Author Topic: Late Notes  (Read 5911 times)

Randawl

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Re: Late Notes
« Reply #15 on: December 19, 2013, 02:22:10 PM »
If LC shuts down IRA trading near the end of the year it will be an even rougher winter I think.

Speaking of shutting down Folio for IRAs. . . Check out this new pararaph LC is using in their emails when responding to IRA applications from lenders:

Please note that individual retirement accounts (IRA) may not participate in the Note Trading Platform, which means that you will not be able to purchase or sell Notes on the secondary market. Lending Club Notes purchased through an IRA must be held through maturity.

When I opened my wife's IRA about a month ago, this paragraph was not included in the correspondence.

Bohb Daishi

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Re: Late Notes
« Reply #16 on: December 20, 2013, 03:24:54 AM »
Here is how I do it.
I keep folders for each month of the year (Sept, Oct, Nov, Dec, etc).  So, any note I buy this month goes into Decembers folder.

Funny, I actually developed a very similar method. The only difference is that mine are dated for the future, instead of the past. Every month has three folders: the 1st, 10th, and 20th. For each new note I purchase, I calculate what month they would charge off (assuming no payments were made). I then put it in the respective folder based on when payments have historically cleared. As the time goes on, I process the folder with the current date (similar to how you do - either sell off or hold). For example, I just purged the 12/20 folder today (these are notes I purchased 3-4 months ago); fire-selling about half the portfolio and moving the remaining "hopefuls" to 1/20.
There are three ways to make a living in this business: be first, be smarter, or cheat.

Bohb Daishi

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Re: Late Notes
« Reply #17 on: December 20, 2013, 03:49:50 AM »
I average about 3-4 weeks, mostly because I'm very stingy on my selling prices. I'm willing to hold on for one or two weeks to earn that extra 3-6%.

That stinginess may be fine under normal conditions.  Especially if it has worked so well for you.  But in the kind of market we are talking about, the market may be moving out from underneath you faster than you think.  How do you handle that if you're holding out for the "right" price?

You hold on for 2 weeks at a +3% above what you might normally expect to easily get.   In that time prices could have dropped 4% and you may not realize it.  When your notes don't sell you drop them down to +0% of normal but by this time the market's still below you.  You could chase it all the way down, but being a step behind they never sell.  Next thing you know you're stuck with a bunch of notes you don't want.  Looking at losses even on "good" notes.  It can happen so gradually (yet quickly, calendar-wise) that you don't even see it coming or realize it is happening.  Been there.

You certainly have a point. However, on the other side of the argument, what happens if the market goes favorable and you end up selling everything because you waited? The 1-2% a month in accrued interest you earn helps to offset the damage.

It's definitely a balancing act. As I mentioned above, I only squeeze the notes that I deem are safe based on payment history and/or favorable based on the up-arrow and a high interest rate.
There are three ways to make a living in this business: be first, be smarter, or cheat.