Author Topic: Quick Answer Needed! Can I undo Purchase of a Note before It's Issued  (Read 4413 times)

bdonovan

  • Newbie
  • *
  • Posts: 36
    • View Profile
    • Email
Long story short, Lending Robot misinterpreted my "aggressive" strategy and 1/3rd of the notes it bought were A-Grade notes.  Under status, many of these are "In Review" and "In Funding".  Am I able to cancel these purchases?  I've made changes on LR to make sure that doesn't happen again, but want to know if I can prevent this from going through and make sure I get the notes in the range I'm seeking (C-E). 

Fred93

  • Hero Member
  • *****
  • Posts: 2245
    • View Profile
Re: Quick Answer Needed! Can I undo Purchase of a Note before It's Issued
« Reply #1 on: August 13, 2016, 12:30:26 AM »
I've heard rumors of folks successfully getting LC to cancel an order.  Give 'em a call early Monday and try.

Have never tried this myself.

bdonovan

  • Newbie
  • *
  • Posts: 36
    • View Profile
    • Email
Re: Quick Answer Needed! Can I undo Purchase of a Note before It's Issued
« Reply #2 on: August 13, 2016, 01:30:16 AM »
I've heard rumors of folks successfully getting LC to cancel an order.  Give 'em a call early Monday and try.

Have never tried this myself.

Thanks; will do.  Worse comes to worse, will sell them (but based on my limited test of sales, given the 1% cost, and given that i don't have the time/inclination to babysit a set of sales, there will likely be a cost to get rid of them).

BruiserB

  • Sr. Member
  • ****
  • Posts: 425
    • View Profile
Quick Answer Needed! Can I undo Purchase of a Note before It's Issued
« Reply #3 on: August 13, 2016, 03:49:52 AM »
I've heard rumors of folks successfully getting LC to cancel an order.  Give 'em a call early Monday and try.

Have never tried this myself.

Thanks; will do.  Worse comes to worse, will sell them (but based on my limited test of sales, given the 1% cost, and given that i don't have the time/inclination to babysit a set of sales, there will likely be a cost to get rid of them).

Why not just keep them?  The loss you'll take selling may be worse than the slightly lower return you may make on them.  Shift them to their own portfolio in your account and compare their performance over time to your aggressive portfolio. You may be surprised at the result. I've always taken my "oopses" as learning opportunities.


Sent from my iPhone using Tapatalk

rawraw

  • Hero Member
  • *****
  • Posts: 2795
    • View Profile
Re: Quick Answer Needed! Can I undo Purchase of a Note before It's Issued
« Reply #4 on: August 13, 2016, 07:14:42 AM »
There is nothing wrong having some A notes.  You may enjoy the mistake if suddenly the health of the consumer starts to get bad

fliphusker

  • Sr. Member
  • ****
  • Posts: 463
    • View Profile
    • Email
Re: Quick Answer Needed! Can I undo Purchase of a Note before It's Issued
« Reply #5 on: August 15, 2016, 12:30:51 PM »
I toss my A/B notes on FOLIO every month for a 1% markup as they were bought wrong.  They never sell.  I assume because they are still young and the YTM is not high enough. 
These are quite stable notes though and never had one go IGP.

Rob L

  • Hero Member
  • *****
  • Posts: 2132
    • View Profile
Re: Quick Answer Needed! Can I undo Purchase of a Note before It's Issued
« Reply #6 on: August 15, 2016, 02:44:37 PM »
Markup/Discount has a much more profound effect on less risky lower grade notes than more risky higher grade ones.
The chart below represents a newly issued $25 note and shows this effect. Profit is total dollars net of fees over the life of the note.



A buyer that pays a 1% markup on a new A1 note suffers a loss of 16.8% of net profits over the life of the loan. A buyer paying that same 1% markup on a new D1 note suffers only a 4.8% loss of net profits. Easy to see why. That $0.25 markup represents a whole lot more of the profits of an A1 note than a D1. Of course the reverse is also true. Discounts on low risk loans will markedly improve their net profits.

Might be why sale of A1 notes at a 1% markup isn't brisk. Look into giving away toasters.
I never had to do that, but was close :)

bdonovan

  • Newbie
  • *
  • Posts: 36
    • View Profile
    • Email
Re: Quick Answer Needed! Can I undo Purchase of a Note before It's Issued
« Reply #7 on: August 15, 2016, 09:45:05 PM »
Markup/Discount has a much more profound effect on less risky lower grade notes than more risky higher grade ones.
The chart below represents a newly issued $25 note and shows this effect. Profit is total dollars net of fees over the life of the note.



A buyer that pays a 1% markup on a new A1 note suffers a loss of 16.8% of net profits over the life of the loan. A buyer paying that same 1% markup on a new D1 note suffers only a 4.8% loss of net profits. Easy to see why. That $0.25 markup represents a whole lot more of the profits of an A1 note than a D1. Of course the reverse is also true. Discounts on low risk loans will markedly improve their net profits.

Might be why sale of A1 notes at a 1% markup isn't brisk. Look into giving away toasters.
I never had to do that, but was close :)

Interesting.  I did my own test on LC to gauge how much I would lose if I needed to sell quickly (5 days) and saw I would take a loss; but those were with C-E notes.  I suspect it will be a little more (and longer) with A notes.

As to why don't I keep them- it's a matter of personal preference.  LC is maybe about 5% of a portfolio I'm managing; and I view it as an aggressive component with high-yield potential compared to other investments like a total bond index fund.  So I aim to maximize potential returns, even if it means more risk.

I am initiating the sale of A notes and can report back on what I find.

TheReaper

  • Newbie
  • *
  • Posts: 23
    • View Profile
Re: Quick Answer Needed! Can I undo Purchase of a Note before It's Issued
« Reply #8 on: August 22, 2016, 04:37:42 PM »
"A" notes are like your ballast stones in rough weather.  I wouldn't sell those considering the 1% scraping they take.  Here is a thought, take the conservative part of your overall portfolio and buy additional riskier LC notes...

In any case, that sucks about the Robot not understanding your commands.  Stupid Robot. >:(