Author Topic: Competing with institutional lenders for notes.  (Read 28276 times)

thezinfan

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Re: Competing with institutional lenders for notes.
« Reply #45 on: July 18, 2013, 03:30:28 PM »
Rawraw, could you clarify what you mean by "rate"  in the folio sentence?

"My rate for my LM portoflio is 11%."

is rate = return, or percentage of loans you are able to invest in via P2Ppicks.

thezfunk

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Re: Competing with institutional lenders for notes.
« Reply #46 on: July 18, 2013, 04:22:53 PM »
Quote
You conveniently ignored the explanation LC gave about this.  Was there a reason for that?

What explanation did they provide? Maybe I missed it.
It was the #4 takeaway.  That a lot of the ideal loans people want are a very small part of the platform and until they can grow this or the demand changes, the loans will continue to get funded quickly.  He stated that LC is centered around prime people, so of course you have more ABC's than the DEF's.

For example, in P2P picks the LM notes hang around a while.  But it is the desirable low grade ones in PM that go quickly -- and it's just because the platform isn't necessarily geared to getting a ton of those type of borrowers.

My rate for my LM portoflio is 11%.
My rate for the PM portfolio is 17%.

In Bryce's backtests, if I remember correctly, they both have similar ROIs.

Are you keeping track of which or how many you are grabbing in PM with portfolios or something on Lending Club?

LonghornSF

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Re: Competing with institutional lenders for notes.
« Reply #47 on: July 18, 2013, 06:03:08 PM »
Quote
It was the #4 takeaway.  That a lot of the ideal loans people want are a very small part of the platform and until they can grow this or the demand changes, the loans will continue to get funded quickly.  He stated that LC is centered around prime people, so of course you have more ABC's than the DEF's.

That's fair. What I'm trying to point out is that not that long ago the "ideal" high rate loans used to stick around on the platform for awhile. Now, they are funded within minutes or often <30 seconds. There's nothing wrong with by the way!

Quote
For example, in P2P picks the LM notes hang around a while.  But it is the desirable low grade ones in PM that go quickly -- and it's just because the platform isn't necessarily geared to getting a ton of those type of borrowers.

My rate for my LM portoflio is 11%.
My rate for the PM portfolio is 17%.


Maybe I'm being daft but what is LM and PM? I don't use P2P picks.

Rob L

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Re: Competing with institutional lenders for notes.
« Reply #48 on: July 18, 2013, 06:24:21 PM »
This seems as good a place to post this as anywhere. I sometimes log into LC a few minutes before each of the 4 upload times. Then I go to browsenotes, filter for 36 month loans, C,D,E and F grades and see how many are there before upload time. After the new loans arrive I take a look again and get a feel for how many were added. FWIW, before the upload today at 2pm PDT there were precisely zero of these before new loans were added. This is a first for me. It may have happened before (probably did), but I haven't seen it. Good, bad or indifferent these all get funded PDQ.

SeattleSun

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Re: Competing with institutional lenders for notes.
« Reply #49 on: July 18, 2013, 06:54:30 PM »
THE NEW NORMAL?

Rob,

I interputed your post early today saying things were "normal" to mean they were the same as you posted on July 1st, see below.

You could use P2P Picks in a manual mode and do OK.


Q.  How much action did you lay in that 30 day period.  I would estimate over $100,000?


.......................      The Old Normal      ............................

Bob L posted this on July 1st

"Today I finished purchasing notes totaling 100% of my initial LC funding exclusively using P2P-Picks.

Since approx. 1 June 2013 LC has posted about 16,349 new notes and I bought 1,672; remarkably close to 10%.

As you know P2P-Picks has two models; Loss Minimizer (LMIN) and Profit Maximizer (PMAX). I bought 796 LMIN notes and 860 PMAX notes. I know the totals don't exactly match because I bought a few others on a whim, and sold some duplicates on Foliofn. Dollar allocation is 55% PMAX and 45% LMIN (which I think is a conservative mix).

PMAX grades notes as Top 1%, 5% and 10%. LMIN grades notes as top 5%, top 10% and top 25%. I initially started funding all notes the same $ amount and saw my portfolio was quickly being dominated by 25% LMIN's. The next evolution in my strategy was to eliminate all the 25% LMIN's completely and that balanced out my purchases for a while. Then I got the bright? idea that I should invest more per note in the PMAX 1% than 5% and more in the PMAX 5% than 10%, so I did. Same for the 5% LMIN's and 10% LMIN's. As I said I had long before stopped investing in any 25% LMIN's. I would love to hear Bryce's commentary on this $ allocation of investable funds. My guess is that I overdid it on the 1%'ers and possibly would have been better off with the same $ allocation to 1% and 5% and maybe a bit less for 10% PMAX. Perhaps the same allocation for 5% and 10% LMIN's would have been better. Time will tell.

Now let me speak to auto-invest, or lack there of with P2P-Max. It's basic human nature to think that the smart money is grabbing all the "best" loans before I get my shot at them, and I'm getting the leftovers. If there's anyone out there (other than LC itself) who has better data than I on this matter over the past month I would be surprised. For all the discussions of  the dominance of high speed autobots, most of the time they never show up. Don't ask me why. Down to the details LC almost always releases new notes between 2 and 3 minutes after each of the 4 magic hours during the day. Often a bit earlier than 2 minutes after the hour and almost never post 3 minutes after. P2p-Picks is extremely punctual posting its recommendations; 4 minutes past the magic hour (I give it an extra second to 4:01). Refresh your screen at 4:01 after and the recommended picks will be there. PMAX is all that matters and you should already be on that page. The LMIN recommendations will be there for a relatively long time and you can check them after you've done your PMAX purchases. You will have previously opened your LC account in a separate tab at the top of the hour, long before the "buying frenzy", so you don't have to spend the time to log in while trying to buy notes. Click on the P2P-Picks dollar allocations for each recommended note, then start at the top and hit go. Wait for that loan's go button to disappear. Continue to hit go till you've hit the last one. Each Go will popup an new LC note added page (if the loan's already been fully funded you'll get a zero notes added. On the popup of the last go hit continue, then hit view notes and finally buy. You do not have time to be more choosy here. Once you get the hang of it the whole process takes less than two minutes, then switch to LMIN picks and repeat for another couple of minutes. For LMIN you will have the time to look at each note's interest rate rather than immediately clicking buy, and have the opportunity to discard the low ones if you want. If you miss one of the 4 magic times a day don't worry, I'll quote another poster who said "notes are like Doritos; they'll make more". At least for now, if you follow the follow the above you will not be substantially disadvantaged by autobots. Maybe I was lucky, but this took about 20 minutes of my days over the past month and I was able to organize my schedule to accommodate it. For other's I'm sure this sounds a bit crazy. Given the choice between having autoinvesting available to me or P2P-picks selections available I went with P2p-picks. Just a personal choice. If I were to add additional funds in the near term I would still be relatively unconcerned about the competition from autobuying, but it could turn on a dime and make things much more difficult.

For now without auto invest who ever's the quickest gets first shot at the top 1%'ers. With auto invest it be may more problematic, but only for allocation by P2P-Picks to P2P Picks customers, not LC. P2P Picks are by no means LC's top 1% (if LC has a top 1%).



Rob L

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Re: Competing with institutional lenders for notes.
« Reply #50 on: July 18, 2013, 07:22:12 PM »
Read my post earlier this afternoon in the P2P-Picks section. Yes, apparently things have changed over the past week. I said in the post you quoted that "maybe I was lucky". I said in the post earlier this afternoon that I think I was.

SeattleSun

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Re: Competing with institutional lenders for notes.
« Reply #51 on: July 19, 2013, 12:06:19 AM »

Although it would be hard to prove cause and effect IMO the "sea change" in the last 18 days was caused by the "Lend It Conference" in New York City. 

We need a "Borrow It" Conference in order to bring things back into balance again.  LOL

Maybe we can have the "Borrow It Conference" in Detroit?
« Last Edit: July 19, 2013, 01:41:37 AM by SeattleSun »

SarahV

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Re: Competing with institutional lenders for notes.
« Reply #52 on: July 19, 2013, 12:54:57 AM »
We need a "Borrow It" Conference in order to bring things back into balance again.  LOL

Great idea. I think I could put together a very respectable presentation teaching people the value of borrowing money at interest rates over 20%! Especially people with high credit ratings. I will explain how in the world of socially responsible P2P borrowing, people with high income have a DUTY to take out loans at high interest rates - they are the ones who can best afford it, after all!

mukoh

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Re: Competing with institutional lenders for notes.
« Reply #53 on: July 19, 2013, 01:09:25 AM »
We need a "Borrow It" Conference in order to bring things back into balance again.  LOL

Great idea. I think I could put together a very respectable presentation teaching people the value of borrowing money at interest rates over 20%! Especially people with high credit ratings. I will explain how in the world of socially responsible P2P borrowing, people with high income have a DUTY to take out loans at high interest rates - they are the ones who can best afford it, after all!

You mean kind of like the president does? Socially responsible to pay more into the system? :)

Fred

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Re: Competing with institutional lenders for notes.
« Reply #54 on: July 19, 2013, 01:10:19 AM »
Great idea. I think I could put together a very respectable presentation teaching people the value of borrowing money at interest rates over 20%!

To pay off credit cards charging 25%.

thezfunk

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Re: Competing with institutional lenders for notes.
« Reply #55 on: July 19, 2013, 10:01:15 AM »

Although it would be hard to prove cause and effect IMO the "sea change" in the last 18 days was caused by the "Lend It Conference" in New York City. 

We need a "Borrow It" Conference in order to bring things back into balance again.  LOL

Maybe we can have the "Borrow It Conference" in Detroit?

HA!  I was actually thinking the exact same thing.

You know, I guess it is some sort of 'validation' that the big boys have jumped in with us but now that we can all feel good about our decision to invest our hard earned money into P2P they can stay the hell out! 

I have heard this type of story over and over again.  Somewhere someone or a small group figure out how to do well for themselves.  Next thing you know the cat is out of the bag and you get edged by the big money and you can't compete.  It's almost like you have to pick yourself up, dust yourself off, pick up your marbles (or what's left of them) and go find somewhere else to play.  When you do, it's only a matter of time before the big money bullies find out about it and show up to elbow you out of the way again.

Don't get me wrong, I think everyone can play together in this sandbox.  It will be up to Lending Club, Prosper and whoever else gets involved to keep it fair. *Gasp* maybe some rules to even the playing field...oh even...the horror...no, I can't say it...*whispers* self imposed regulations of some kind *shivers*.
« Last Edit: July 19, 2013, 10:09:04 AM by thezfunk »

rawraw

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Re: Competing with institutional lenders for notes.
« Reply #56 on: July 19, 2013, 04:34:40 PM »
Rawraw, could you clarify what you mean by "rate"  in the folio sentence?

"My rate for my LM portoflio is 11%."

is rate = return, or percentage of loans you are able to invest in via P2Ppicks.
Rate as weighted average interest rate.  Just showing the relative difference in PM and LM notes -- and subtly hinting at potential LM returns aren't too shabby, either.

LM = Loss Minimizer in P2P = Lowest Expected Rate of Default
PM = Profit Maximizer = Highest Expected ROI

« Last Edit: July 19, 2013, 04:36:45 PM by rawraw »

neals384

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Re: Competing with institutional lenders for notes.
« Reply #57 on: July 20, 2013, 12:01:18 AM »
I would think that LC would be better served in the long run by maintaining a large diverse group of a happy investors.  In my opinion, it would be incredibly stupid for LC to become completely reliant on hedge fund money, because while market conditions or the novelty of LC may make it the hot investment this year, who is to say what next year holds?  Safer bonds may offer better returns ... Or a new lending platform may gain share ... Who knows. 

It's not like LC has not taken action in the past to cater to both groups, and no one is asking for anything radical that will hurt the other side.  If LC says they have plans to address the problem, then I believe them.

+1.

Just look what happened to Prosper last fall when the institutionals stopped investing.  Darn near brought the company down. 

Any company that has only a handful of large customers will eventually discover that the customer can squeeze the profit right out of their pocket.  In LC's case, institutionals may well ask for reduced fees, say 3/4% instead of 1%.  Who knows, maybe they get that already.

rawraw

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Re: Competing with institutional lenders for notes.
« Reply #58 on: July 20, 2013, 07:35:02 AM »
The institutions do get lower fees and this is disclosed in the Prospectus -- it's what you'd expect when dealing with large volume clients.  This is why I dislike speculation, such as the prior "LC prefers one million dollar account than 10 accounts representing a million!" They never mentioned the fact LC makes less money on that one million dollar account. 

Fred

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Re: Competing with institutional lenders for notes.
« Reply #59 on: July 20, 2013, 11:52:05 AM »
I have heard this type of story over and over again.  Somewhere someone or a small group figure out how to do well for themselves.  Next thing you know the cat is out of the bag and you get edged by the big money and you can't compete.  It's almost like you have to pick yourself up, dust yourself off, pick up your marbles (or what's left of them) and go find somewhere else to play.  When you do, it's only a matter of time before the big money bullies find out about it and show up to elbow you out of the way again.

Maybe I am old enough to have accepted this -- as a fact of life.  IMO, this is a part of evolutionary process, which is still going on.