Author Topic: Flooded the Market  (Read 4148 times)

Bohb Daishi

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Flooded the Market
« on: February 04, 2014, 03:16:51 AM »
I just flooded the late-note market with about $5,000 worth of notes at a 96% discount (about $200 selling price). Feel free to pick over them and taunt me if they end up going current. This would also be a great opportunity to test out New Jersey Guy's strategy of buying notes with the intention of letting them charge off, detailed in this thread: http://www.lendacademy.com/forum/index.php?topic=1959.0


I really wish the whale was back. He used to buy this crap for no more than a 92%. But these are the times, I guess...  :-\
« Last Edit: February 04, 2014, 03:23:31 AM by Bohb Daishi »
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core

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Re: Flooded the Market
« Reply #1 on: February 04, 2014, 12:13:32 PM »
I bought 77 of them.  Including some rather high-dollars ones that I only have a few days to unload on someone else.  (Wasn't I going to stop doing that?  Argh.)  Lots of duplicates in there Bohb.  10 from the same loan?  A lot of them were like that.

dontvote

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Re: Flooded the Market
« Reply #2 on: February 04, 2014, 05:01:22 PM »
Bigger sucker theory at work right here.

To a buyer a note at 92% looks pretty close to one at 96% discount. To the guy who bought it at 96%, that's a home run.
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Bohb Daishi

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Re: Flooded the Market
« Reply #3 on: February 04, 2014, 08:22:14 PM »
Wow, those were bought up pretty fast.

I would have sold them at a better price, but I recently had a rather large batch of notes default/charge-off because I wasn't paying enough attention to them. Might as well fire sale this crap a week or two earlier than normal, than be stuck with them forever.

Lots of duplicates in there Bohb.  10 from the same loan?  A lot of them were like that.

Yep. When I see a note I like, I buy up every one of it's type that I can find. I used to "diversify" by sticking to small note sizes, but then I realized that the probabilities are virtually the same whether I'm working a $25-note or a $1,000-note. Keep in mind, these were all for trading, not for investing.
« Last Edit: February 04, 2014, 08:25:33 PM by Bohb Daishi »
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core

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Re: Flooded the Market
« Reply #4 on: February 04, 2014, 09:11:37 PM »
The only problem with having 10 notes of the same loan (for trading) is that if someone sees several notes right next to each other in the listings then they figure something's wrong with it.  At least that's what I'm assuming is happening.  It could be algos that check to see what the next best price is (NJG mentioned once that he checks this manually).  Regardless of the cause, a group of notes doesn't seem to sell as well as a single one.  When I get stuck with several I try to space out the discounts so they don't appear right next to each other in a clump.   The smart thing to do might be to sell just one at a time, or have the rest be way overpriced until the low one sells,  but that's way more fuss than I'm willing to deal with.

Now if you're buying these hoping that they go current and you hit the jackpot, then obviously you don't care so much.  I suppose you still have to deal with it somewhat when it comes time to sell, whether they're now current or just-about-defaulted.

By the way I won't be able to tease you if I make money on these because I don't have a good way to keep track of all of them.  At least not a way that wouldn't take like 200 clicks.
« Last Edit: February 04, 2014, 09:15:05 PM by core »

Bohb Daishi

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Re: Flooded the Market
« Reply #5 on: February 05, 2014, 02:27:17 AM »
The only problem with having 10 notes of the same loan (for trading) is that if someone sees several notes right next to each other in the listings then they figure something's wrong with it.  At least that's what I'm assuming is happening.  It could be algos that check to see what the next best price is (NJG mentioned once that he checks this manually).  Regardless of the cause, a group of notes doesn't seem to sell as well as a single one.  When I get stuck with several I try to space out the discounts so they don't appear right next to each other in a clump.   The smart thing to do might be to sell just one at a time, or have the rest be way overpriced until the low one sells,  but that's way more fuss than I'm willing to deal with.

I used to have the same thinking. But when I see 10 of the same notes all selling at the same discount, I just assume that someone (probably a hedge fund) is trying to offload a large position. I have not really noticed a difference in the time it takes to sell. But then again, I haven't really been keeping track of it. All I know is that pricing the batch of notes differently usually results in more work than it's really worth. I have noticed that typically when people buy up the notes, they usually buy several at a time, if not all.
There are three ways to make a living in this business: be first, be smarter, or cheat.