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Post by thetreasurer on Dec 5, 2016 15:40:40 GMT
I can't believe the amount of people buying negative remaining term loans on the secondary market in the thousands! I mean it is great for those who are a bit more risk adverse like me having no trouble getting rid of loans that have 20 odd days remaining term but I can't understand why people are buying this stuff!
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Dec 5, 2016 15:52:26 GMT
I can't believe the amount of people buying negative remaining term loans on the secondary market in the thousands! I mean it is great for those who are a bit more risk adverse like me having no trouble getting rid of loans that have 20 odd days remaining term but I can't understand why people are buying this stuff! I share your disbelief, however, there may be some reasons (or a combination of reasons) why investors invest in these loans 1. The strategies they employ is simply diversification across all loans 2. They have the opinion that the PF will cover all losses (possibly not true...) 3. BHs with so much money and a determination to invest in P2P, that they have little choice but to send money towards the negative day loans 4. They have the up most faith in SS, the DD that SS carry out and the management of the loan 5. Just share ignorance - it is very simple to invest, and old proverb rings true; "a fool and his money are soon parted" Rather them than me, and I'm quite happy that I have the ability to sell unwanted loans in seconds. However, please remember that the SM is a marketplace and certain conditions can (and will) affect our ability to trade on there (i.e. there is a risk that it could become static at the drop of a hat)
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seeingred
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Post by seeingred on Dec 5, 2016 16:06:03 GMT
It is actually the number of people (and the amount of money they invest). Anything seems to sell. I was never happy with Fife but seeing the thread this morning I decided to get rid anyway - few hundred £ only. It was snapped up. Even more amazed that Gloucestershire is still purchased. It's the lure of 12%..... Interesting link on the Z thread to FT articles suggesting that P2P as a sector might not survive a real credit crunch. "The loan book also can’t be taken at face value, what with all the mislabelling that seems to be going on. Data isn’t really all that helpful if you can’t be sure that it properly reflects the truth of the situation. Transparency counts for very little unless it’s accompanied by accuracy." from: link |
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jamesc
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Post by jamesc on Dec 5, 2016 16:16:48 GMT
I can't believe the amount of people buying negative remaining term loans on the secondary market in the thousands! I mean it is great for those who are a bit more risk adverse like me having no trouble getting rid of loans that have 20 odd days remaining term but I can't understand why people are buying this stuff! I share your disbelief, however, there may be some reasons (or a combination of reasons) why investors invest in these loans 1. The strategies they employ is simply diversification across all loans 2. They have the opinion that the PF will cover all losses (possibly not true...) 3. BHs with so much money and a determination to invest in P2P, that they have little choice but to send money towards the negative day loans 4. The have the up most faith in SS, the DD that SS carry out and the management of the loan 5. Just share ignorance - it is very simple to invest, and old proverb rings true; "a fool and his money are soon parted" Rather them than me, and I'm quite happy that I have the ability to sell unwanted loans in seconds. However, please remember that the SM is a marketplace and certain conditions can (and will) affect our ability to trade on there (i.e. there is a risk that it could become liquid at the drop of a hat) Actually there is another reason that the security is good and regardless of being overdue the security will more than cover loan amount e.g. The hackneys and the BTL in Liverpool IMHO all much better security than a lot of recent loans and all at 12% and the longer before being paid back the longer I earn my 12%. I believe that the security is paramount and any loan you invest in you should be prepared to hold for term.
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Dec 5, 2016 16:29:16 GMT
I share your disbelief, however, there may be some reasons (or a combination of reasons) why investors invest in these loans 1. The strategies they employ is simply diversification across all loans 2. They have the opinion that the PF will cover all losses (possibly not true...) 3. BHs with so much money and a determination to invest in P2P, that they have little choice but to send money towards the negative day loans 4. The have the up most faith in SS, the DD that SS carry out and the management of the loan 5. Just share ignorance - it is very simple to invest, and old proverb rings true; "a fool and his money are soon parted" Rather them than me, and I'm quite happy that I have the ability to sell unwanted loans in seconds. However, please remember that the SM is a marketplace and certain conditions can (and will) affect our ability to trade on there (i.e. there is a risk that it could become liquid at the drop of a hat) Actually there is another reason that the security is good and regardless of being overdue the security will more than cover loan amount e.g. The hackneys and the BTL in Liverpool IMHO all much better security than a lot of recent loans and all at 12% and the longer before being paid back the longer I earn my 12%. I believe that the security is paramount and any loan you invest in you should be prepared to hold for term. That is true - my little list and observations was based on the fact that all negative loans are moving, not just the ones with good security. There are some loans in negative territory where the security looks sound.
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Post by charliebrown on Dec 5, 2016 16:39:31 GMT
I don't think I'd buy negative days loans, but I am holding some negative days loans. My logic is this, I do not want to play the "Russian roulette" game of buy with the intent to jump ship right before repayment is due. This strategy might not work forever. I prefer to choose my loans and as long as I'm not aware that anything significant has changed I'll hold them until they (hopefully) repay. Negative days loans are pretty common and so far they usually extend or repay.
Regarding the notion that p2p couldn't survive a significant downturn or credit crunch then I'd also fear that's true, I fear it would be complete Armageddon. Do the people who run p2p sites stand to lose anything personally or will it only be us lenders that lose out.
Something tells me that I shouldn't have put quite so much cash in p2p but the buzz of it is quite addictive. Perhaps the online nature of it is the issue; it kind of feels like a computer game hahahaha but it will suddenly feel very real if I lose a big bundle of cash.
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ablender
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Post by ablender on Dec 5, 2016 17:07:43 GMT
It is not that I play Russian roulette. It is more a matter of not liking that small dash in front of the the number representing the date.
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Post by charliebrown on Dec 5, 2016 17:19:48 GMT
It is not that I play Russian roulette. It is more a matter of not liking that small dash in front of the the number representing the date. It's probably more like pass-the-parcel, but inside the parcel is a bomb 
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twoheads
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Programming
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Post by twoheads on Dec 5, 2016 17:49:00 GMT
Regarding the notion that p2p couldn't survive a significant downturn or credit crunch then I'd also fear that's true, I fear it would be complete Armageddon. Do the people who run p2p sites stand to lose anything personally or will it only be us lenders that lose out. As far as Lendy/SS is concerned, they will not lose out on existing loans. In theory, all the loans are funded by us. For sure they keep some for themselves but they don't need to.
Even if there is 'maximum Armageddon' and all lenders try to sell all their loan parts, all this means is that there would be £147M available for sale on the SM with nobody wanting to buy. This is a mere shifting of lenders loan parts from the 'Live' category to 'Selling' category; nothing else. The same lenders (us) would still be lending to the same borrowers.
SS would find it rather difficult to fund the next loan and their business would collapse as the interest dries up as loans are (hopefully) repaid.
In this situation, the lenders must hope that the loans are either repaid in due course or that the securities will cover the loan values in case of defaults.
If the Armageddon means that many loans default with insufficient security then it is the lenders of those loans who will lose out.
That's how I see it anyway!
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lobster
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Post by lobster on Dec 5, 2016 18:23:42 GMT
Regarding the notion that p2p couldn't survive a significant downturn or credit crunch then I'd also fear that's true, I fear it would be complete Armageddon. Do the people who run p2p sites stand to lose anything personally or will it only be us lenders that lose out. As far as Lendy/SS is concerned, they will not lose out on existing loans. In theory, all the loans are funded by us. For sure they keep some for themselves but they don't need to.
Even if there is 'maximum Armageddon' and all lenders try to sell all their loan parts, all this means is that there would be £147M available for sale on the SM with nobody wanting to buy. This is a mere shifting of lenders loan parts from the 'Live' category to 'Selling' category; nothing else. The same lenders (us) would still be lending to the same borrowers.
SS would find it rather difficult to fund the next loan and their business would collapse as the interest dries up as loans are (hopefully) repaid.
In this situation, the lenders must hope that the loans are either repaid in due course or that the securities will cover the loan values in case of defaults.
If the Armageddon means that many loans default with insufficient security then it is the lenders of those loans who will lose out.
What sort of event are we talking about here, that could trigger such an "Armageddon" ? If we are talking about a total collapse of the banking system, then we wouldn't be any better off with our cash "safely" in the bank - it would still be inaccessible. Unless we're all going to stuff £20 notes under the mattress ....  If, instead, we are talking about a stock market crash for our Armageddon, then people would be selling their stocks for whatever they could , and looking for a new home for their cash. If some of that cash were to find its way into P2P that could be construed being good for the P2P marketplace. What other Armageddon are there ? An all out war ?? I guess if that happens, and P2P profitability would be the last thing on our minds. Anything else ? How about Donald Trump becoming the next president of the USA - nah, that's just a ludicrous thought that could never actually happen ...... 
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ablender
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Post by ablender on Dec 5, 2016 18:33:35 GMT
It is not that I play Russian roulette. It is more a matter of not liking that small dash in front of the the number representing the date. It's probably more like pass-the-parcel, but inside the parcel is a bomb No, it only has a blanket inside, look. 
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Post by charliebrown on Dec 5, 2016 18:52:52 GMT
As far as Lendy/SS is concerned, they will not lose out on existing loans. In theory, all the loans are funded by us. For sure they keep some for themselves but they don't need to.
Even if there is 'maximum Armageddon' and all lenders try to sell all their loan parts, all this means is that there would be £147M available for sale on the SM with nobody wanting to buy. This is a mere shifting of lenders loan parts from the 'Live' category to 'Selling' category; nothing else. The same lenders (us) would still be lending to the same borrowers.
SS would find it rather difficult to fund the next loan and their business would collapse as the interest dries up as loans are (hopefully) repaid.
In this situation, the lenders must hope that the loans are either repaid in due course or that the securities will cover the loan values in case of defaults.
If the Armageddon means that many loans default with insufficient security then it is the lenders of those loans who will lose out.
What sort of event are we talking about here, that could trigger such an "Armageddon" ? If we are talking about a total collapse of the banking system, then we wouldn't be any better off with our cash "safely" in the bank - it would still be inaccessible. Unless we're all going to stuff £20 notes under the mattress .... If, instead, we are talking about a stock market crash for our Armageddon, then people would be selling their stocks for whatever they could , and looking for a new home for their cash. If some of that cash were to find its way into P2P that could be construed being good for the P2P marketplace. What other Armageddon are there ? An all out war ?? I guess if that happens, and P2P profitability would be the last thing on our minds. Anything else ? How about Donald Trump becoming the next president of the USA - nah, that's just a ludicrous thought that could never actually happen ...... Yes, that was my Amegedon. An event or series of events that causes all or most values of securities to drop below the value of the loan. You might say a bit like an average Joe finding himself in a negative equity situation. Why do we always say it needs to be a war or something so drastic, I don't think it does by any means.
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mikes1531
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Post by mikes1531 on Dec 5, 2016 20:44:49 GMT
What sort of event are we talking about here, that could trigger such an "Armageddon" ? If we are talking about a total collapse of the banking system, then we wouldn't be any better off with our cash "safely" in the bank - it would still be inaccessible. Unless we're all going to stuff £20 notes under the mattress .... If, instead, we are talking about a stock market crash for our Armageddon, then people would be selling their stocks for whatever they could , and looking for a new home for their cash. If some of that cash were to find its way into P2P that could be construed being good for the P2P marketplace. What other Armageddon are there ? An all out war ?? I guess if that happens, and P2P profitability would be the last thing on our minds. Yes, that was my Amegedon. An event or series of events that causes all or most values of securities to drop below the value of the loan. You might say a bit like an average Joe finding himself in a negative equity situation. Why do we always say it needs to be a war or something so drastic, I don't think it does by any means. It certainly doesn't take a war or something similarly drastic. We've seen it happen before -- IIRC, property prices took a severe knock at the end of the 80's, and they've taken another knock after the 2007-08 financial crisis. A 70% LTV may sound like adequate security in such a case, but it isn't. Distress sales of property often result in a 20% discount to the 'market value', and if there's been a generally widespread drop of even 10% in market values, then the sale proceeds won't cover a 70% loan -- and that's before taking account of the costs of receivers, estate agents, lawyers, etc., etc. And while 'normal' residential property prices are reasonably consistent/predictable, the prices of commercial property and high-end residential properties are a lot more volatile and will suffer more than residential prices in a downturn.
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mikes1531
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Post by mikes1531 on Dec 5, 2016 20:47:17 GMT
However, please remember that the SM is a marketplace and certain conditions can (and will) affect our ability to trade on there (i.e. there is a risk that it could become liquid at the drop of a hat) : Or even illiquid! Or were you referring to a meltdown? 
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Dec 5, 2016 20:50:15 GMT
However, please remember that the SM is a marketplace and certain conditions can (and will) affect our ability to trade on there (i.e. there is a risk that it could become liquid at the drop of a hat) : Or even illiquid! Or were you referring to a meltdown? I did, in fact, mean static . Very happy to see it liquid; hopefully, no impending meltdown
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