SteveT
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Post by SteveT on Oct 30, 2017 9:50:44 GMT
When you consider discounting I am not sure how this would actually change the length of the queue. Take Liverpool, by now I would see that at a massive discount as people listing now would have no choice. Whatever the max allowed was, all I can see is that people may have lost their place in the que as their discount became too low and they had to relist at a higher one. If you limit the discount to a low % then people will just go to that, to avoid being beaten, so pointless to even do it. Only hope is that people see the amount of the discount as worth investing, on Liverpool as we stand today I would suggest the que would be nigh on identical as we look at it now. If you allow high discounting, lets say upto the interest rate in a loan, you would IMHO only see an improvement in liquidity by doing this (with people watching the SM que like hawks for the time to list), as people are unlikely to list at a significant loss, unless they felt they had to as they were desperate for the cash. Its still not guaranteeing anyone would buy it, but it would certainly increase the chance if discounted high enough. A loan looking like it was going "lady humps" up would immediately hit this discount and again would probably become illiquid even at the max discount. If you felt there was a 20% chance of losing significant capital or being tied in for time with no interest eventually payable, then even a 10% discount would probably not persuade you to invest in that loan. So my conclusion is small discounting is worthless, high discounting would allow liquidity for those willing to take the biggest loss on sale, until the percepted risk in a loan exceeded the max discount amount. Well, I guess you could be right, but the track record on Assetz Capital (and, to a lesser extent, Funding Secure) suggests otherwise. On AC, very few parts ever actually need discounting to sell and I can only remember one loan (the Welsh hotel) where parts were, for a period, available at anything lower than the minimum discount. AC lenders, knowing that the option to discount is available to them if a queue* later forms, tend not to rush for the exit at the first indication of problems. On FS, the tax situation means that pretty much all loans become available at a discount as they near their term, but anything offered at more than 0.1% or 0.2% below the "going rate" tends to get bought up pretty quickly. *It's worth mentioning that AC also eliminates the "queue" issues by randomly allocating sales across all those waiting to sell (at the same price). MoneyThing could perhaps consider the same, although I wouldn't recommend chopping into anything smaller than £1 parts! (crossed with r00lish67 )
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jlend
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Post by jlend on Oct 30, 2017 11:09:02 GMT
I wonder if the number and slower recent growth in lenders is also having an impact on shifting things on the SM.
As Ed has said growth has slowed recently in lenders.
Relatively new lenders like me were hoovering up things on the secondary market to build a balanced portfolio on MT.
I don't think I'd be quite so keen to join Moneything now just because of the lack of choice on the SM and the small number of loans in general, even putting aside the recent defaults and at the very least noise around a few of the other loans however great they may turn out to be.
Some good news on recoveries, an insight into the situation in Liverpool and a clear exit plan for MH I think will settle things down again over the next couple of months.
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mary
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Post by mary on Oct 30, 2017 11:28:46 GMT
£40k taken on Newcastle and £30k on Liverpool this morning, so money is still flowing into the SM. Not everyone is pessimistic, however a loan update would not go amiss for Liverpool.
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robski
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Post by robski on Oct 30, 2017 11:29:05 GMT
MT emailed a good update out this morning. There is a graph in there on the SM, and its quite interesting, it certainly seems to debunk the "the SM is slow" type thoughts Of the last 6 months, every one of the 6 is higher than the record previous month for SM sales The highest was August and the lowest Sept. That doesn't look like an SM thats needing fixing to me. Your views may differ if your desperate to offload some loans
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Oct 30, 2017 11:52:23 GMT
This seems to me an interesting question not taken up in this thread. What do people here think would happen. At the moment £1.6m is available on the SM. At a guess availability would drop drastically by perhaps as much as a half or two thirds leaving only those seriously wanting/needing to sell. Looking ahead, what advantage would such a measure provide? Would it discourage flippers? Improve liquidity? Impair MT's attractiveness to investors? If we hold the risk we should be paid interest.
I'd buy far less of new loans if there was no interest on the sm, that wouldn't help the platform in my view. I quite agree with the bold. If any penalty for listing on the SM is required (I'm not saying it is) I would prefer a simple percentage charge taken at the time of a successful sale, as is levied on some other platforms. The money would go to MT initially but would benefit lenders in the long term.
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Post by GSV3MIaC on Oct 30, 2017 19:07:16 GMT
That's certainly my preferred way of paying for a SM, if it needs paying for (free is even better).
Discounts and premia exist over at ABLRate (now the SM is turned back on) and as a result you can buy/sell most anything (albeit in smallish quantity) most of the time. I regularly have stuff listed for sale at 101% or whatever, if I am not particularly attached to it .. I'll also hoover up a bunch 'extra' at <99%, if it becomes available (in the hope I can sell it at 100% later, or just hold to completion and enjoy a decent rate). Plenty of <12% loans at Ly were basically unsaleable for a while when there was a glut of decent 12% loans with no apparently higher risk .. a discount might have helped (but it might have needed to be 5% or so).
IMO that sort of market benefits everyone, as long as you have some mechanism to stop folks from buying 'all' a loan and then selling at once for 103% (the FC model). And as long as everyone realises that early repayment is always a risk.
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archie
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Post by archie on Oct 31, 2017 7:11:59 GMT
I don't like the ABL sm at all so limit my investment there.
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Post by GSV3MIaC on Oct 31, 2017 8:31:56 GMT
I don't like the ABL sm at all so limit my investment there. What don't you like about it? I agree the software implementation is poor, but the concept is fine by me.
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IFISAcava
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Post by IFISAcava on Oct 31, 2017 8:41:05 GMT
I don't like the ABL sm at all so limit my investment there. What don't you like about it? I agree the software implementation is poor, but the concept is fine by me. I like all the SMs where you can make a bid and wait for matching
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mary
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Post by mary on Nov 4, 2017 9:46:00 GMT
So now liquidity has returned, all is well and the moaning Minnie's have shut up.
I assume their Quant models and strategies are all purring along again, if only they could build in the obvious fluctuations in liquidity into their abstract mathematical models, rather than relying on being able to dump any quantity of a loan onto unsuspecting dupes at the first hint of trouble!
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Post by Deleted on Nov 4, 2017 10:57:50 GMT
So now liquidity has returned, all is well and the moaning Minnie's have shut up. I assume their Quant models and strategies are all purring along again, if only they could build in the obvious fluctuations in liquidity into their abstract mathematical models, rather than relying on being able to dump any quantity of a loan onto unsuspecting dupes at the first hint of trouble! Yep, and all without turning MoneyThing into a spivs playground. Amazing!
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registerme
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Post by registerme on Nov 4, 2017 11:57:07 GMT
If you hold a fixed rate government bond, and interest rates rise, the value of that bond decreases, right? If you can't reflect that decrease in value with a change in price you have a dysfunctional market.
It's no different with a fixed rate loan. Interest rates have recently risen, the value of all the loans we hold has dropped correspondingly.
It is similarly no different when you have a fixed rate loan with a bullet repayment approaching the end of its term. You are left with fewer coupons and the same default risk. So as with the bond, if you can't reflect the fact that it is worth less with a change in price then you have dysfunctional market.
You don't need to be a quant to understand this, and understanding this does not make a person a spiv.
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Post by GSV3MIaC on Nov 4, 2017 14:17:44 GMT
And the fact that 'moaning minnies' have ceased to try to explain the functioning of a market to those who fail to understand what a market actually is, has nothing to do with the return of liquidity (and actually liquidity is the ability to buy OR sell .. right now we are back at 'can't buy / can sell' state .. still not liquid, still not a market).
It's more likely a case of 'we've tried to explain it in words of one syllable, and that didn't work, so let's give up'.
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registerme
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Post by registerme on Nov 4, 2017 14:51:37 GMT
I understand that the market does not currently allow the correct price to be found but at the same time, I'd actually rather the market stay broken rather than allow someone smarter or quicker than me take advantage of me financially. That's probably me being emotional or "cutting off my nose to spite my face" but there you go - real people, real opinions. By being "broken" the current system means that buyers in the secondary market are being taken advantage of as a result of the design / structure of the SM because they are forced to pay too high a price for anything they buy. I realise that I am in a minority regarding this, and I don't expect the SM to change here, or anywhere else for that matter. But it's important that people understand the weaknesses and limitations of the current approach.
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Post by Deleted on Nov 4, 2017 14:58:05 GMT
But it's important that people understand the weaknesses and limitations of the current approach. It's also important that people understand the weaknesses and limitations of the 'perfect market' approach. Assuming of course that some of the bragging on this thread about exploiting less sophisticated investors didn't give the agenda away. The fact that such markets are also highly prone to short-termism and herd behaviour, in addition to other problems such as spoofing, subpennying, layering, added tax complexity, etc etc, should give anyone pause. 'Perfect markets' simply don't exist. There is no utopia. There are, however, certainly models which are more favourable to sharks and spivs.
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