Author Topic: Worst Month Yet  (Read 254170 times)

anabio

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Re: Worst Month Yet
« Reply #285 on: November 29, 2016, 04:30:55 PM »
My uninformed guess is that the standards haven't changed, but we're starting to see what those standards do when the market tightens a bit. (LC doesn't really have a history of PTP loans in a contracting credit environment.)
I tend to agree with you...or if the standards have changed they changed around 2014 just after their IPO (in order to get more loans serviced for their shareholders.)

I think it is the economy and wonder if Trumps WPA project will be too little too late to stave off a recession. 

I invested in 2014 and stopped in Jan 2015. In the past month of my 596 current notes 32 of them went into grace with way too many of those being never lates. A few of those have came back current but no where near the amount I would have expected to pay  up in the past. 32 of 596 ratio wise is worse than SMWinnie's 7 of 165...but there are 22 of those 165 that have not reached their first payment yet so it might get a little worse for SMWinnie. Remember, these are circa 2014 notes not 2016. So  whatever is happening it does not only affect recent loans.

Lucky for me that all these notes are very mature and I only have $5-$7 dollars of principal to lose if they default.
As Will Rogers stated: : I'm not as concerned about the return on my money as I am the return of my money

anabio

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Re: Worst Month Yet
« Reply #286 on: November 29, 2016, 04:37:21 PM »
I invested in 2014 and stopped in Jan 2015. In the past month of my 596 current notes 32 of them went into grace with way too many of those being never lates.

BTW...I forgot to mention that (like SMWinnie) I used LC auto invest the first three months so the vast majority of my initial 1400+ notes were purchased with auto invest. I only used my own filtering techniques to buy notes when re-investing my proceeds.
As Will Rogers stated: : I'm not as concerned about the return on my money as I am the return of my money

Larry321

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Re: Worst Month Yet
« Reply #287 on: November 30, 2016, 09:31:26 AM »
RawRaw,

Who is leaving the mutual fund at inopportune times? The managers of the fund or investors like us?
I measure all my investments against what I could get if I just left my money in an S&P 500 linked fund. 

At the moment (actually, for the past 10 years) my Fidelity investments have been earning me more, way more, than the 4-5% I am getting from LC right now.

I am convinced that if I understood the statistical tool of factor analysis, I could use it to choose LC loans more effectively.


I have lost as much money to defaults as I have made in Lending Club.
I am still ahead and have made money, but I would make more money if I shifted my money to Fidelity and polaced it in a DJ linked fund.
Slowly, I am moving my funds out, not reinvesting.
Did you know that the average retail investor receives half of the average returns of mutual funds because of them leaving and entering at inopportune times? I've always found that statistic fascinating. Good luck but just chasing returns never seems to work out well for the majority who try.

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rawraw

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Re: Worst Month Yet
« Reply #288 on: November 30, 2016, 09:50:04 AM »
RawRaw,

Who is leaving the mutual fund at inopportune times? The managers of the fund or investors like us?
I measure all my investments against what I could get if I just left my money in an S&P 500 linked fund. 

At the moment (actually, for the past 10 years) my Fidelity investments have been earning me more, way more, than the 4-5% I am getting from LC right now.

I am convinced that if I understood the statistical tool of factor analysis, I could use it to choose LC loans more effectively.


I have lost as much money to defaults as I have made in Lending Club.
I am still ahead and have made money, but I would make more money if I shifted my money to Fidelity and polaced it in a DJ linked fund.
Slowly, I am moving my funds out, not reinvesting.
Did you know that the average retail investor receives half of the average returns of mutual funds because of them leaving and entering at inopportune times? I've always found that statistic fascinating. Good luck but just chasing returns never seems to work out well for the majority who try.

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Investors like us. We get roughly half the returns the managers actually do (and disclose) because of the buying selling.

I'm not arguing you shouldn't exit LC because it's not for everyone, but this is a bond equivalent. It shouldn't be compared to stock market, but rather be considered as an asset in your overall Allocation. It's benefits come partly from less correlation with markets than other equities. This may reduce your overall return in a given year but overtime it should make your returns less volatile. And volatility increases the odds of us making rash decisions.

I think anyone getting into LC should decide up front what their goal and process is. And they should stick to it until something changes. Returns are not a good process imo. Overtime good investment process does help returns, but the outcome in any individual quarter or year can't be based on achieving the absolute returns.

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anabio

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Re: Worst Month Yet
« Reply #289 on: November 30, 2016, 11:18:23 AM »
I'm not arguing you shouldn't exit LC because it's not for everyone, but this is a bond equivalent. It shouldn't be compared to stock market, but rather be considered as an asset in your overall Allocation.

I agree, it is in the bond world...but people have to realize that it is in the junk bond world, not the muni, treasury bill, corporate bond world.

The question investors have to ask themselves is: Has the world changed in the recent past and what does that mean for future returns? Are past expectations going to be realized in the months or years ahead? If you  think they aren't then you need to decide if that change fits in with your risk tolerance and act accordingly.
As Will Rogers stated: : I'm not as concerned about the return on my money as I am the return of my money

rawraw

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Re: Worst Month Yet
« Reply #290 on: November 30, 2016, 11:27:27 AM »
I'm not arguing you shouldn't exit LC because it's not for everyone, but this is a bond equivalent. It shouldn't be compared to stock market, but rather be considered as an asset in your overall Allocation.

I agree, it is in the bond world...but people have to realize that it is in the junk bond world, not the muni, treasury bill, corporate bond world.

The question investors have to ask themselves is: Has the world changed in the recent past and what does that mean for future returns? Are past expectations going to be realized in the months or years ahead? If you  think they aren't then you need to decide if that change fits in with your risk tolerance and act accordingly.
I wouldn't say it's like junk bonds. Structurally, junk bonds are secured with similar rates (so higher risk of default, but lower lgd). Maybe net returns are similar, but I'm skeptical they'd be similar in all environments.  It also depends where in LC credit spectrum. A lot of the origination are in grades many in this forum underweight. A lot of people here are severely exposed to a very small sliver of LC market returns. But better to assume it's junk vs treasury at the start for sure

But I agree on risk. I've redirected new investments into A and B since I can't reprice the lower spectrum loans like a lender can.  I also sold some new vintage low grade notes to remix into a and B. My weighted average rate has declined roughly 75bps as a result and still Trending down.

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lascott

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Re: Worst Month Yet
« Reply #291 on: December 03, 2016, 11:17:40 AM »
FYI, Nov statements are available.  Took a loss on my taxable account for the first time. Disturbing. ROTH is still good. May need to get even more conservative on my taxable account.

Taxable - stopped investing for 6 months - restarted


ROTH - stopped investing 6 months ago - not restarted


Added charting showing my percentage of lates and charge offs relative to me stop purchasing notes.

Taxable - Interest Radar tracking data charted

« Last Edit: December 03, 2016, 02:44:14 PM by lascott »
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Rob L

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Re: Worst Month Yet
« Reply #292 on: December 03, 2016, 01:29:48 PM »
Another statement and another new month.
All D' and E's; WAIR 17.43%, Weighted average age 26.9 months.
Primary notes returns 7.18%, Traded notes returns 16.73% and Combined returns are 7.96%.
 
Much of this was to be expected. I stopped reinvesting on 5/9 and did not resume until 8/30.
Also I sold half my portfolio in July - August and virtually all notes sold were current, never late. I kept all the bad stuff.
So, maybe 5 or so months of 2x charge offs were already baked in.
I'm expecting to see the blue and red bars begin to converge. Unfortunately it's looking like that might be in the 60% to 80% range.
This was absolutely my worst month dollars wise, but in the long run I still think Jan 16 was my worst overall.



I do have some optimism for the future; my delinquency rate has begun to drop. Hopefully a leading indicator of better things to come.
This is not to suggest that LC delinquency rates are falling; quite the opposite.
Only that the effects of the reduction of my portfolio size has begun to reduce my overly high delinquency rate to whatever's appropriate for a portfolio of that new size.



« Last Edit: December 03, 2016, 02:03:14 PM by Rob L »

jheizer

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Re: Worst Month Yet
« Reply #293 on: December 03, 2016, 02:10:50 PM »
My numbers this month look a lot.better but I also realized I have sold more late notes than before.  I need to sit down and go through my folio statements and look at the amount lost per late sale per month and see how that effects things.
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SeanMCA

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Re: Worst Month Yet
« Reply #294 on: December 03, 2016, 02:26:59 PM »
This was my 3rd negative month since July. July, September and November all generated losses. Those losses for the most part wiped out all the gains in August and October. I haven't purchased any new loans since early June.

Considering my IGP and late categories aren't seeing any slowdown, I don't think I'll really be on a positive trajectory for a long while at this point.

What has killed me the most as I've mentioned previously is early payoffs. I've had 928 loans pay off early. That's 28% of all the notes I ever bought. My LC account hasn't even been open 3 years yet so the first note I ever bought hasn't even run its course to maturity. If all the good borrowers pay off early then this whole system doesn't make sense. And if they pay off after 12 months, we are hit with an early payoff penalty in the form of 1% of the outstanding balance to make it even worse.

If defaults and early payoffs hold steady, it's possible that I will only break even or experience losses going forward.


I'm a merchant cash advance veteran exploring the p2p lending waters.

lascott

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Re: Worst Month Yet
« Reply #295 on: December 03, 2016, 02:54:15 PM »
<snip>
What has killed me the most as I've mentioned previously is early payoffs. I've had 928 loans pay off early. That's 28% of all the notes I ever bought. My LC account hasn't even been open 3 years ...
<snip>
I think our more conservative notes (A,B,C) just pay off more.
My paid off early percentage are:
28% on my 2.8 yr old account and
19% on my 1.5 yr old account
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SeanMCA

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Re: Worst Month Yet
« Reply #296 on: December 03, 2016, 03:16:50 PM »
<snip>
What has killed me the most as I've mentioned previously is early payoffs. I've had 928 loans pay off early. That's 28% of all the notes I ever bought. My LC account hasn't even been open 3 years ...
<snip>
I think our more conservative notes (A,B,C) just pay off more.
My paid off early percentage are:
28% on my 2.8 yr old account and
19% on my 1.5 yr old account

I am forever curious as to "how" they're paying off. Is Marcus refinancing them? Is it Discover? Is LC giving them a new loan to pay off their previous loan? I don't get it. This phenomenon is absurdly material. I don't think we should accept that the best borrowers are just disappearing out of our portfolios en masse without a detailed explanation from Lending Club. I've already emailed them.

I think they should reimburse everyone the 1% penalty assessed on all applicable early payoffs.
I'm a merchant cash advance veteran exploring the p2p lending waters.

Rob L

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Re: Worst Month Yet
« Reply #297 on: December 03, 2016, 06:18:25 PM »
Personally I think that going forward LC, Prosper (mpl's), et al will find themselves unable to compete with Marcus, Discover, et al for the most credit worthy borrowers. The "banks" have the advantage and desire to make loans to the most credit worthy borrowers (LC A and top B grades) and they probably aren't very much interested in the more risky loans. LC borrowers in this most credit worthy category are prime targets for poaching. The day will likely come when mpl's are relegated to making only the more risky loans the "banks" don't want on their balance sheets.

SMWinnie

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Re: Worst Month Yet
« Reply #298 on: December 04, 2016, 10:54:47 AM »
(Snip)
In the past month of my 596 current notes 32 of them went into grace with way too many of those being never lates. A few of those have came back current but no where near the amount I would have expected to pay  up in the past.
Of the seven mid-October notes that went IGP, one borrower has come current and two have slipped into the Late 16-30 bucket.

Along with anabio's experience, it would appear that: (1) there is a sharp, recent decline in credit quailty; and (2) it is a population issue, not just a vintage issue.

jheizer

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Re: Worst Month Yet
« Reply #299 on: December 05, 2016, 10:31:52 AM »
Kind of what I was afraid of.  I had been lazy listing late notes since they hadn't really been selling lately.  But last month they did more than average.



So the sales stopped the losses from being larger, but also hid that the month wasn't as good as we'd like.
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