Author Topic: Why not use an auto-invest service?  (Read 18071 times)

p2p2p2p2p

  • Newbie
  • *
  • Posts: 28
    • View Profile
Re: Why not use an auto-invest service?
« Reply #15 on: August 22, 2013, 12:51:07 PM »
I am flabbergasted to hear you say:
For those who are concerned about security, what's really the worst thing that could happen?

Someone schedules an ACH withdrawal out of your account? LC automatically sends an e-mail when a withdrawal request is received, and they can usually cancel these requests for about 1 day.

Someone tries to sell all of your notes on Folio? That may be more tricky to deal with (in terms of getting LC to cancel the sale), but lets be real here...your login credentials could be compromised at any time

If I don't check my email for a day, or if a wire transfer is requested my account can be cleaned out in under 15 minutes.
And I watch and protect my login credentials just as closely as I watch my login credentials to my bank accounts, brokerage accounts, credit cards etc.

From my perspective giving up my user name and password to an unidentified IT professional (who may even be a hacker) that I only met on the internet,  is equivalent to giving someone the key to my safe deposit box on condition that they get me a 12% return on my money.

But as my former financial advisor used to say " I'm only here to help you"- Sincerely Bernie Madoff

core

  • Hero Member
  • *****
  • Posts: 1790
  • Your loss is my gain
    • View Profile
Re: Why not use an auto-invest service?
« Reply #16 on: August 22, 2013, 12:57:28 PM »
Someone tries to sell all of your notes on Folio? That may be more tricky to deal with (in terms of getting LC to cancel the sale), but lets be real here...your login credentials could be compromised at any time

There's a big difference between having your LC account randomly hacked and freely handing over your password to a complete stranger running a one-man shop.  Even if he has the best intentions.

If you use a unique password not used on other sites, do not store your password anywhere, and aren't in the habit of getting your machine infected, there is hardly any chance of your one account being hacked.  Practically zero.  Assuming you have never given your credentials to any service, of course.  A hacker would certainly have a better shot at getting into all LC accounts, but in that case LC would certainly do something about it after the mass intrusion was brought to someone's attention. 

.........is consider using this time to develop your own strategy, stop paying for picks, stop sharing your strategies, filters, & stop copying what others do, for they rarely know as much as they'd want you to believe they do.

Best advice I've read today!!  You can't use some picks score, the same one hundreds/thousands of other people are using, and then complain that there are no good notes that match it.  Even if the scoring model you paid for is better than random chance at picking notes, obviously the artificial demand it creates means its benefit as a public tool is limited.

rlv99

  • Full Member
  • ***
  • Posts: 194
    • View Profile
    • Email
Re: Why not use an auto-invest service?
« Reply #17 on: August 22, 2013, 02:07:07 PM »
Zach-  There is a more basic problem when using IR's auto-invest.  Some of those notes that are selected using your specific criteria are poor investments!  Income too low and DTI too high as an example.  While I use IR's auto-invest, my IR filters are set deliberately to be much tighter thereby yielding about 1 loan for every two that I can capture manually on the LC platform.  That way I can minimize, if not eliminate, the financially weak borrowers.  On an average day, I gross 15 loans @$25.each which is enough for me until LC corrects its way of doing business ( imo, its payment posting and collection practices suck).
« Last Edit: August 22, 2013, 02:08:51 PM by rlv99 »

AnilG

  • Hero Member
  • *****
  • Posts: 1122
    • View Profile
    • PeerCube
Re: Why not use an auto-invest service?
« Reply #18 on: August 22, 2013, 02:33:48 PM »
Wow, I never thought I will ever read such an statement from a forum moderator, supposedly savvier and unbiased than the rest. I hope Peter hasn't handed you all the keys to the hen house.

I agree with core and p2p2p2... just because credentials can be compromised doesn't mean you should freely share them.

There is no absolute guarantee that credentials will not be compromised that is why financial institutions spend millions and hire experts for fraud detection and security, regulations limit institution and account holder liability (for example credit cards), and institutions put back stop measures to remediate such situations (for example, credit card companies sending new credit card because they believe old one is compromised).

lets be real here...your login credentials could be compromised at any time
---
Anil Gupta
PeerCube Thoughts blog https://www.peercube.com/blog
PeerCube https://www.peercube.com

rawraw

  • Hero Member
  • *****
  • Posts: 2795
    • View Profile
Re: Why not use an auto-invest service?
« Reply #19 on: August 22, 2013, 05:32:45 PM »
My account is tied to an email with 2-Factor authentication.  My password is unique, randomly generated and stored encrypted behind 2-Factor authentication.  My list of passwords is stored an encrypted jump drive.  My phone with the second factor is password protected, has no passwords stored on it, and can be remotely wiped/locked/etc if stolen.  Needless to say I try to ensure my credentials can't just be compromised at any time lol  I want them to work for it :)

cfb

  • Full Member
  • ***
  • Posts: 132
    • View Profile
Re: Why not use an auto-invest service?
« Reply #20 on: August 22, 2013, 07:04:37 PM »
I'm surprised by the folks who say they have no problems buying notes.  I've been able to get almost nothing the last 2 weeks and have pretty much given up.  Most of the time when I look, there are 30-50 notes, most A's and B's, which sure aren't getting anyone to 15%.

I don't use an autoinvest service because the ones I've seen don't let me filter at the level I want, or they don't check the data often enough, or stuff is just selling out too fast.  Plus I'm not excited about giving some random person control over my money.

Six months ago I had 10k to invest on top of the notes I already own (about 2300) and now I've got almost 17k.  Looks like I'd have to accept crap notes that aren't snapped up 2 minutes after they release, I'd have to take A and B notes, or give up until this clears up...if it does.  Looking like option C right now.

Zach

  • Administrator
  • Hero Member
  • *****
  • Posts: 622
    • View Profile
    • Email
Re: Re: Why not use an auto-invest service?
« Reply #21 on: August 22, 2013, 09:18:11 PM »
Wow, I never thought I will ever read such an statement from a forum moderator, supposedly savvier and unbiased than the rest. I hope Peter hasn't handed you all the keys to the hen house.

I agree with core and p2p2p2... just because credentials can be compromised doesn't mean you should freely share them.

There is no absolute guarantee that credentials will not be compromised that is why financial institutions spend millions and hire experts for fraud detection and security, regulations limit institution and account holder liability (for example credit cards), and institutions put back stop measures to remediate such situations (for example, credit card companies sending new credit card because they believe old one is compromised).

lets be real here...your login credentials could be compromised at any time

Anil, I definitely agree with what you're saying here. Too much of my personal opinion went into that statement. My statement can be "unofficially retracted".

Sent with Tapatalk 4 on my HTC DNA.


GS

  • Sr. Member
  • ****
  • Posts: 413
    • View Profile
Re: Why not use an auto-invest service?
« Reply #22 on: August 22, 2013, 10:15:47 PM »
I'm surprised by the folks who say they have no problems buying notes.  I've been able to get almost nothing the last 2 weeks and have pretty much given up.  Most of the time when I look, there are 30-50 notes, most A's and B's, which sure aren't getting anyone to 15%.

I agree, and it can't be good for LC when new potential investors log on to find 30-50 notes, with the average note being a B1, 80% invested.  When you look at the flow recently, in early 2013 (when I started with LC) wasn't unusual to log on and find 1000 notes to pick from, then it started dropping ... 700 ... 500 ... 300 ... now it's in the double digits.  It feels like were quickly heading towards 0. 

thezfunk

  • Sr. Member
  • ****
  • Posts: 316
    • View Profile
Re: Why not use an auto-invest service?
« Reply #23 on: August 22, 2013, 11:49:12 PM »
The reason I don't is that $25 takes a big chunk out of my monthly earnings right now because I only have about 5K in with LC.  I can't get it all funded the way I want yet and I have been trying for two months.  So...very little incentive to put more in for it to only sit there.  That $25 needs to pay for itself and it can't quite yet.

cfb

  • Full Member
  • ***
  • Posts: 132
    • View Profile
Re: Why not use an auto-invest service?
« Reply #24 on: August 23, 2013, 09:37:54 AM »
The reason I don't is that $25 takes a big chunk out of my monthly earnings right now because I only have about 5K in with LC.  I can't get it all funded the way I want yet and I have been trying for two months.  So...very little incentive to put more in for it to only sit there.  That $25 needs to pay for itself and it can't quite yet.

Even with much larger than $25 chunks, and when 400-500+ notes at any time was common, it still took me many months to invest my initial 50k stake.  I was placing as much as $500 with some really squeaky clean notes, although that was rare and most got $50-250.  When I found that even the squeaky clean ones tended to default at not that much lower rate than the uglier looking ones, that started to become less and less of a good idea.  I'm VERY hesitant to commit more than $25, but I might go up to $50 and follow through with drawing some money off the account.

DanB

  • Hero Member
  • *****
  • Posts: 665
  • A lie told often enough becomes The Truth!
    • View Profile
Re: Why not use an auto-invest service?
« Reply #25 on: August 23, 2013, 09:58:10 AM »
I'm surprised by the folks who say they have no problems buying notes.  I've been able to get almost nothing the last 2 weeks and have pretty much given up.  Most of the time when I look, there are 30-50 notes, most A's and B's, which sure aren't getting anyone to 15%.



Who is saying that they're having "no problems"? I know I didn't. I said I wasn't having "extreme difficulty" in response to the term used as the premise of this whole conversation, which presupposed that investors must be facing extreme difficulty. I imagine that it is unnecessary to point out that someone who says they are not having extreme difficulty isn't  in any way saying that they are having no problems.............since the 2 expressions are on almost opposite sides of a spectrum that has quite a few steps in between!

BTW, since you referenced the 15% figure I stated............... as I mentioned before, getting high yielding notes or if you prefer, getting what one perceives to be "good performing" high yielding notes, is only one of several ways I personally know of that can be employed in order to achieve a consistent 15%+ real return. In fact there are a few people right here in this forum that are getting substantially higher than 15% real returns. I'm very confident that these people know some methods that I don't know of and/or methods that I don't employ.
Your remarks though technically correct, within the narrow perspective you take, may be interpreted to suggest that what I say isn't true, isn't possible, or at the very least, that my numbers may be exaggerated. But I take no offense from these potential inferences because the reasoning within your remarks clearly illustrate to those of us who are consistently achieving these higher returns where you appear to currently reside on the p2p learning curve...........& I completely understand :)

cfb

  • Full Member
  • ***
  • Posts: 132
    • View Profile
Re: Why not use an auto-invest service?
« Reply #26 on: August 23, 2013, 10:52:15 AM »
Semantics?  While understanding other people you can't see with a few sentences leaves a lot of room for interpretation, what you said seemed to imply that you were finding notes that would enable high returns recently without jumping on the 'dump times', which with my limited experience would seem to require mostly E, F and G notes, and you said you don't use an automated service.  Over the last two weeks, using frequent random look-ins, I see generally 30-50 notes, most of which are A or B grade (which wouldn't support a 15% return), very few notes past a D, and the E-G notes I've seen had very low FICO, very low income, 3 or more inquiries, several recent deliquencies, numerous public records or some other serious defect that statistically would seem to indicate a high default rate, which would likely dip you well under 15%.

I think the gist of it is that I hardly see ANY notes in a range that would sustain a high rate of return, let alone finding them without 'extreme difficulty'.  I had good luck this morning in the 60 seconds some notes were available at the 9am drop time, but I'd actually term the ability to find E-G notes at all the last few weeks to be 'nearly impossible'.  Of the bunch I managed to buy this morning, only one was an E, one D, and the rest C and above.

So I'm guessing you're A) putting high 3, 4 or 5 figure amounts into each note, B) buying and selling on the secondary market and getting some great discounts, C) you're accidentally buying new notes in the one minute after the drop time when decent ones are still available on a persistent basis, D) you've developed your own automated system (which I've considered, although the last time I coded I was excited about PL/1 because it was so much better than Fortran), or E) you're a statistical anomaly.

There is also another option, which is one I weigh frequently.  In mutual funds, actively managed funds always trail index funds over the long haul, and the number of managed funds that do exceed their index for more than a few years is much lower than it should be, given even a random distribution.  As William Bernstein noted, monkeys throwing darts at the Wall Street Journal's stock page would give better results on a random basis than we see from 'investing professionals'.  Much like that, the % of LC investors with high rates of return is lower than it should be, indicating that like many investments, a person trying to employ strategies does worse than someone buying a big diversified bucket of a product and then doing nothing with it.  Some LC reps have implied that to me, saying that most large investors trust LC's vetting process and just buy on grade.  Given that my analysis of prior results as a predictor of future results tells me that most of the data people go on is at best a bit skimpy and was effected by situational influences unlikely to repeat, it seems there is a great analog between stock market performance and loan return performance in terms of guessing where a stock/loan is going to go.

With all that in mind, it seems the wisest choice would be to A) put your money to work, B) diversify, and C) buy every E and F note you see, as G's high default rate drag their end returns to below E's and F's, and D) don't bother looking at anything else and when something goes wrong with a note, just stand there and do nothing.  But historically, that wouldn't give you 15%, but closer to 12.5 to 13.5, which is exactly where my returns are with a couple of thousand notes over 18 months.  Although my results are dragged down from buying B's and C's to get a lot of capital deployed in a short time.  I expect my returns to move higher as the composition of my portfolio shifts from heavy B/C/D to D/E/F.

I think its also interesting to note that high return investors tend to do better with G's when holding fewer, higher amount notes, so I'll go out on a limb and guess that your strategy is to buy all and F notes, and put a lot of $$$ into them, and you've been slightly lucky or found one or two things to filter on that have been effective the last 3 years, but may not work for the next 3.

All this is very interesting and I'm really glad to have found people willing to talk about what they're doing.  My LC "experiment" has proven to be a very educational and very interesting endeavor.

cfb

  • Full Member
  • ***
  • Posts: 132
    • View Profile
Re: Why not use an auto-invest service?
« Reply #27 on: August 23, 2013, 12:16:17 PM »
For those who are concerned about security, what's really the worst thing that could happen?

The automated system spends the max on a bunch of G notes with the worst specs that LC will accept, and they all default in the first month.  Or even more plausible, the system hiccups and buys all sorts of stuff that I wouldn't want and didn't fit my criteria.

core

  • Hero Member
  • *****
  • Posts: 1790
  • Your loss is my gain
    • View Profile
Re: Why not use an auto-invest service?
« Reply #28 on: August 23, 2013, 12:23:53 PM »
The automated system spends the max on a bunch of G notes with the worst specs that LC will accept

If that happens you should throw a party and booze it up.  Because those seem to be the ones that everyone wants. If it doesn't suit your risk tolerance then you just turn around and make a quick profit by selling them.

Or even more plausible, the system hiccups and buys all sorts of stuff that I wouldn't want and didn't fit my criteria.

This certainly is plausible and has been discussed in detail here before.  One has to have a lot of trust in whoever wrote the thing.  Worst case you take a 1-2% hit by having to sell them back.  And then show up at the site admin's house for a "friendly chat".  But occasional hiccups are bound to happen; in the software biz we call this "user error".
« Last Edit: August 23, 2013, 12:25:25 PM by core »

cfb

  • Full Member
  • ***
  • Posts: 132
    • View Profile
Re: Why not use an auto-invest service?
« Reply #29 on: August 23, 2013, 12:27:48 PM »
I guess I shouldn't be surprised at the risk tolerance of folks who make unsecured loans to strangers over the internet.  :D

Usually I'm considered the risky outlier that everyone thinks is nuts for doing this.  All this dialog is really cheering me up and making me feel like playing in traffic.  ;D