Newbie saying hi (with some questions)

Hi all,



* I'm curious to know how many people think there are fraudulent borrowers out there (as opposed to debts that go bad for "legitimate" reasons)?

Hi all,

Just a short note to say "hi".  I started with Funding Circle (and Zopa, but that's another matter) a week or so back, and a little bit of googling lead me here.  You all seem to be sensible, polite, and I've found reading through some of the old threads quite informative.  If I had to summarise both my initial feelings about Funding Circle, and my interpretations of what some of you have been posting about, it would go roughly as follows.  I'd be curious to see how far wide of the mark I am .

* Funding Circle is the best of a bad bunch.
* The quality of the information provided to lenders has deteriorated (why?).
* Auto-bid isn't optimal, if you have the time to sift through loans / loan parts yourself.
* Diversification is critically important, but not to the extent that you have to invest all of your funds asap.
* The website is.... lacking.  But basic functionality seems to be there (though as I type it seems to be down, how often does this happen?).
* Whole loans and institutional investors might be a problem for "true p2p" lenders.  How much cream do they get at our expense?
* There are some big fish who bid aggressively in the expectation that they will be able to re-sell parts (good for liquidity, bad for rates?).
* Rates are trending down at the moment (funds supply over loan demand?).
* Unload property loans before term (because they are sticky / illiquid / may require refunding?).
* Funding Circle's debt recovery capabilities seem.... lacking.
* I'm curious to know peoples' thoughts about interest rate risk, ie how the loan market will respond to the inevitable (but when?) rises?
* I'm curious to know how many people think there are fraudulent borrowers out there (as opposed to debts that go bad for "legitimate" reasons)?
* I'm curious to know peoples' thoughts about correlation risk.
* I like the way you sometimes look to "get an offering over the line".
* I like the way you discuss offerings that bother you.
* If nothing else Funding Circle isn't Bondera.

That's about all for now .

Cheers,


RM

"* Funding Circle is the best of a bad bunch." emmm, it is probably the biggest and has built up a head of steam to stay the big player, its software is complicated and therefore weak. It charges the lender management fees (ah hello, does that even seem reasonable?), its rates are pretty bad when you look at the risk you are taking on, not  maybe now but when the investment cycle takes a dip.  At the moment I think AC, FS and MT are all looking better than FC but they also have their limits.  I've set myself a limit of 5 portals and move the money between as the deals get better.  

* Auto-bid isn't optimal, no it is horrible, I tried to use it for a period and it really is useless due to the randomness of its process (it is not a "fire and forget" tool it is a "fire, worry and monitor tool".  Read deeper.

* I like the way you sometimes look to "get an offering over the line". No idea what this means, sometimes (1% of the time) you get a price that is reasonable, the rest of the time the rates are bad (just think, you are offered no security on most of the deals)

* Diversification is critically important, but not to the extent that you have to invest all of your funds asap.  No, set yourself a target for investment over time, the trick is to ensure that once the money is invested it stays invested at the best possible rate, not that you get everything in early (that money was probably only earning 2% anyway so why worry about it).  Every Portal has a season for investing, right now FC is useless, RS was looking great a week ago, now back in the doldrums.   You also need to understand how weekends work, normally people borrow at the weekend but lend during the week, companies borrow during the week.

* There are some big fish who bid aggressively in the expectation that they will be able to re-sell parts (good for liquidity, bad for rates?).  Flippers exist but less so at these rates.  One of things that occurs on both sides (Lenders and Borrowers) is they put up agents to do their work, these numpties (sorry, "trained individuals") have to fill their allocations and at figures better than the ignorant can get elsewhere.  Hence you see people bidding down the deals or finishing the deals early.  It looks clever but all it does is expand the market.  Think of it like a pyramid, there will always be people who want to lend at 6% because that seems like a safe bet, forget the details of the lend but 6% is around or just above sensible corporate bonds, then there are people who want to lend at 9% which is about the level of PIBs and other lower security bonds, finally there are people who want to live in the excited atmosphere of 12% which has some risk but would line up with Greek Bonds with less risk (that is saying something), if you want excitement and don't like hanging out is casinos then 20%+ is in the P2B equity market.

Bondera; the industry needs to think what to do about failures, as a bad fail will have lenders coming out across the board, it needs buying up and I'd think FC and AC will have been in talking to them.

The mystery wine merchant, and the original, but maybe not the best, S**t Hou*e also come to mind.