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Post by dutchman on Aug 10, 2019 11:36:57 GMT
hi, i was reading below article. let me first applaud the article, i find it always interesting to read about others investment strategies. i'm interested what others think. p2p-millionaire.com/how-to-invest-a-million-in-p2p-lending-our-e1m-mintos-auto-invest-settings-revealed/My 2 remarks: 1) the writer assumes that the high % return will make up for 1 or 2 Loan Originators failures per year. although that may be the case in normal market situations, personally i would like to see a 2008 kind of event before investing more in P2P. i think that in a global market downturn, where people get fired, they stop paying back their car, personal loans etc an mass, meaning a bit more than 1 or 2 failure of LO's 2) the writer mentions that if a LO goes belly up, you may as well have 14% loans instead of 9.5% loans. (assuming you buy BB loans) although it makes sense to some extent, in my opinion, higher returns come with longer terms. For instance if you look at Mogo, you get 14% for 46+months, @ 24Months you get 12% and below 12months it drops to 9.5% (prim market). Simply said even mogo 'pays' for longer terms. Sure the writer mentions it all depends on your risk tolerance (and i guess the % of net worth you invest in p2p). Looking forward to hear your remarks. |
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Post by littleinvestor on Aug 13, 2019 20:31:47 GMT
A global downturn will hurt you everywhere, if you are afraid of that, then simply put your money in cash at hand. Not the bonds, or stock market will save you from that.
Maybe some commodities will, and still, it is a risk. Who would have imagined that with Trump it was going to run ok - nobody can predict.
There is indeed a rule of 40 for diversification which the guy in the blog applies. Seems that 40 investments gives you the sweet spot in risk tolerance. I'm personally not a fan of it, without doing DD on each investment (I also have less money to invest lol).
My investment is different, I invest in each loan originator not more in what I make as interest on a year; and I only invest in the top 15 performing LO; like this I hope to have any impact of one LO going bankrupt covered. If is more than one, well bad luck. But in any case; some money is always returned here - this is not like crypto where it is all or nothing.
I personally do not care about percentage to term; I have no problems getting 18% for 82 months loans; chances are small they reach maturity, and secondly, for sure someone will buy a high percentage loan regardless the length - in my view they are always good investments. But one needs to balance.
Anyway, the guy of the post doesn't care with a 1M portfolio. I don't think he will be bothered if even 4 LO go total bankrupt. His level of risk tolerance is from another level as he plays from within a total comfort zone.
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Post by southseacompany on Aug 14, 2019 9:19:56 GMT
The blog's author is in this forum as Sterling @ p2p-millionaire.com and his investment approach has also been discussed in an earlier thread. He seems to be well aware of the risks; he simply has an unusually high risk tolerance. Diversification only works when correlation between the investments in question is low enough. It's possible that LOs will die en masse in the next downturn, ruining everyone's investment returns here, but there isn't much scope to predict how bad it will be, because most of the LOs are so young that they've never had to withstand a recession. |
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JamesFrance
Member of DD Central
Port Grimaud 1974
Posts: 1,317 
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Post by JamesFrance on Aug 14, 2019 11:41:00 GMT
It will be interesting to see whether P2P seems to lose more in a crash situation than ETFs. The share values will probably recover after a while but P2P bad debts will be written off, so it may be the time to switch into the stock market when share prices seem to have bottomed out, however timing it right could be difficult but otherwise the losses will be permanent.
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Post by rahafoorum on Aug 16, 2019 14:51:10 GMT
2) the writer mentions that if a LO goes belly up, you may as well have 14% loans instead of 9.5% loans. (assuming you buy BB loans) although it makes sense to some extent, in my opinion, higher returns come with longer terms. For instance if you look at Mogo, you get 14% for 46+months, @ 24Months you get 12% and below 12months it drops to 9.5% (prim market). Simply said even mogo 'pays' for longer terms. Yes, you get higher return for longer term loans, because the risk is higher in some sense. However, in case of LO default, the term length probably doesn't make much difference. There's a decent likelihood that the portfolio will be sold off at a discount to some collection agency or something of the sort and you more than likely won't receive any payments for months or years anyway. Until the bankruptcy processes have grinded very very slowly to the point where they finally pay something to someone. In essence, you could receive payment at the same time, irregardless of how long your loan terms are.
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benaj
Member of DD Central
Posts: 4,855
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Post by benaj on Aug 16, 2019 15:21:20 GMT
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Post by dutchman on Aug 8, 2020 11:08:22 GMT
Just a quick recap... It seems he has decreased his exposure to Mintos from 1000,000 in Aug last year to 571,000 now (so -43%) I suppose the failing row of loan providers has something to do with that. And i can't blame him, i'm sure more will follow... p2p-millionaire.com/track/sterling/In my opinion is making rational decisions one thing, actually loosing 100,000 is something very different. And you can only know how you ‘feel’ about that when you had that real experience. Just my 2 cents… |
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