Author Topic: New to LC-Bad Timing?  (Read 4109 times)

Skeptical

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New to LC-Bad Timing?
« on: April 26, 2017, 05:52:40 PM »
Well I have read a number of posts here, and do not know what to think. The reason I chose P2P Lending and Lending Club is I want to diversify outside of the stock market.

I have been a stock market investor since the early 90s and have seen bull and bear markets, euphoria and crashes like most of the members here. Human nature is part of the investing equation and for many years this was the part that stumped me-keeping my own emotions in check. Over the last 25 years, I have learned a lot about myself-investment wise.

I don't know if I will be successful investing in P2P Lending with the various notes of different quality. There is a segment of the market I have been successful in and that is Penny stock investing. I buy stocks $3 per share or less. To be honest, I follow the Bowser Report and have done quite well. There are a lot of similarities about Penny stock and P2P investing. You never know how you will do. Therefore, I have an open mind about what kind of returns I will get with P2P investing.

My portfolios have different strategies. A passive strategy is the one I prefer. One of my portfolios is a Dog of the Dow strategy, buying the 10 highest yielding Dow stocks and my other portfolio uses an Ivy Portfolio strategy with 5 ETFs and I rebalance the portfolio quarterly. This takes the emotion out for me and forces me to use discipline. That is the key for me-having discipline. Also I own DRIPs. Again, I never try to time the market. Right now I am adding to Exxon and some REITs because these are down.

I'm going to take the P2P Lending slow and not expect too much as far as what kind of returns I will get. There are some strategies I have thought about, but I am reading how others handle their P2P portfolio(s).

I am skeptical anyone can consistently time the market or predict the future. All investing is risky. All investments have cycles.

rawraw

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Re: New to LC-Bad Timing?
« Reply #1 on: April 28, 2017, 04:57:11 PM »
LendingClub is nothing like trading penny stocks.  LendingClub would be like touching a hot light bulb and penny stocks would be like reaching out to touch a flame thrower.

Skeptical

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Re: New to LC-Bad Timing?
« Reply #2 on: April 28, 2017, 06:09:52 PM »
Perhaps I need to be more specific. A penny stock is any stock that trades below $5 a share. My range is usually  $.50 to $3.00. I would never buy a penny stock for .001.

But my trading and investing in the penny stock area has given me greater clarity about the nature of risk and how most people underestimate the amount of risk they are taking with various investments.

If I can be successful in this area of the market, I can come to P2P investing with a bit of soberness.  I know the risks associated with the D, E, F and G rates. I will not be seduced by trying to get stock market returns from this kind of investing vehicle. Anyone who wants stock market returns should invest in the stock market, whether actively (picking) or passively (indexing).

It seems like a lot of people are bailing out of P2P investing. This might be an excellent time to put your toe in the P2P investing ocean. Of course you have to buy when others are selling and this usually goes against human nature.

Thanks for the comparison about the hot light bulb and the flame thrower. 

BTW, I am slowing building my Lending Club account. I would consider the notes I have bought to be cool to the touch.

rawraw

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Re: New to LC-Bad Timing?
« Reply #3 on: April 28, 2017, 07:00:09 PM »
Sounds like you approaching this the right way.  Just remember part of your risk comes from LC the platform. It isn't a very big risk right now, but if people stopped buying you have to worry about LC's credit quality as well as your notes.  Since you are technically a unsecured creditor of LC.

Edward Reid

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Re: New to LC-Bad Timing?
« Reply #4 on: May 01, 2017, 11:54:51 AM »
It seems like a lot of people are bailing out of P2P investing.
I see no evidence of that. The people who talk about getting out are a self-selected sample. Self-selected samples are worthless. And especially so in this kind of environment, because the unhappy tend to talk about their complaints far more than the happy talk about what they like.

Edward

Lovinglifestyle

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Re: New to LC-Bad Timing?
« Reply #5 on: May 01, 2017, 02:20:47 PM »
It seems like a lot of people are bailing out of P2P investing.
I see no evidence of that. The people who talk about getting out are a self-selected sample. Self-selected samples are worthless. And especially so in this kind of environment, because the unhappy tend to talk about their complaints far more than the happy talk about what they like.

Edward

What do you think of this chart?  http://forum.lendacademy.com/index.php/topic,3551.msg40027.html#msg40027

Re: Worst Month Yet
Reply #439 on: March 03, 2017, 08:28:37 AM

Fred93

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Re: New to LC-Bad Timing?
« Reply #6 on: May 01, 2017, 02:24:11 PM »
It seems like a lot of people are bailing out of P2P investing.

Here are some numbers.  LC publishes originations by funding source in the quarterly earnings call slides.

Originations from "self-managed individuals" (that's us) were...

$273M in 3Q2016
$263M in 4Q2016

You'll get numbers for 1Q2017 a few weeks from now.

Edward Reid

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Re: New to LC-Bad Timing?
« Reply #7 on: May 01, 2017, 03:38:40 PM »
What do you think of this chart?  http://forum.lendacademy.com/index.php/topic,3551.msg40027.html#msg40027

The whole report

Mostly what I see is 1) too much volatility to draw any conclusions (neither that individual investors are pulling out nor that they are staying in), and 2) a drop in individual originations, not in balance held.

What the heck happened in 2Q16? (True question. I assume someone here knows; I don't. It sort of looks like they decided to put a cap on originations.) You could say from the same chart that Other Insitutional are pulling out too. Maybe they are. (I don't know exactly what that category consists of.) Banks and Managed Accounts have been flip-flopping for the past four quarters. Obviously some things are changing fairly drastically from quarter to quarter, but I see no trend.

In any case, these are originations. There are clues that LC is exiting its fast growth stage and moving into something closer to a steady state. What's happening to total value of individual investor notes held? Is even the slightly lower funds in originations enough to keep the total investments growing? If it is, then there's no evidence of "pulling out", just that there are fewer new investors. Slower growth is a different animal from contraction. What's the average age of outstanding notes? I doubt LC gives us any data on that. If the average age of notes is older, that counterbalances a drop in originations.

See page 23 of the report, the Servicing Portfolio Balance. This is the only chart I find in the report which addresses balances held. It rather clearly shows the total balance leveling off in the past year. It does not give numbers for the categories, but eyeballing it, it looks to me like there's a tiny growth in Notes in the past year, with no Q/Q drop at any point. Certificates have dropped a tiny bit, and whole loans have expanded quite a bit.

Until we see a drop in balance held by individual investors, I don't believe there's any reason to say individual investors are pulling out.

Edward

Fred93

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Re: New to LC-Bad Timing?
« Reply #8 on: May 01, 2017, 04:18:30 PM »
There was a scandal in April 2016, and many institutional investors (banks especially) stopped investing until the dust settled.  They are earning these guys back one by one now.

You can google for details, or read the SEC filings.

Jadedfalcons

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Re: New to LC-Bad Timing?
« Reply #9 on: May 02, 2017, 09:15:06 AM »
It seems like a lot of people are bailing out of P2P investing. This might be an excellent time to put your toe in the P2P investing ocean. Of course you have to buy when others are selling and this usually goes against human nature.

Are you solely doing folio notes then?  Investors bailing on Lending Club doesn't affect you on the primary market, outside of less competition on the higher quality notes, maybe.  It's not the same as buying Ford when it dropped below $2 during the recession and enjoying that 60/annum dividend today.