Author Topic: LC RIP - Aug 2013  (Read 13031 times)

Dennis

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Re: LC RIP - Aug 2013
« Reply #30 on: August 16, 2013, 04:35:40 AM »
I'm having the same set of issues.  Struggled to get 50k invested earlier last year and had to take a lot of low interest loans and relax my filter significantly and it still took three+ months to get it all in play.  Had no problems finding 10-15 loans a day after that for further investment and reinvesting.  My defaults are decent with my filters, and I'm getting a 12.6 NAR after about 18 months.

However, last couple of months I'm fighting to get one or two notes a day and half of them don't issue.  Between the institutional and autoinvests the 'good' notes I'm looking for disappear in minutes.  While a few months ago it was routine to see 200-400 notes in inventory, I'm seeing 25-40 at some points during the day.

I won't do the autoinvest because they don't allow the filtering I want (no low income, no high payment to income ratio, I don't mind 25-30k in debt but I'm not interested in 40k+, for example) and the surcharge would eat into my returns.

Definitely not seeing anything else out there to put money into.  The stock market seems to have hit its apex on the cycle, the bond market is headed for a wall, cash investments give negative returns, and real estate around my area has picked up to the point where some properties are selling for well above what they're worth...again.

LC is really starting to take more time than its worth at this point, and its not very productive for me anymore, unless I want to take lower interest loans or take on more default risk.  Its only a small part of my net worth, but it WAS a nice cash slush fund where I could pull a few grand a month out of it or roll it over.  I'm not particularly interested in sub 10% returns at this risk/effort level.

I'm also deeply concerned about the sudden dramatic increase in quoted default rates.  3%+ is quite a move!  Are they expecting defaults to rise significantly going forward or were they just seriously understating the risk?  I used to get an ROI of 13-14% with a small bundle of notes, now I'm having a hard time getting north of 10.5%.

Bummer, it looked like a good ride for a while, but success has done a number on the product.

You summarized (I believe) very well the concerns of me and probably many others here.  I have a VERY similar situation to you, but maybe I've been working a little harder as I'm still above water as far as my investment objectives go with P2P.  I will admit though, I've become a slave to the clock with the P2P application remittance times. 

I lend at both LC and Prosper.  While I'm still finding what I want at LC (albeit with an element of luck), Prosper on the other hand has presented a far greater challenge for me.  I'm still above water there with reinvestment, but adding new investment dollars is impossible now.  I don't know that things will get better anytime soon as investor demand seems to  increase with each passing month.  But I find for now that it is still worth my time to slave away as the returns I'm getting are far superior, based on risk and convenience, to anything else I'd be willing to invest in. 

I believe it is important to remember that achieving the excellent return you are currently receiving WILL attract a LOT of competition.  It's been easy for you and me, to get those returns up until a few months ago, because investment competition had been minimal due to the unknowns of P2P risk at the time.  Now that results are being proven, others want their piece too, and they are willing to work hard for it.  Are you?  My friend, anything worthwhile requires work.  Don't be disappointed that you've hit a benchmark of success and others want to follow.  Enjoy what you've achieved up to this point, but understand that the dynamics of P2P have changed, and either you change with it or it's over with for you.  I wish you the best of luck.       

cfb

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Re: LC RIP - Aug 2013
« Reply #31 on: August 16, 2013, 12:43:53 PM »
I believe it is important to remember that achieving the excellent return you are currently receiving WILL attract a LOT of competition.  It's been easy for you and me, to get those returns up until a few months ago, because investment competition had been minimal due to the unknowns of P2P risk at the time.  Now that results are being proven, others want their piece too, and they are willing to work hard for it.  Are you?  My friend, anything worthwhile requires work.  Don't be disappointed that you've hit a benchmark of success and others want to follow.  Enjoy what you've achieved up to this point, but understand that the dynamics of P2P have changed, and either you change with it or it's over with for you.  I wish you the best of luck.     

I wish you well also, as I think its going to get tougher.  My developing perspective on this is that spending an hour a day split over five to seven 5-10 minute periods to come up with 2-3 notes and then have one not issue isn't that productive, but on the other hand I have plenty of spare time.  Perhaps they'll draw more borrowers, hire more people to process the loans, and some people will lose interest in it.  I dropped 10k in about 5 months ago to increase my investment and thats increased to almost 17k with payments and interest.  I get a ridiculous rate of paying off the loans early.  In fact, my early payoffs are double in number what my defaults are.  I guess I'm picking people who don't need the money...

Amazing how fast the 'good' notes go.  I've had situations where I've seen nothing that passes my filters, refreshed and got one, then by the time I finished looking at it and decided to invest the note was sold out.

I guess the other alternatives is to take an autoinvest option and enjoy higher default rates, or take A-C notes and get lower returns.  Awful lot of risk to wade into for <8-9% though.

What I'm thinking is that I'll reduce my efforts to reinvest for now, take a look-see approach with how the # of notes in inventory goes (there were only 43 when I looked a few minutes ago), and plausibly let the thing wind down on its own over the next 3-5 years.  There's some chance that by then we'll be able to get a decent return from bonds or other cash investments, or at least the clean junk bond market might be giving a better return.