Author Topic: EBay-Style Peer Loans Spur Wall Street Asset Craze - Bloomberg  (Read 7728 times)

rawraw

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Re: EBay-Style Peer Loans Spur Wall Street Asset Craze - Bloomberg
« Reply #15 on: August 28, 2013, 05:40:33 PM »
When I started, it was ebay vs amazon business models. Now ebay is gone lol. And who cares who the peer in peer to peer is? Disintermediation was the goal. Not robin Hood

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Well put rawraw. I know we are losing many of the early adopter investors who do not like the recent changes. While part of me would love to go back to the good old days and not be competing with everyone for loans, I also want to see a thriving business. And we finally have that, at least in the case of Lending Club, hopefully we will say the same for Prosper soon.

I believe we are moving away from a manual loan picking environment. I expect within 12 months 99% of investing will be completely automated. And we will never again be able to invest in every loan we want, but hopefully we will find enough loans to still provide an excellent return.
People who have worked in banks (Fred probably has insight) knows that when you are dealing with homogeneous credit, it is all about managing the pool.  People on this forum have grown up focusing on the micro picture instead of the macro picture.  Yes, all those micro picks end up forming the portfolio's characteristics -- but at the end of the day, you can do the same by not being so dogmatic on certain attributes.  I think this is what P2P Picks attempts to do -- if you analyze the pool of loans, you see clear things it prefers.  But it doesn't automatically exclude notes that don't meet each of those check boxes.  It's just a rough transition to go from avoiding defaults to realizing defaults are part of the game -- too few defaults can mean you aren't achieving the maximum amount of risk/reward.