Author Topic: Time  (Read 3203 times)

DutchNurse

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Time
« on: September 05, 2013, 01:22:01 AM »
So after spending five hours tonight on things... I finally realized I could set up a portfolio to auto select loans based on a risk profile I select.

I've read the forum for about three or four hours, and in my position I can't afford to spend too much time on these things. Ill still play for fun when I have time and select on my own, but how many of you just auto select loans off the LC site using their portfolio tool?

Honestly I feel like I'm cheating a bit here and not putting forward enough due diligence but now that I'm seeing things here.. I could easily spend more time on this than my scottrade account - I thought it to be the reverse initially. I mean I'm just parcelling out a "dipping my toes in" five grand (not sure if its kosher to discuss amounts here? If not I apologize) In 25 dollar sums it started to churn through the clock as I was concerned about each persons debt to asset ratio, credit utilization, etc..

I'm also quickly realizing this isn't stock picking, and I have power of volume behind me. Normally when selecting stocks I'm looking at a a balance sheet income statement cash flow... And this forum has made me think there is a growing trend here people can't find enough loans period to sink money into with the reading ive done... I suppose this is true after playing with some numbers because with enough loans, you'll be shielded from the default rate as your diversified I'm just used to looking tediously at fiscal health of each individual individual parcel. I seem to find plenty of a b and c ratings... Maybe the slim pickings are more towards the junk ratings?

As such, the  'automatic' feature has me feeling a little uneasy like I didn't do my best here to succeed.

I guess what I'm asking for here is a little consent on my action. Do people using automatic structuring end up with a slightly better return than a money market account? it seems like other people here use some type of automatic buying too? I would hope so or some of us probably end up with very little time free due to our LC?

Sorry if I'm getting to close to asking about gaurded strategies here, but just seeking guidance from the pros.
« Last Edit: September 05, 2013, 01:25:38 AM by DutchNurse »

storm

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Re: Time
« Reply #1 on: September 05, 2013, 02:35:21 AM »
If you are happy with the average return and default rate and short on time, then there is nothing wrong with using LC’s “Build a Portfolio” tool to auto select loans by interest rate.  Note that it doesn’t automatically invest your money.  You’ll still have to login periodically and invest in the notes it picks for you.  There is also the “Prime” service that will auto select and invest if you have $25k+ in your account.

I like to think of myself as above average, and you can definitely do better by filtering the notes.  There are lots of ideas in Peter’s blog and in the forums.  Peter’s favorite filter (I think) is notes with 0 inquiries.  You can play with the filters and see the expected return on sites like lendstats.com or nickelsteamroller.com.  Lending Club is supposedly working on an automatic investing tool using filters.  In the meantime, there are for-profit third-party websites like interestradar.com and Nickel Steamroller that can do it as well.

rawraw

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Re: Time
« Reply #2 on: September 05, 2013, 08:04:31 AM »
Worrying about the pool characteristics instead of being so picky on individuals can reduce time as well. 

rlv99

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Re: Time
« Reply #3 on: September 05, 2013, 10:04:47 AM »
Unlike a public company,  you only have limited info on the borrower.  You don't know if he/she is married, how many dependents they have,  how secure is their job/business, etc., etc.

A leap of faith is required to be a lender here.  You need to ask yourself how much risk are you willing to accept and be able to sleep well each night, although you sound like you're a very risk-averse guy even though you're only 27.  I am 77 and only invest in C-G loans, but that's my "play" money and the money from the fixed income portion of my portfolio. (said portion not being relatively large to begin with).

New Jersey Guy

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Re: Time
« Reply #4 on: September 05, 2013, 11:17:29 AM »
"I am 77 and only invest in C-G loans, but that's my "play" money and the money from the fixed income portion of my portfolio."

I have to agree with RLV99 on this one.  Not to be critical of your strategy, but I'm 54 and much more aggressive than you are.

At 27, you can afford to be more aggressive, and lower grade notes could provide you with double the yield with just a slight increase in risk.

I've got 3 different "Buy/Hold" strategies I use:

Folder 1.)  64% C and D Notes yielding 15.99%
Folder 2.)  72% C, D and E notes yielding 14.74%
Folder 3.)  90% B, C and D notes yielding 14.57%

I wouldn't be here for 6% or 7%.

If I recall, the general consensus of the board is that "A" grade loans aren't worth buying.  The return for the risk just isn't worth it despite the fact default rates appear lower on paper.  I remember reading a couple people actually sold off their high-grade notes just so they could reinvest the money in lower grade notes.

Defaults and Bankruptcies are a way of life around here, even on "A1" and "A2" notes.  There is no avoiding it.  However, you'll have the ability to sell a note on Folio at the first sign of trouble.  This will allow you to recover a large portion of your initial investment instead of watching it slide into Default as the months go by.
Return over deposits:   66.82%
IRR:   86.54%
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Dennis

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Re: Time
« Reply #5 on: September 05, 2013, 12:12:54 PM »
DutchNurse, we have something in common, I also trade through Scottrade - great company.  I think you'll find investing in LC to be far less stressful than stock trading.  I've been doing this for 2 years now and not lost one second of sleep over worry of losing money.  I definitely can't say that about stock trading.  I hand pick all my notes here, I don't use tools or filters, and between 3 P2P accounts have maintained a 15%+ return for 2 years running.  Everyone here has a different investment style, no doubt you will discover what works best for you. 

As far as you possibly wanting to automate your investing, if you are pressed for time that may be the way to go.  I too have a very busy schedule, and lately have been finding it cumbersome to stay fully invested as note selection has become challenging lately.  So my "old fashioned" way of doing things here may be coming to an end for me.  But if you can find the time, it may be more beneficial to research what has been working for those here who are getting superior returns.  You certainly can do it too.

I don't know what kind of a stock trader you are, but you may need to temper you expectations regarding returns here when compared to stock trading.  The money can be very good trading stocks, as I'm sure you know, but there can be a fair amount of stress that goes with that.  I've certainly had sleepless nights from that.  But like I said, there is very limited stress here so you may enjoy this more than trading, even if returns are a little less.

So best of luck to you......... 

DutchNurse

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Re: Time
« Reply #6 on: September 06, 2013, 01:04:13 AM »
I've been reading Peter's blogs and I agree. I am realizing how ironically risk averse I am here when I have had 20k in TSLA since 50/s.

I'm a huge stock guy and love keeping up with companies, looking at same store sales, eps growth rates, product lines and innovations. I'm really not a TA guy but much more of a fundamenals guy. Tesla...being the glaring exception (I have a degree in chemistry as well so I'm a bit of a science nerd) - I just believe it works, have test driven it, understand how its possible. Actually, on a bit of a tangent here, it seems to me in retrospect that actually understanding that its possible was a huge part of tesla success - people for months were outright calling it impossible until the stock ripped straight up for a number of months in a row. I'm only using Tesla here to show...Sometimes...I put money where the 'right answer' is NO but I go with a gut feeling.

Actually I think tesla is the only time I've ever done that go with the gut... Either way I'm leaning towards taking my money out at this ~170 level.

I guess "loaning money" is something more of a shady idea to me being new at this. A corporation to me seems a far safer bet (taken for granted that one would generally know how to see a healthy company or not). I'm seeing more and more its not a terrible proposition thanks to you guys. It did ring a bit more fear into me akin to what shorting a stock has always panged me with too. That "default" word, that total/huge loss idea was scary before I understood this bunch of $25 dollar loans idea.




...And... I dont just own Tesla. I realize that tesla example me sound...really young.  ;D
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DutchNurse

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Re: Time
« Reply #7 on: September 06, 2013, 01:05:47 AM »
And thanks everyone so much for the replies! I hope to be a contributing member here once I'm up to speed and this is certainly helping!

Fred

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Re: Time
« Reply #8 on: September 06, 2013, 01:29:55 AM »
There seems a lot of financial veterans in this thread; one of the least negative / confrontational I've seen in the past few weeks.  :)

Enjoyed reading your comments.