Author Topic: Lending Club Results - NEGATIVE RETURNS  (Read 2882 times)

jheizer

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #15 on: June 11, 2017, 12:24:03 PM »
Since a lot of talk is about moving to fundraise, my question is how can you really make that decision with any better information than what is available with LC.  Aren't all there ereits designed to hold property for like 5 years then disolve/sell?  So you really have no idea what the actual return is until that happens.   8% now but a closing sale price negative and that return goes to junk too.

At least I feel like that was the stated goals off them before.  I was trying to find it quickly again but on my phone and they seem to have rearranged their site since I last looked at it.
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dr.everett

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #16 on: June 11, 2017, 01:32:22 PM »
So you really have no idea what the actual return is until that happens.   8% now but a closing sale price negative and that return goes to junk too.

They are paying the 8% now as they go along. I've had an investment with them of $3k for the last year and every quarter so far I received about $60. Not sure about the hold for 5 years and sell part as I hadn't seen/read anything like that. They also have automatic reinvestment so that the dividends are automatically reinvested in the EREIT that generated it.

As stands today I'm invested in each of their 3 current EREITs, all of which have the same current return and objectives, the differences between them being the region of the US they invest in. (West Coast, Midwest, and East Coast) They provide detailed info on the property being loaned to and the management firm that is associated with the property. Each EREIT currently has 5-20 properties and they typically add 5-10 additional properties every few months.

AnilG

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #17 on: June 11, 2017, 03:30:21 PM »
Thanks for the chuckle about shiny things. I tend to get stuck with some words sometime.

In the past I have been part of several private real-estate partnerships. Sustaining 8+% might be unrealistic. What kind of historical data Fundrise provides on properties? Do you know cash-over-cash, LTV for these properties? Do you know exactly what properties (location address) included in your investment? Any claims of above 4-5% usually gets my warning flags up. Yeah, all real-estate investment sales pitches starts with we have collateral and your investment is safe. All new expenses start showing up when properties start going bad.

At the risk of sounding like a fanboy of Fundrise, I like it for the following reasons:

1. It's real estate backed, so if for some reason things go sideways, there are land, buildings, etc. as collateral.
2. The returns average between 8-8.5% so far, compared to 1-1.5% after all chargeoffs, losses, etc. with Lending Club for this year.

I will agree that last year when I initially invested in Fundrise that it was the new "shiny" thing you referenced. (And thank you for a hearty laugh with that reference, it made my evening  ;D )

As for chasing returns, I've seen $60K in profits go poof at the rate of $2-3K a month in chargeoffs for the last 2 years with Lending Club. I did everything I could to try to figure out/fix my portfolio and selection process. Nothing made a difference. So I made a business decision as well to move my funds to an investment that I believe will do better based on my observations over the last year.
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jheizer

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #18 on: June 11, 2017, 03:47:31 PM »
 Closest I can seem to find is:
Quote
These are long­term investments. Each eREITTM plans to look for opportunities to provide liquidity to its investors after approximately five years. While we expect to seek a liquidity transaction in this time frame, there can be no assurance that a suitable transaction will be available or that market conditions for a transaction will be favorable during that time frame.

Not sure that is exactly saying the same as what I read before but I give up. In the end I decided to just go with standard REITs based on similar criteria and regions like AVB and MAA.
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AnilG

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #19 on: June 11, 2017, 03:48:48 PM »
While I believe in p2p consumer lending as investment, I don't agree with the current direction and how the business is being conducted by the companies like Lending Club and Prosper. They were going to disrupt the financial world, instead they got enslaved by the very same firms. I don't know if you ever read Clayton Christensen and his books Innovator's Dilemma and Solutions. I am pretty sure someday it will become part of his case study how to handle and destroy disruption.

Well, any debt based investment without liquidity has upper limit on return (the interest rate). Equity investment comparison is not a fair one. Debt investment has "limited" upside potential, Equity investment has "unlimited" upside potential. That is the reason equities are considered riskier, investors demand higher on average return but also get high return volatility. 6% long term return doesn't exist without taking more risk. Everybody will be piling into non-volatile 6% if there was one.


I think the question answers itself. I only had an account value of $164k when I began pulling the plug. Never a peep from LC in any form. I don't want it to sound like I care though; just the fact of the matter.

Meanwhile I don't know where the money I've withdrawn will land. I bought MSFT, WDC, NVDA and SPY with money from withdrawn from LC (and other cash on hand). It was just before the election so I quite luckily made 1.5x more in 3 months than in 3 very good years with LC. Could just as easily have been a 1.5 x loss I suppose. Right place right time I guess. Those positions were closed out 3 weeks ago so now I have cash that needs a home. A reasonably non-volatile 6% was all I ever asked of LC. Still IMO they threw me under the bus and I am no longer a valued customer. Okay, I get it and will get over it.
« Last Edit: June 11, 2017, 03:51:16 PM by AnilG »
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jheizer

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #20 on: June 11, 2017, 03:55:00 PM »
Opened the prospective and search liquidate

Although we presently intend to complete a transaction providing liquidity to shareholders within approximately five to seven
years from the completion of our initial offering (December 6, 2016), our operating agreement does not require our Manager to pursue
such a liquidity transaction. Market conditions and other factors could cause us to delay the listing of our shares on a national securities
exchange or delay the commencement of a liquidation or other type of liquidity transaction, such as a merger or sale of assets, beyond
five to seven years from the termination of this offering. If our Manager does determine to pursue a liquidity transaction, we would be
under no obligation to conclude the process within a set time. If we adopt a plan of liquidation, the timing of the sale of assets will
depend on real estate and financial markets, economic conditions in areas in which properties are located, and federal income tax effects
on shareholders, that may prevail in the future. We cannot guarantee that we will be able to liquidate all assets. After we adopt a plan of
liquidation, we would likely remain in existence until all our investments are liquidated. If we do not pursue a liquidity transaction, or
delay such a transaction due to market conditions, your shares may continue to be illiquid and you may, for an indefinite period of time,
be unable to convert your investment to cash easily and could suffer losses on your investment.


Depending upon then prevailing market conditions, and subject to our consideration of alternative liquidity events, it is our
intention to consider beginning the process of liquidating our assets and distributing the net proceeds to our shareholders within
approximately five years after the termination of this offering. However, our Manager may determine to defer such liquidation beyond
the fifth anniversary of the termination of this offering.
Market conditions, our status as a REIT and other factors could cause us to delay the commencement of our liquidation or other
liquidity event. Even after we decide to liquidate, we are under no obligation to conclude our liquidation within a set time because the
timing of the sale of our assets depends on real estate and financial markets, economic conditions of the areas in which the properties
are located and federal income tax effects on shareholders that may prevail in the future, and we cannot assure you that we will be able
to liquidate our assets. After commencing a liquidation, we would continue in existence until all properties are sold and our other assets
are liquidated. In general, the federal income tax rules applicable to REITs will require us to complete our liquidation within 24 months
following our adoption of a plan of liquidation. Compliance with this 24 month requirement could require us to sell assets at
unattractive prices, distribute unsold assets to a “liquidating trust” with potentially unfavorable tax consequences for our shareholders,
or terminate our status as a REIT.
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nonattender

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #21 on: June 11, 2017, 04:36:18 PM »
In the end I decided to just go with standard REITs based on similar criteria and regions like AVB and MAA.

See you at the MAA shareholder's meeting.  I now own even more of it, after they bought PPS.
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Rob L

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #22 on: June 11, 2017, 08:04:27 PM »
Well, any debt based investment without liquidity has upper limit on return (the interest rate). Equity investment comparison is not a fair one. Debt investment has "limited" upside potential, Equity investment has "unlimited" upside potential. That is the reason equities are considered riskier, investors demand higher on average return but also get high return volatility. 6% long term return doesn't exist without taking more risk. Everybody will be piling into non-volatile 6% if there was one.


I think the question answers itself. I only had an account value of $164k when I began pulling the plug. Never a peep from LC in any form. I don't want it to sound like I care though; just the fact of the matter.

Meanwhile I don't know where the money I've withdrawn will land. I bought MSFT, WDC, NVDA and SPY with money from withdrawn from LC (and other cash on hand). It was just before the election so I quite luckily made 1.5x more in 3 months than in 3 very good years with LC. Could just as easily have been a 1.5 x loss I suppose. Right place right time I guess. Those positions were closed out 3 weeks ago so now I have cash that needs a home. A reasonably non-volatile 6% was all I ever asked of LC. Still IMO they threw me under the bus and I am no longer a valued customer. Okay, I get it and will get over it.

Yeah, I completely agree. Almost went back to edit out the equity references as soon as I posted them. In hindsight they were completely inappropriate and I regret including them. I guarantee that if the positions were still open that would not have happened. One thing has absolutely nothing to do with the other. As for the 6% target I'll stick with that as it was in fact my expectation from day one. Right or wrong it didn't seem completely delusional. LC itself was probably surprised by the extent of risky borrower deterioration right at the same time they were lowering standards and interest rates. Or, maybe not ...

AnilG

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #23 on: June 11, 2017, 09:37:44 PM »
No sweat about equity references! A 6% return target for p2p lending is very reasonable from long term perspective but in short term there will be times when we undershoot or overshoot.

Just curious what made you take position in MSFT, NVDA and SPY before election and then closed out recently? I am always interested in learning about what kinda thinking process goes in investors' mind about buying and selling investments.


Yeah, I completely agree. Almost went back to edit out the equity references as soon as I posted them. In hindsight they were completely inappropriate and I regret including them. I guarantee that if the positions were still open that would not have happened. One thing has absolutely nothing to do with the other. As for the 6% target I'll stick with that as it was in fact my expectation from day one. Right or wrong it didn't seem completely delusional. LC itself was probably surprised by the extent of risky borrower deterioration right at the same time they were lowering standards and interest rates. Or, maybe not ...
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SLCPaladin

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #24 on: June 12, 2017, 12:30:18 AM »
I want to chime in on this post. I basically agree with dr. everett, Rob L, and Russ G, which is why I too have been letting my notes mature without reinvestment.I don't feel like I had unrealistic expectations about LC or this particular asset class. I do, however, think that LC made a mistake in the underwriting. But what really sort of soured is that now that the underperformance is visible, I don't think they are doing near enough in going in the other direction to help compensate for a patch of underperformance. I think they should have more forcefully raised interest rates to make up for the losses that the lenders incurred.

I always go back to the asymmetries of power: LC controls the rates via underwriting, but lenders and borrowers are only free to accept terms or not participate. There are probably bunches of loans that I would still buy on the platform, but I would want like a 2% to 3% increase in rates as a cushion given recent history.

Rob L

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #25 on: June 12, 2017, 09:39:59 AM »
Just curious what made you take position in MSFT, NVDA and SPY before election and then closed out recently? I am always interested in learning about what kinda thinking process goes in investors' mind about buying and selling investments.

The market had been flat for quite a long time and I simply thought it was ready to move. I didn't hazard a guess for the reason it would move; certainly not the election. That was a big surprise. I had more cash than I should at the time but that's normal. That explains SPY. I'm an engineer so NVDA seemed like a good idea; they have a moat as they are so far ahead of their competitors in SIMD. MSFT has had a big management change over the past year or two and I thought they would begin innovating again. I think the Fortune 500's have a long way to go moving into cloud computing and MSFT will get a lot of that business with its AZURE platform. I only sold everything when valuations IMO got really crazy. Everything's still higher today than when I sold out, but it was quite a ride and I did do very well. As I said I was lucky and outsized profits fell into my lap. Taking small profits isn't usually a good thing but taking large ones ain't always bad. I still think the market is way overvalued but that doesn't mean it won't continue on up. On the other hand when Bob Schiller says "hey don't worry that my CAPE ratio is in nosebleed territory, the market can still go up 50%" it's one of those tiny contra-indicators that sets off a bell or two.

Meanwhile I had the idea Saturday that interest rates had come down so far that the yield curve would turn and begin to spread out. What to invest in? financials, and regional banks in particular of course. These had been hammered over the past month. So, I look at a few charts and was I disappointed! KRE screamed up last Thursday and Friday. I was two days late on what would have been another good idea. Probably still a good idea but 7-10% of the gains already happened. Up another 1% this AM. Last week I jokingly posted I was going to buy GS. Shoulda done it.

rawraw

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #26 on: June 12, 2017, 12:53:08 PM »

For those interested in where I'm going- it's to Fundrise. While not nearly as liquid as LC is, there's way less hassle, a very consistent and good level of return, and I've been happy with the small amount of money that's been there for the last year. Time to up the ante.

I do want to take the opportunity to thank everyone that spoke knowledgeably to me during my time on this board. Your experience and willingness to share has been invaluable to me and greatly appreciated. I'll still keep an eye on things here but will probably be on less as I wind things down.
This makes me so mad. And every time I try to engage with it, I get even more angry.  But I'll try one last time.

You would have made the same decision with LendingClub three years ago!  "Prosper isn't doing well, but LC has.  Let's invest there!"  How do you not understand this is not how to evaluate where to invest.  The LC stuff is relatively benign -- if you keep hopping around like this without doing the due diligence required up front, I worry you are going to lose much more than an opportunity cost.

But good luck. . .
« Last Edit: June 12, 2017, 12:55:25 PM by rawraw »

nonattender

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #27 on: June 12, 2017, 09:22:03 PM »
Meanwhile I had the idea Saturday that interest rates had come down so far that the yield curve would turn and begin to spread out. What to invest in? financials, and regional banks in particular of course. These had been hammered over the past month. So, I look at a few charts and was I disappointed! KRE screamed up last Thursday and Friday. I was two days late on what would have been another good idea. Probably still a good idea but 7-10% of the gains already happened. Up another 1% this AM. Last week I jokingly posted I was going to buy GS. Shoulda done it.

The same day that the Barron's article in the "consumer distress" thread was posted, this also appeared in Barron's (but was ignored):

http://www.barrons.com/articles/jason-trennert-the-trump-trade-is-underpriced-1496460610

I'm a bit too picky to just buy KRE, but I own a number of the components of KRE, individually.

On MSFT, I'd need a very big pullback to take a position, but the sort of Adobe-like subscriber model that they seem to be going toward - where one no longers "owns" their operating system (but just "rents" it, monthly) will probably make a lot of money.  I bought two new laptops back in October or November or just so I could lock down decently new tech, with Windows 7, and not be a MSFT guinea pig (or monthly hostage) - and then there's MSFT and QCOM working on x86 emulation using QCOM's chips, which may be a threat to Intel.  (I own some QCOM, one of my very few tech stocks.)

NVDA's Jensun Huang impressed me in like 1996 and I recommended NVDA to all kinds of friends - but sold my shares out way, way too early.
« Last Edit: June 13, 2017, 01:21:05 AM by nonattender »
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RomanLegend

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #28 on: July 16, 2017, 06:37:07 PM »
Over 3 years I have had a NAR of 8.6% to 10.5% (never lower never higher).  My defaults are less than 3% (2.8 as of right now).  Please check out my YouTube video and please give my LC Investment strategy a try.  It is free for now in Beta!  :) 

YouTube Intro:  https://www.youtube.com/watch?v=dIE5bVgj8eE&t=3s

Register Here:  LCPicks.com

Let me know if you have any questions along the way just send me a message and I'll help out.

Thanks,

-Chris

Rob L

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Re: Lending Club Results - NEGATIVE RETURNS
« Reply #29 on: July 17, 2017, 10:33:43 AM »
Brief update to my post of 6/12. On Friday 7/14/2017 the US stock market Cyclically Adjusted PE Ratio (CAPE Ratio, also called Shiller PE Ratio, or PE 10) surpassed 30.00 for the first time since 1929. Okay,so what. I found the following paper a very interesting read that attempts to provided an answer to that question. Spoiler alert; CAPE's predictive value is only over the long term (10-15 years), but at this level the long term isn't looking too good.

http://www.starcapital.de/files/publikationen/Research_2016-01_Predicting_Stock_Market_Returns_Shiller_CAPE_Keimling.pdf

If you are interested in keeping up with the CAPE ratio see http://www.multpl.com/shiller-pe/

Finally, in an oversight, I didn't mention that I also owned and then sold WDC at the same time as MSFT, NVDA and SPY mentioned previously. I forgot; my bad.

This thread really went off the rails somewhere.  :)