  3  notes paid in full in first month
 22  notes have not reached 1st payment (or are processing/current)
  7  notes IGP


So, payment on 7 of the 140 notes which have come up on their first payment date failed.

Collection logs indicate most were NSF, but a couple of the logs showed no entry for the type of payment failure. One collection log is completely blank.

Jesus, what is LC thinking with lowering their lending standards /underwriting so badly? Sure, you get a few quarters of increase loan volume/fees/revenue, but long term all the capital is going to leave...

40
Investors - LC / Re: New Understanding Your Returns Chart
« on: November 15, 2016, 12:35:00 PM »
Notice how things went started going bad ~24 months ago, i.e. when they went public.  I've said it before, but basically after they went public, in an attempt to maintain their insane growth, they drastically lowered lending standards.

41
Investors - LC / Re: LC's home page shows the collapse
« on: November 11, 2016, 05:58:33 PM »

It does concern me to see the downward trend when their isn't much macro factors to explain it (least not obvious to me).

That indeed is the frightening part. As of right now, there is not macro-economic explanation for these poor returns. My returns over the past few months have been ~0%. I still believe, after going public, there was incredible pressure to continue increasing their loan volumes aka their revenue exponentially, and so they lowered lending standards in an attempt to do so.

I think it's backfired of course, whereas they could of had slower but organic growth with confidence and consistency, instead they got a few quarters of incredible growth, but now everyone is backing away (myself included).

42
Investors - LC / Re: Worst Month Yet
« on: November 03, 2016, 01:46:00 PM »




What is scary about this chart, is that supposedly the economy is doing alright. So, to what extent did lending club lower their lending standards in order to achieve their loan volume targets?



To achieve that exponential growth, they had to attract a lot of new borrowers, and their only way to do that was to basically complete relax their underwriting standards, at the expense of the investors. I should have known this would happen after going public.

43
Investors - LC / Re: Worst Month Yet
« on: November 03, 2016, 09:32:10 AM »
This was also my worst month, I lost money at a rate of 5%.

LC clearly lowered lending standards after going public in an attempt to keep their loan volume growth in exponential territory, at the expense of the investors. Until they fix this, I'm done buying notes and will be withdrawing my cash as it comes in.

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