Author Topic: Worst Month Yet  (Read 171942 times)

dr.everett

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Re: Worst Month Yet
« Reply #375 on: January 05, 2017, 05:31:17 PM »
My full year losses were nearly 80% of the interest I earned.  My early years with LC this ratio was more of a constant 33%.  My last few months, the losses have exceeded my interest earned.  This better improve soon.  I've stopped reinvesting my taxable account for the foreseeable future.

Same here. I wonder what LC's most recent quarterly report is going to say. I would imagine a lot of people are pulling their money out. I'm currently at a 1-2% return this year. No reason to keep my money with them.

I wonder as well. I'm surprised we haven't seen any lawyers poking around for "negligence" or any of the many other terms used when one doesn't live up to their fiduciary duties. If one does show up and is successful- I would get onboard. I have $40K in losses since day one between two accounts that I'd like to get some of back. In the meantime I'll continue to sell my low FICO notes and replace them with better ones.
Does really amount to $40K if you offset it with gains on your taxes or the using the rolling $3K annual tax claim a deduction against the loss?

I claim my losses every year against my taxes- that said I have tended to be a buy and hold person as of late with little stock activity, so not a lot to offset with. This year will be no different except for a lot more losses to claim.

screwedbylendingclub

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Re: Worst Month Yet
« Reply #376 on: January 05, 2017, 09:32:46 PM »
This is his post I was referring to.  I hope I am not sounding like a jerk to him, just questioning his post and his extremely risky strategy.
Quote
1. Say I change my maintain cash level from $300 (current) to $500. How does the program decide how to price/markdown notes? Is there a way to set the max discount?

2. I've recently started buying in grace period and 31-120 day late notes as part of a more aggressive investment strategy, will PLS mess with these?
Thanks in Advance,

The liquidity in the FOLIO market dried up?  You took 20% returns and turned them into -1% in a few months?   
When you bail out taking losses, what do you expect your returns to do?  I remember reading, might have been your initial post, but you were buying notes that were 31-120 days late.  Personally I think that is the craziest strategy for someone just getting into FOLIO, could ever do and just playing with fire.  Absolutely you are going to have a slew of charge-offs with this kind of excessively risky strategy.  I can only guess that you were overpaying for notes at 31-120 days late and then turned around and tried to sell them at the same discount and could not find any takers. 
I knew lending club was a scam as soon as the rep called me asking me why I was trying to withdraw from my account. Right after that, the liquidity in the market dried up, bringing my 20% down to a -1% return in a few months. I now have a slew of charge offs.

The model is completely unsustainable since they do not hire the right credit analysts/statisticians and severely underestimate the risk of their borrowers. The platform only benefits debtors esp. those that commit financial fraud.

-As for me,

I am pulling out of Lending Club ASAP and looking for a partner to start a real, legit payday loans company.
He may have been one of these guys loading up on the riskiest stuff and selling it on Folio when it looked like it was going bad.  I have always vocally felt this is a poor strategy and you  should be willing to live with the consequences of a strategy if Folio disappears.  Needless to say, posts like the above are amusing.  I'm so glad I work in an area of finance isolated from retail investors lol

Yeah, just because I mentioned it, does not mean I carried through with it. I bought one 31+ day late note (had buyer passed away) for under around $1.5 that charged off. Since I only invest in $25 notes, it's not a viable strategy. Before, I had all new notes in the 17-25 interest range, which I hand picked to have the lowest risk (no CA, TX, DC, NY; Credit Score Above 640; no delinquencies 60 months; <2 inquiries etc...)... so I had maybe a 21/22% return and then the rep calls me because 1/3 of my portfolio is liquidated at that point and I have the rest lined up to sell.

All of a sudden, these same notes (like 95% are current), which are perfect are unable to be moved at a 1% premium or discount. Long story short, I ended up withdrawing maybe $600, so the -1.5% return I'm at is not that big a deal. I did buy some high interest notes at a discount later. I examined them closely and they had a perfect payment history (no in-grace or lates), no delinquents, no TX/FL/CA/NY, but the thing is Lending Club screwed me on 2! They were marked Debt Consolidation, but they gave me "credit card loan," and two days after they were processed, they were charged off. I didn't buy that many discounted notes , but I made sure I was getting a deal where the guy needed to liquidate for a discount.

So, no, I'm not leaving yet. I still think they are more opportunities on folio to take advantage of people's emotions. I'd like to get my money back and some, but I really don't see it as a good investment long term if you're a serious investor. It's investors eating other investors being eaten by Lending Club; kind of like our government. Okay, not that it's as hard to make money as something like acting, but you'd see better returns doing almost anything else: muni bond funds, private equity, oil/gas, real estate aren't a waste of time. In fact, for the young/inclined, it'd be better to open a prop trading account. Having low risk under 40 is too big of a risk!

I won't reveal the full details of my strategy, but I incorporate a lot of due diligence: I split my notes up between fresh notes with stellar credentials from 15-27% interest (under 60%), 18-27% interest notes with 45 payments left and discount up to 5%, and in-grace notes (though that market is so thin, I might need to make some sort of script).
« Last Edit: January 05, 2017, 09:47:30 PM by screwedbylendingclub »

screwedbylendingclub

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Re: Worst Month Yet
« Reply #377 on: January 07, 2017, 10:06:49 PM »
Based on my qualitative assessment, I wouldn't even pay 50% for it. The borrower  was 16-30 days late how many times? Yeah, that's a big risk of default; might as well be 16-30 days late already and those are selling up to 75% (or even more) discount.

Fred93

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Re: Worst Month Yet
« Reply #378 on: January 07, 2017, 10:13:33 PM »
Based on my qualitative assessment, I wouldn't even pay 50% for it.

When setting a price, a qualitative assessment is worthless.  One needs  a quantitative approach, because price is a number.

Rob L

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Re: Worst Month Yet
« Reply #379 on: January 11, 2017, 10:08:31 PM »
Now that 2016 is over I decided to take a look at year over year profitability since I began investing in LC in May of 2013. The computation was simple. Just took the change in Account Value for each year and divided by the starting Account Value of that year. My LC results were:

2013    6.2%  (partial year, began investing in May, or about 10.6% annualized)
2014  12.1%
2015    7.6%
2016    3.1%  (paused reinvesting May-Sept, sold about 50% of account value on Folio Aug-Sept)

I was really spoiled early with great returns.
Maybe this thread should be "Worst Year Yet".

FWIW my Prosper results were:
2014   1.5%  (partial year, began investing in Jul, very slowly invested, lots of cash drag)
2015   7.1%
2016   2.7%  (stopped investing in late October and have no plans to resume)

Here's to a better 2017!

.Ryan.

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Re: Worst Month Yet
« Reply #380 on: January 12, 2017, 01:14:49 AM »
Now that 2016 is over I decided to take a look at year over year profitability since I began investing in LC in May of 2013. The computation was simple. Just took the change in Account Value for each year and divided by the starting Account Value of that year. My LC results were:

Thanks for the detail Rob. I've done some rudimentary analysis on my own portfolio, and let's just say that 2016 was not a banner year for me as well.

I'm curious as to you're reasoning for not reinvesting in Prosper. I've made the same decision based upon some platform & other concerns, even though my Prosper returns seem to outpace that of my LC portfolio.

Here's to a better 2017!

Amen to that, brother!

Rob L

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Re: Worst Month Yet
« Reply #381 on: January 12, 2017, 09:46:56 AM »
Thanks for the detail Rob. I've done some rudimentary analysis on my own portfolio, and let's just say that 2016 was not a banner year for me as well.

I'm curious as to you're reasoning for not reinvesting in Prosper. I've made the same decision based upon some platform & other concerns, even though my Prosper returns seem to outpace that of my LC portfolio.

When Prosper dropped its relationship with Folio I decided to pull the plug and let the account run off. I valued the liquidity that Folio provided should I want or need it and never would have invested with them in the first place without it. Not a fan of changing the rules in the middle of the game by fiat. Felt like a slap in the face. There were a few other annoyances but loss of Folio was the deal breaker.

investor88

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Re: Worst Month Yet
« Reply #382 on: January 13, 2017, 07:16:32 PM »
Here's to a better 2017!
[/quote]

Based on the downward trajectory of the data on the 'Understanding Your Returns' chart, 2017 will be a bad year for LC investors.  Lending Club is now advertising that note investors earn 5-7% but that is based on portfolios over an age of 30 months.  The portfolios at 12-18 months are actually earning  -8% to 8%.   In a couple of years once these portfolios age out and go down over time, the 30 month age portfolio return will be at -10% to 0%. By mid-2018, I forecast that the returns on portfolios that average 30 months on the 'Understanding Your Returns' chart will be negative.
Amazing that the returns are this bad even with an okay economy.  If there is a recession in the next couple of years, these returns will be lower than -10%.  As I warned the OP Rob in December 2015 when he originally posted, stop investing in LC.  Much better investments out there with better returns with much less risk.

storm

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Re: Worst Month Yet
« Reply #383 on: January 13, 2017, 08:26:06 PM »
Much better investments out there with better returns with much less risk.

Like what?

michael49

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Re: Worst Month Yet
« Reply #384 on: January 14, 2017, 09:33:40 AM »
Here's to a better 2017!

Based on the downward trajectory of the data on the 'Understanding Your Returns' chart, 2017 will be a bad year for LC investors.  Lending Club is now advertising that note investors earn 5-7% but that is based on portfolios over an age of 30 months.  The portfolios at 12-18 months are actually earning  -8% to 8%.   In a couple of years once these portfolios age out and go down over time, the 30 month age portfolio return will be at -10% to 0%. By mid-2018, I forecast that the returns on portfolios that average 30 months on the 'Understanding Your Returns' chart will be negative.
Amazing that the returns are this bad even with an okay economy.  If there is a recession in the next couple of years, these returns will be lower than -10%.  As I warned the OP Rob in December 2015 when he originally posted, stop investing in LC.  Much better investments out there with better returns with much less risk.
[/quote]

That's a very negative assessment.  I've seen my returns on LC drop this year and I certainly don't expect any double digit returns in the future, but my expectations for my LC investments going forward are certainly not as downtrodden as yours.

Osito

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Re: Worst Month Yet
« Reply #385 on: January 14, 2017, 10:09:56 AM »


Based on the downward trajectory of the data on the 'Understanding Your Returns' chart, 2017 will be a bad year for LC investors.  Lending Club is now advertising that note investors earn 5-7% but that is based on portfolios over an age of 30 months.  The portfolios at 12-18 months are actually earning  -8% to 8%.   In a couple of years once these portfolios age out and go down over time, the 30 month age portfolio return will be at -10% to 0%. By mid-2018, I forecast that the returns on portfolios that average 30 months on the 'Understanding Your Returns' chart will be negative.
Amazing that the returns are this bad even with an okay economy.  If there is a recession in the next couple of years, these returns will be lower than -10%.  As I warned the OP Rob in December 2015 when he originally posted, stop investing in LC.  Much better investments out there with better returns with much less risk.

Could it be that since it is based on portfolio of an average of 30 months would also include maybe those that jumped in with very little diversment and put all of what they had in high risk g notes and just lost it then complained that they lost their money? Or just went away?
 It would seem to me that if these people were or are included in that, that would explain lower return rates being posted.
« Last Edit: January 14, 2017, 10:12:11 AM by Osito »

JohnnyP

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Re: Worst Month Yet
« Reply #386 on: January 14, 2017, 09:12:38 PM »
Here's to a better 2017!

Based on the downward trajectory of the data on the 'Understanding Your Returns' chart, 2017 will be a bad year for LC investors.  Lending Club is now advertising that note investors earn 5-7% but that is based on portfolios over an age of 30 months.  The portfolios at 12-18 months are actually earning  -8% to 8%.   In a couple of years once these portfolios age out and go down over time, the 30 month age portfolio return will be at -10% to 0%. By mid-2018, I forecast that the returns on portfolios that average 30 months on the 'Understanding Your Returns' chart will be negative.
Amazing that the returns are this bad even with an okay economy.  If there is a recession in the next couple of years, these returns will be lower than -10%.  As I warned the OP Rob in December 2015 when he originally posted, stop investing in LC.  Much better investments out there with better returns with much less risk.
[/quote]

OK, I will bite. What other investments are you looking at?

Fred93

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Re: Worst Month Yet
« Reply #387 on: January 15, 2017, 01:56:14 AM »
Based on the downward trajectory of the data on the 'Understanding Your Returns' chart, 2017 will be a bad year for LC investors.

All the data on that chart is for a single point in time, so it has no "trajectory".


Quote
Lending Club is now advertising that note investors earn 5-7% but that is based on portfolios over an age of 30 months.

Don't know how you come to that conclusion.  You can easily see, if you care to, that the average around 15 months is something near 5%.


 The portfolios at 12-18 months are actually earning  -8% to 8%.   In a couple of years once these portfolios age out and go down over time, the 30 month age portfolio return will be at -10% to 0%. By mid-2018, I forecast that the returns on portfolios that average 30 months on the 'Understanding Your Returns' chart will be negative.
Amazing that the returns are this bad even with an okay economy.  If there is a recession in the next couple of years, these returns will be lower than -10%.  As I warned the OP Rob in December 2015 when he originally posted, stop investing in LC.  Much better investments out there with better returns with much less risk.
[/quote]

OK, I will bite. What other investments are you looking at?
[/quote]

Joleran

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Re: Worst Month Yet
« Reply #388 on: January 15, 2017, 12:29:28 PM »
I've started cutting back from around $50k to around $25k invested, mostly passively but I think I want to accelerate that slightly now.  I expect LC returns to slowly improve from the last 5 months and stabilize at some point, but it will be lower than the historical returns.  I don't expect any sharp improvement, and I'm very uncertain of the final EV, which is why I'm drawing back.

At any rate, I would note that this is seasonally the time of year for things to go south with late payments and defaults, so the default merely not getting worse for the next few months might indicate a positive trend.

Rob L

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Re: Worst Month Yet
« Reply #389 on: January 15, 2017, 03:47:28 PM »
I've started cutting back from around $50k to around $25k invested, mostly passively but I think I want to accelerate that slightly now.  I expect LC returns to slowly improve from the last 5 months and stabilize at some point, but it will be lower than the historical returns.  I don't expect any sharp improvement, and I'm very uncertain of the final EV, which is why I'm drawing back.

At any rate, I would note that this is seasonally the time of year for things to go south with late payments and defaults, so the default merely not getting worse for the next few months might indicate a positive trend.

EV?? Sorry, what's that?