Author Topic: My experience with LC isn't particularly good  (Read 2287 times)

OleBill

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My experience with LC isn't particularly good
« on: July 06, 2017, 04:30:17 PM »
I've had an IRA account with Lending Club for over 2 years. The initial results were good. But after a year, they started to decline and now are pretty bad. Bad enough that I decided to quit investing in new notes. But rather than give up, I'm analyzing lots of data and my experience. I'm documenting these in a blog http://billlanke.blogspot.com/. I'll be adding the results of my analysis every couple of days. When I do, I post a tweet on Twitter, @billlanke, as a notice of a new post.

I invite anyone to look at this blog and comment on it. I'm sure I'll be covering ground already done by others. But you never know.

last1bidding

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Re: My experience with LC isn't particularly good
« Reply #1 on: July 08, 2017, 11:03:05 AM »
what was your loan grade distribution? 
I would be interested to know what you decide to do with your account and how it works out. good luck!


Fred93

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Re: My experience with LC isn't particularly good
« Reply #2 on: July 08, 2017, 05:56:56 PM »
Yea... Your blog and your posting here say nothing about how you selected your loans.  Even the most basic info, such as loan grades or interest rates.  This matters.

I looked at the ratios you computed.  I don't think they're very helpful.  You used all the loans for the denominator if I understand correctly, but for example when looking at late loans, it makes more sense to put in the denominator only the active loans.  Obviously a loan that is paid off isn't going to be late.  You need to compute ratios that actually tell you something about your portfolio.

Also, when comparing loans of different ages, obviously more of the older loans are going to be paid off or failed, so just looking at percentage of all loans so far that have entered one of those states is not something that helps one compare one vintage to another.

As I have written about elsewhere on this board (extensively, over and over), loans from 2015 and 2016 have performed more poorly than loans from the prior few years.  This is especially true for the riskier grades.  If you jumped in in 2015, and invested in the risky grades, then I expect you will have a return less than zero on those loans.

OleBill

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Re: My experience with LC isn't particularly good
« Reply #3 on: July 09, 2017, 03:14:35 PM »
The distribution of notes by grade did have a major impact on my results. I've included some statistics on this in my latest post. Two years ago I opted for automatic investment and picked one of the models Lending Club recommended. Apparently the model I picked was skewed toward the riskier loans which did contribute significantly to the results. Later I changed models toward a less risky mix and I believe the results were better.

In a later chart I did compare my results by grade to all notes issued in 2015. It turns out that the results for the riskier notes in my account were worse than randomly selected notes at the same grade level. So, the distribution and some bad luck were the leading culprits.

Fred93, I'm intrigued by your assertion that notes from 2015 and 2016 performed worse than previously. I'll have to look at your posts to understand your reasoning. I'm also working on a performance measure instead of the charge off rate and would be interested in your views on it.

fliphusker

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Re: My experience with LC isn't particularly good
« Reply #4 on: July 09, 2017, 07:10:04 PM »
You would be wise to go back and read any post that Fred has made. He is a very valuable member here and has written extensively about the issues with 2015 and 2016 notes.
When I came here Fred was one of the guys that I read as much as I could from. Gleamed a ton of knowledge from him, along with many others here. I will have to check out your blog.
Good luck.

Fred93, I'm intrigued by your assertion that notes from 2015 and 2016 performed worse than previously. I'll have to look at your posts to understand your reasoning. I'm also working on a performance measure instead of the charge off rate and would be interested in your views on it.

RomanLegend

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Re: My experience with LC isn't particularly good
« Reply #5 on: July 14, 2017, 11:12:53 PM »
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