Author Topic: Beta Testing - Lending Club Investing Algorithm  (Read 1479 times)

RomanLegend

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Beta Testing - Lending Club Investing Algorithm
« on: July 14, 2017, 11:11:18 PM »
Hello,

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

fliphusker

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Re: Beta Testing - Lending Club Investing Algorithm
« Reply #1 on: July 15, 2017, 10:16:15 AM »
I was going to make some long comments, but at 12:52 I chuckled and seen that on your fav bar you have torrents and top 100 proxies. OOPS. :)
Might want to redo your video and pull that one from youtube so people will actually take you seriously.
Good luck with your project. :)

rawraw

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Re: Beta Testing - Lending Club Investing Algorithm
« Reply #2 on: July 15, 2017, 03:00:00 PM »
Christopher Roman?  May want to remove that mail tab too

jrr6415sun

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Re: Beta Testing - Lending Club Investing Algorithm
« Reply #3 on: July 15, 2017, 09:39:36 PM »
it's not really clear to me what your numbers are based off of and whether or not I can trust the ratings you give.

jheizer

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Re: Beta Testing - Lending Club Investing Algorithm
« Reply #4 on: July 15, 2017, 10:22:01 PM »
Replacement to P2P Quant's Percentile Tool http://lc.geekminute.com

RomanLegend

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Re: Beta Testing - Lending Club Investing Algorithm
« Reply #5 on: July 16, 2017, 05:26:25 PM »
Yea, I should remove that, thanks for the input.  Didn't think about it.  (But who doesn't use Torrents...Anyways...)

The algorithm is based on the approach I refined over 3 years.  I really focused on minimizing defaults at first which sort of kept my return low because I was mostly in A's and B's...  But then I realized there are ways you can take shots at the higher interest rates if you are selective on certain factors.  When I chained a few of the factors together I really jumped my interest rate up.  It persisted over time so I decided to design a site and eventually an app. 

I really don't want to get too much into the weeds on the approach/analysis as it is our secret sauce that we are attempting to build a business around.  But I'll do my best to answer any further questions.

Thanks for testing it out,

-Chris

jheizer

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Re: Beta Testing - Lending Club Investing Algorithm
« Reply #6 on: July 16, 2017, 05:45:35 PM »
(But who doesn't use Torrents...Anyways...)

approach/analysis as it is our secret sauce that we are attempting to build a business around.

-Chris

Hmm.....
Replacement to P2P Quant's Percentile Tool http://lc.geekminute.com

RomanLegend

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Re: Beta Testing - Lending Club Investing Algorithm
« Reply #7 on: July 16, 2017, 05:48:08 PM »
We're giving it away for free right now.... what do you want?  Geeezzzz......

RomanLegend

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Re: Beta Testing - Lending Club Investing Algorithm
« Reply #8 on: July 16, 2017, 05:54:40 PM »
it's not really clear to me what your numbers are based off of and whether or not I can trust the ratings you give.

I showed you the returns.  I'm currently at 8.6% NAR fluctuated as high as 10.5% NAR.  I don't think I showed it in the video, but my defaults are less than 3%.  No real reason to trust us as we are brand new and haven't had time to give a proven track record.  But that is why it is free for now in Beta Testing.  Give it a shot, try it out.  See what you think. 

-Chris

jrr6415sun

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Re: Beta Testing - Lending Club Investing Algorithm
« Reply #9 on: July 17, 2017, 01:09:38 PM »
it's not really clear to me what your numbers are based off of and whether or not I can trust the ratings you give.

I showed you the returns.  I'm currently at 8.6% NAR fluctuated as high as 10.5% NAR.  I don't think I showed it in the video, but my defaults are less than 3%.  No real reason to trust us as we are brand new and haven't had time to give a proven track record.  But that is why it is free for now in Beta Testing.  Give it a shot, try it out.  See what you think. 

-Chris

some of the top picks I was shown were people with bankruptcies and lots of delinquencies. I always thought to avoid those people but maybe i'm wrong about that and the algorithm proves differently. Is there a way to turn off/unsubscribe from the emails? I don't see the option anywhere, it's too many emails for me right now.

RomanLegend

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Re: Beta Testing - Lending Club Investing Algorithm
« Reply #10 on: July 17, 2017, 01:14:04 PM »
Messed with me as well.  At first I would never invest in any loan with a bankruptcy or a lien, etc...  Through some of my trial and error, as well as some back testing to confirm that variable didn't seem to negatively effect my defaults.

I agree the x4 emails, per day, is a bit much but the idea initially was to compete for the best loans right when they come out.  If you message me your user name I can see if I can have them turned off for you.  Maybe send them to a folder for now so they stay out of your inbox? 

Thanks for taking a look at the software!

it's not really clear to me what your numbers are based off of and whether or not I can trust the ratings you give.

I showed you the returns.  I'm currently at 8.6% NAR fluctuated as high as 10.5% NAR.  I don't think I showed it in the video, but my defaults are less than 3%.  No real reason to trust us as we are brand new and haven't had time to give a proven track record.  But that is why it is free for now in Beta Testing.  Give it a shot, try it out.  See what you think. 

-Chris

some of the top picks I was shown were people with bankruptcies and lots of delinquencies. I always thought to avoid those people but maybe i'm wrong about that and the algorithm proves differently. Is there a way to turn off/unsubscribe from the emails? I don't see the option anywhere, it's too many emails for me right now.

SeanMCA

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Re: Beta Testing - Lending Club Investing Algorithm
« Reply #11 on: July 17, 2017, 04:13:19 PM »
I think your ANAR will drop once your portfolio seasons more. Mine did. I believe mine said 8%+ around that portfolio age. Now mine is down to a little over 5%. I'm at a 29 month weighted age. I have generated a negative return YTD with no end in sight. Early payoffs are the silent killer. Your good borrowers will get snatched out of your portfolio, leaving you with many borrowers who can't get more credit. Lending Club will also charge you a 1% penalty on the outstanding principal to add insult to injury. With the good notes getting refinanced away from you, you'll be left with a lot of the bad and the ugly, even if they looked good when you first bought them.
I'm a merchant cash advance veteran exploring the p2p lending waters.

RomanLegend

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Re: Beta Testing - Lending Club Investing Algorithm
« Reply #12 on: July 17, 2017, 04:31:26 PM »
Good comments.  I've wondered about that myself.  How come you've let your portfolio mature to 29 months?  Didn't want to add new loans any longer? 

I've noticed I needed a healthy balance of A's & B's to offset the riskier higher interest rate notes (even if I think they have a smaller chance of default vs their LC Grade).  I've started sort of a PID loop exercise where I add higher interest rates for a while, then ebb back to lower interest rates, then back to higher to keep things sort of balanced around a 9% ANAR.  As Late 1, Late 2, etc, start popping up I'll go back to lower interest rates in anticipation.  In theory, this will reduced my maximum interest ceiling however I won't lose the money I'm working to make...  I'm pretty sure this is the reason my defaults have stayed quiet thus far. 

I think your ANAR will drop once your portfolio seasons more. Mine did. I believe mine said 8%+ around that portfolio age. Now mine is down to a little over 5%. I'm at a 29 month weighted age. I have generated a negative return YTD with no end in sight. Early payoffs are the silent killer. Your good borrowers will get snatched out of your portfolio, leaving you with many borrowers who can't get more credit. Lending Club will also charge you a 1% penalty on the outstanding principal to add insult to injury. With the good notes getting refinanced away from you, you'll be left with a lot of the bad and the ugly, even if they looked good when you first bought them.

SeanMCA

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Re: Beta Testing - Lending Club Investing Algorithm
« Reply #13 on: July 17, 2017, 05:47:28 PM »
Yes, I stopped reinvesting a little over a year ago. In the immediate wake of the Laplanche scandal, there was a period of time when no loans were being added to the platform at all and I got a chance to truly imagine what it would be like to live with the portfolio I had without any opportunity to reinvest. Sure, I experienced defaults but the biggest killer has been early payoffs (I think more than 1,400 of my notes have paid off early so far). If you notice, you'll see that I'm kind of obsessed on dwelling on this.

You'd think your portfolio without reinvesting would just be the good notes paying interest to offset the defaults while generating a profit on the road to maturity, but that's not what happens. Instead, your good borrowers get additional loans to pay off their existing loan and leave your portfolio. If the loan is older than 12 months, Lending Club hits you with a 1% fee on outstanding principal as a penalty when it pays off early (for no reason that I can understand). So not only do you lose the good borrowers you need to offset your defaults but you get hit with penalties when it happens.

These LC borrowers may be getting that 2nd loan from LC or from a competitor. LC won't tell you if the loan you're investing in is the borrower's first or second. LC won't tell you if a paid off borrower got a 2nd loan from LC (and used that 2nd loan to pay off their first). LC alone can decide whether to extend a 2nd loan to their existing borrowers and they have a strong financial incentive to do this. (1) They generate a new origination fee (2) They get to show new loan volume to their shareholders (3) They get to charge the investors on the original loan a 1% penalty on outstanding principal.

LC does not like answering questions about early payoffs. I have emailed them about all this and they skirted my questions with legalese but admit that borrowers can use a 2nd loan from them to pay off a first one. Heck, in their testimonials, their customers have raved about getting a 2nd loan from LC at a lower interest rate to pay off their first one at a higher interest rate. Both LC and investors lose when borrowers default but when loans are paid off early, LC wins and the investor loses. If this was an infrequent occurrence, It's a conflict of interest I might not make a fuss about, but it has happened to more than 30% of my portfolio SO FAR. The net result is regularly monthly losses. I expect that when all is finished, nearly half of my borrowers will have paid off early.

When you're on the reinvesting treadmill, you might not care as much. Bottom line, I don't trust LC.
I'm a merchant cash advance veteran exploring the p2p lending waters.

RomanLegend

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Re: Beta Testing - Lending Club Investing Algorithm
« Reply #14 on: July 17, 2017, 05:58:59 PM »
Makes sense to me Sean... Unfortunately. 

I did notice that a bit with the very low A's and B's.  The only thing I've done that might ease that pain is I've done some back testing to verify that I can eliminate A1 to B2 Loans.  This reduces my early payoffs quite a bit however, it handicaps my ability to maintain my PID-esq loop where I'm combating lates & charge offs with loans that are less likely to default.  Tricky balance so far.  What I seem to be left with is a slightly higher default rate developing but reducing the overall early payoffs.  This estimates a 9.75% NAR with that higher default rate.

-Chris