Author Topic: How will the IPO effect the secondary market?  (Read 6861 times)

BulldogLender

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How will the IPO effect the secondary market?
« on: May 27, 2014, 02:42:48 PM »
I've been involved in Lending Club for almost 2 years now and have been using Folio more and more to sell existing notes.  How do you think the IPO will effect the secondary market for loans?  When all 50 states become eligible to buy on the LC site, will demand for loans listed on Folio go down?  What is everyone's opinion?  I am sort of split on the issue. 

New Jersey Guy

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Re: How will the IPO effect the secondary market?
« Reply #1 on: May 27, 2014, 11:58:35 PM »
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will demand for loans listed on Folio go down?

What you're really asking is:  "When all states can buy 'Notes in Funding' off of LC cause the demand for notes on Folio to go down?"

This is a real head-scratcher.  LC can't sell issued notes, and everybody is aware of the everyday problems faced when trying to invest in Notes-in-Funding.  Besides getting them, you still face the problem of tying your money up for weeks just to have the note never issue.

I think at first it might make a difference.  But it's like a new toy.  When people get tired of playing with it, they'll slowly start going back to Folio.  Remember, it's still possible to purchase a freshly issued note off of Folio for a 1/2% or 1% discount.  You can buy it today, and have it in your account tomorrow.  No waiting.  Try doing that off of Lending Club.



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rawraw

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Re: How will the IPO effect the secondary market?
« Reply #2 on: May 28, 2014, 09:17:26 AM »
The secondary market is going to have to change.  It's the most antiquated part of this whole thing

Emmanuel

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Re: How will the IPO effect the secondary market?
« Reply #3 on: May 28, 2014, 10:47:04 AM »
The secondary market is going to have to change.  It's the most antiquated part of this whole thing

You could add suggestions for your 'dream' secondary market here: http://www.lendacademy.com/forum/index.php?topic=2142.msg19801#msg19801

New Jersey Guy

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Re: How will the IPO effect the secondary market?
« Reply #4 on: May 28, 2014, 12:09:13 PM »
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The secondary market is going to have to change.  It's the most antiquated part of this whole thing

It's better than what it used to be.  However, if you're looking for more filters and better features, you need to stay with the 3rd party sites.  I mean, if the Lending Club Platform was truly so wonderful, you wouldn't be using NSR, Interest Radar, P2P-Picks, Lending Robot and all the other sites available.

Interest Radar still gets a 9.7/10 for managing Folio.  Even if Folio did a massive, ground shattering make-over this month, it would still be hard-pressed to match the flexibility of Interest Radar.

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caseChange

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Re: How will the IPO effect the secondary market?
« Reply #5 on: May 28, 2014, 03:58:17 PM »
The Issued-Note-at-a-Premium market just might collapse, unless new investor demand ever takes a significant toll on funding note supply, in which case it may be one of the best places to pick up a brand new note (if that's your thing).

Of course, to say anything useful about what might happen, we'd need to know the proportions of the various kinds of Folio transactions being made by Folio-only investors.  And I have no clue about that distribution.

rawraw

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Re: How will the IPO effect the secondary market?
« Reply #6 on: May 28, 2014, 04:08:03 PM »
The secondary market is going to have to change.  It's the most antiquated part of this whole thing

You could add suggestions for your 'dream' secondary market here: http://www.lendacademy.com/forum/index.php?topic=2142.msg19801#msg19801
I have no dreams for the secondary market.  But it's obviously lacking and I'm sure it limits the demand for the notes.  A 1% fee for liquidity? Are we in 1910?

New Jersey Guy

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Re: How will the IPO effect the secondary market?
« Reply #7 on: May 28, 2014, 04:32:44 PM »
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Of course, to say anything useful about what might happen, we'd need to know the proportions of the various kinds of Folio transactions being made by Folio-only investors.  And I have no clue about that distribution.

That has no bearing on anything!
The nice thing about Folio is that it is for every kind of investor.  You can be a super conservative "A" Grade-Only Type Guy down to a $1.00 speculator.  Folio is a big, mixed bag of nuts with a little bit for everybody. 

So why don't people gt off their butts and look more closely at Folio?  Core said it best in one of his previous posts:

I have never understood why people insist on participating in the 4x daily rat race.  Besides psychological issues, the only answer I can come up with is that people's usual filters and tools do not work the same for Folio and they are unwilling to do anything different from what they've always done.  They'd rather set their alarm clocks each day for eternity than spend some time learning something new.

Living in New Jersey I had no choice.  I was forced to learn Folio.  Now that I'm in Florida, I can shop Lending Club until I drop.  I know how to use it.  I still haven't bought a note off of Lending Club.  Buying notes off of Folio has its advantages.

Read my blog from last June.  Folio investors are not second class citizens.
http://www.lendacademy.com/foliofn-lending-club-users/

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As of April 30, 2014

caseChange

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Re: How will the IPO effect the secondary market?
« Reply #8 on: May 28, 2014, 05:06:01 PM »
NJG,

If they are a large part of the Folio market and decide to eschew it to a large degree, then it has tons of bearing.  Given that the greater part of the investor pool doesn't do much on Folio, that's well within the realm of possibility.

Since Folio-only investors are the only ones whose purchasing abilities will change, without knowing what they're doing now and whether they feel like changing, we really can't say a whole lot about what changes might come.  I can't imagine that nothing would change, but I can't say exactly what might change either.

More personally, I've followed some of your writing (the linked post and the series from Peer & Social Lending, particularly), and I like what you're doing.  I've tried a few of your recommendations to some success, but it's so much easier for me to pay IR to automate things! That, and the persistent feeling that there is something extra risky about the discounted notes that I find that I have overlooked. 

Fred93

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Re: How will the IPO effect the secondary market?
« Reply #9 on: May 29, 2014, 11:14:50 PM »
How do you think the IPO will effect the secondary market for loans?

It will increase.  Most humans have still not heard of Lendingclub.  The increased publicity will increase volume.