archie
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Post by archie on Aug 28, 2017 11:23:58 GMT
Selling on Lendy isn't that difficult but most things only move around interest payment day. On MT the interest is spread throughout the month so it's not an issue.
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Post by GSV3MIaC on Aug 28, 2017 15:21:36 GMT
IMO the 'preying upon' can only take place when the 'small number' are allowed to monopolise things which others would have been willing to pay the same, or more, for. There was at last one instance on ABL where a small (£100k) loan was bought up in minutes by a few punters, and then reappeared at a premium (where it has been ever since). In general the SM works fine with both discounts and premiums (although the ABL pricing/selling mechanism IS, admittedly, a bit clunky), and almost all loans can be bought, or sold, almost all the time for a 1-2% discount or premium, depending on the nominal interest rate(s) and the (ever changing) perceived risks.
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archie
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Post by archie on Aug 28, 2017 15:28:54 GMT
IMO the 'preying upon' can only take place when the 'small number' are allowed to monopolise things which others would have been willing to pay the same, or more, for. There was at last one instance on ABL where a small (£100k) loan was bought up in minutes by a few punters, and then reappeared at a premium (where it has been ever since). In general the SM works fine with both discounts and premiums (although the ABL pricing/selling mechanism IS, admittedly, a bit clunky), and almost all loans can be bought, or sold, almost all the time for a 1-2% discount or premium, depending on the nominal interest rate(s) and the (ever changing) perceived risks. That's the fault of ABL, loan details aren't available until it is live. While some are reading the details, others just buy regardless. I'd say a lot clunky, awful in fact. I invest up to ten times more per loan on MT than ABL because of the sm.
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Post by GSV3MIaC on Aug 28, 2017 16:31:23 GMT
I have the same maximum on both, since I don't plan to use the SM anyway, but yes, ABL could help things a lot by throttling the initial bidding as MT do, so that people who want some (having read the proposal) have a chance to buy (at par) without resorting to the SM. Ditto FC. Both these platforms' problems are caused by the possibility of making a sale at a PREMIUM though .. discounts are less of an issue. You can guarantee to buy at par (and then sell at a premium) you can never guarantee to buy at a discount, and sell at par (or a smaller discount) unless someone cares to sell too cheaply.
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Post by df on Aug 29, 2017 4:23:12 GMT
Is there any need for change? I think MT's SM works fine as it is. Agreed that right at this moment, it's not an issue. But people said exactly the same thing over at Lendy towers - it was great, awesome, everything sold immediately. Until it didn't. Then people complained that they couldn't sell their loans because of a gigantic unmoving queue. This will happen at MT too, even just as the Hall/hotel move naturally to maturity but especially if some bad (but not necessarily defaulting) news comes out of the woodwork for a particular loan. What perhaps isn't appreciated enough also is that by being forced to buy at par on MT's secondary market today, one is often actually buying at poor value because they haven't bought at a discount. If you look over in FS-land, you'll see that on the whole, loans typically are discounted more and more as they move to maturity because of the tail-end risk. Immediately after SS's SM became "illiquid monster" MT's SM got flooded too, but I've managed to reduce my holding in 'Hall' in one day. Selling on Ly takes much longer. I do hope MT won't take Ly's careless lending approach. I prefer at par with no fees and no loss of interest whilst the part is listed I liked recent FS's -/+1% cap - less opportunity for flipping and more for investment.
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niceguy37
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Post by niceguy37 on Aug 29, 2017 9:49:59 GMT
I think that every platform that allows discounts and premiums will have a small group of lenders that will prey upon and profit from, essentially, the ignorance of the hoard. This is point at which I generally leave. Typical or median returns will fall and the Platform or the FCA will change the platform to go automatic to ensure fair treatment for all. This is the point at which I consider returning. This is a pattern we have all seen elsewhere and if and when MT get big enough, they will surely follow. (With apologies to mrclondon ) I don't agree with this. I can't see how allowing discounting would allow a small group to prey on the ignorant hoards. AC allow discounting and I can't say that anyone is being preyed upon. Same with ABL etc etc. All it means is that it is always possible to sell and always possible to buy (if premiums are allowed) which reinforces confidence in the market. Historically an investment type/venue that has remained illiquid has typically died. I really don't buy into the 'fair treatment for all' or everyone should get the same returns idea. It is the opposite of capitalism (I guess this is fairly popular in this country at the moment). Those that deploy their capital well should be rewarded and those that do it badly should lose their money (and the same applies to the businesses themselves). That is how society progresses, leads to capital being allocated effectively and efficiently and prosperiety for the society as a whole. If all capital was allocated automatically then bad business ideas will always get their 'fair share' and resources (and money) will be wasted en masse. By this token a loan which looks dubious should be allowed to go unfilled on a platform instead of being by some sort of autobid. I don't have much sympathy for the ignorant when it comes to P2P lending. If they don't understand the basics/don't know what they are doing or the risks they are taking then they should stick to savings accounts. By the same token I am glad that we are allowed to buy shares in individual companies in the stock market instead of being forced to buy a FTSE-all share index tracker if we want to invest even if it means the igniorant may lose their money on a start up tech company. I'm happy with selling at discounts as it does improve liquidity. Sometimes a lender might just need his or her money, due to a change in circumstances perhaps, and wants to sell perfectly good loans. Or be prepared to offer a discount to reduce holdings in a loan that will take a while to be resolved. BUT as soon as there is selling at a premium, then as paul123 says, you have the traders trying to buy up the better looking loans to later sell at a premium for short-term profit, which just squeezes some of the value out of the system for the actual investors, who are funding the whole model. And MT don't get anything out of allowing selling at a premium, other than the cost of extra admin and volume of transactions, unless they add a trading fee on the secondary market. At the moment the SM is generally useful for reinvesting bits of interest as they come in, and one can be reasonably confident of the value on offer, but as soon as there is selling at a premium you know that there will only be poor-value loans left. For the P2P model to work well we need a system that offers: Quality borrowers reasonably speedy lending at fair rates Fair returns, with excellent security, for lenders without having to spend a huge amount of time (either doing due diligence or on the p2p website) P2P system that is easy and efficient to operate, to keep down overheads Introducing a opportunity for traders to sell at a profit will generally reduce the investors returns (as some of the true investors returns will be creamed off by the traders), which over time will cause them to leave for more profitable p2p platforms.
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SteveT
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Post by SteveT on Aug 29, 2017 12:55:47 GMT
I'm happy with selling at discounts as it does improve liquidity. Sometimes a lender might just need his or her money, due to a change in circumstances perhaps, and wants to sell perfectly good loans. Or be prepared to offer a discount to reduce holdings in a loan that will take a while to be resolved. BUT as soon as there is selling at a premium, then as paul123 says, you have the traders trying to buy up the better looking loans to later sell at a premium for short-term profit, which just squeezes some of the value out of the system for the actual investors, who are funding the whole model. Not sure this is really a valid concern on MoneyThing, where sensible 24 / 48 hour bid limits are set to make sure every lender has an opportunity to buy into every loan they like the look of. By definition, anything still unfilled after 48 hours is unwanted by the majority of MT lenders, so where's the problem in bigger lenders acting as de-facto underwriters and helping to fill anything that's left? However, it's a moot point since the debate here is only about permitting discounting to boost liquidity in defaulted / "troubled" loans, just as Assetz Capital have done for the last couple of years. Most of the time there's very little available at a discount on AC but, when a large loan hits an issue and the queue for the SM exit grows rapidly, the option to add a discount has very obvious benefits for sellers, buyers and the platform alike. As soon as the Birkenhead tranches formally default in 3 weeks' time, I'd like to see them moved to a Defaulted Loans page with the option to trade them at a discount, so the market can determine the fair price at which sellers and buyers are happy to trade.
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Post by Deleted on Aug 29, 2017 13:04:57 GMT
KISS keep it simple stupid
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jlend
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Post by jlend on Aug 29, 2017 14:03:48 GMT
Looks like a very clear majority has voted for no discounting.
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bg
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Post by bg on Aug 29, 2017 17:56:11 GMT
KISS keep it simple stupid Yes keeping it simple works perfectly in the utopian world where demand = supply. Unfortunately we don't live in that world. Optically, things look fine even when demand > supply (as it is has been in the past and just about is now as there new loan supply has been about nil for months) but that doesn't help MT with new lenders signing up who after checking the SM 10 times in a week to see there is nothing available, give up never to return again. Far better for them to be able to pay +0.5% premium to get into a variety of loans if they so wish (and if people are willing to sell). MT need to be increasing 'active' lenders to be able to grow. They will know this. What's even worse is when supply > demand, which i suspect is where we will be if MT ever manage to bring a few new loans in semi-rapid fashion. Then the SM will be flooded (partly so people can diversify into the new loans but then because people are worried about being trapped). This then acts as a massive red flag for the entire platform, confidence falls and people will be hesitant investing in the PM offerings. The only way to stabilise the platform is to cut right back on any new loans (which is how they make their money) If you don't believe this look what has been happening to Lendy over the past few months. The market needs to be able to find its level.
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Post by Deleted on Aug 30, 2017 7:21:16 GMT
KISS keep it simple stupid Yes keeping it simple works perfectly in the utopian world where demand = supply. Unfortunately we don't live in that world. Optically, things look fine even when demand > supply (as it is has been in the past and just about is now as there new loan supply has been about nil for months) but that doesn't help MT with new lenders signing up who after checking the SM 10 times in a week to see there is nothing available, give up never to return again. Far better for them to be able to pay +0.5% premium to get into a variety of loans if they so wish (and if people are willing to sell). MT need to be increasing 'active' lenders to be able to grow. They will know this. What's even worse is when supply > demand, which i suspect is where we will be if MT ever manage to bring a few new loans in semi-rapid fashion. Then the SM will be flooded (partly so people can diversify into the new loans but then because people are worried about being trapped). This then acts as a massive red flag for the entire platform, confidence falls and people will be hesitant investing in the PM offerings. The only way to stabilise the platform is to cut right back on any new loans (which is how they make their money) If you don't believe this look what has been happening to Lendy over the past few months. The market needs to be able to find its level. MT has been a portal of feast and famine for all the time it has been open. Investing in it has been easy enough and requires nothing but "patience". I'm not sure that having the "wish to pay extra" for something is a better alternative to "having patience". Over many years of investment I've learnt that rushing to pay for something is a great way to lose money. Generally this feast and famine comes about because MT does a good job at what it does, it find good loans and manages them well. Looking at those Portals that have a constant stream of loans I tend to see a constant stream of defaults. The correlation seems clear and I, for one, don't like it. I like the simplicity of MT and by keeping it this way we keep the costs of MT's IT down. If they start spending more money on IT they may take resources away from the things that matter, like choosing great loans and managing them well. I think that is a de-focus we should not support. If people want to invest and dis-invest on an urgent basis I think they should be leaving their money in a building society account.
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bg
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Post by bg on Aug 30, 2017 7:42:53 GMT
MT has been a portal of feast and famine for all the time it has been open. Investing in it has been easy enough and requires nothing but "patience". I'm not sure that having the "wish to pay extra" for something is a better alternative to "having patience". Over many years of investment I've learnt that rushing to pay for something is a great way to lose money. Generally this feast and famine comes about because MT does a good job at what it does, it find good loans and manages them well. Looking at those Portals that have a constant stream of loans I tend to see a constant stream of defaults. The correlation seems clear and I, for one, don't like it. I like the simplicity of MT and by keeping it this way we keep the costs of MT's IT down. If they start spending more money on IT they may take resources away from the things that matter, like choosing great loans and managing them well. I think that is a de-focus we should not support. If people want to invest and dis-invest on an urgent basis I think they should be leaving their money in a building society account. I would disagree. I can't ever remeber there being a feast on MT. Only perhaps when people are panicking over a defualt and selling down their holdings. Patience is great but when there hasn't been a new loan for 3 months people are going to lose interest and look elsewhere. As for other portals having a constant stream of defaults. Sure...I would expect that when you have a constant stream of loans then you would have a constant stream of defaults. MT may only have had 2(?) defaults but how many loans have they originated? 50 maybe? In percentage terms its probably comparitive to its peers - and thats not forgetting that most of the loans are yet to hit maturity which is when defaults are likely to occur. Remeber Lendy didn't have any defaults until their loans hit maturity. I agree that MT's communications are good - as many other platforms were until they started getting a few defaults and the pressure ramped up. As for whether the loans are great and they are being well managed - I will reserve judgememnt for another year or two. When it comes to investing, people have the right to assess the risks and rewards and put their money where they think they are best served. They also have the right to switch that money to a better opportunity or remove it and spend it if they so wish. There is no moral or ethical reason that all peer to peer investing should be hold to maturity and they don't need to justify their investment decisions. Clearly you are against investing in the stock market where there is instant liquidity and everything trades at a discount or premium depending on sentiment. The same principles apply.
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robski
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Post by robski on Aug 30, 2017 8:10:13 GMT
MT has been a portal of feast and famine for all the time it has been open. Investing in it has been easy enough and requires nothing but "patience". I'm not sure that having the "wish to pay extra" for something is a better alternative to "having patience". Over many years of investment I've learnt that rushing to pay for something is a great way to lose money. Generally this feast and famine comes about because MT does a good job at what it does, it find good loans and manages them well. Looking at those Portals that have a constant stream of loans I tend to see a constant stream of defaults. The correlation seems clear and I, for one, don't like it. I like the simplicity of MT and by keeping it this way we keep the costs of MT's IT down. If they start spending more money on IT they may take resources away from the things that matter, like choosing great loans and managing them well. I think that is a de-focus we should not support. If people want to invest and dis-invest on an urgent basis I think they should be leaving their money in a building society account. I would disagree. I can't ever remeber there being a feast on MT. Only perhaps when people are panicking over a defualt and selling down their holdings. Patience is great but when there hasn't been a new loan for 3 months people are going to lose interest and look elsewhere. As for other portals having a constant stream of defaults. Sure...I would expect that when you have a constant stream of loans then you would have a constant stream of defaults. MT may only have had 2(?) defaults but how many loans have they originated? 50 maybe? In percentage terms its probably comparitive to its peers - and thats not forgetting that most of the loans are yet to hit maturity which is when defaults are likely to occur. Remeber Lendy didn't have any defaults until their loans hit maturity. I agree that MT's communications are good - as many other platforms were until they started getting a few defaults and the pressure ramped up. As for whether the loans are great and they are being well managed - I will reserve judgememnt for another year or two. When it comes to investing, people have the right to assess the risks and rewards and put their money where they think they are best served. They also have the right to switch that money to a better opportunity or remove it and spend it if they so wish. There is no moral or ethical reason that all peer to peer investing should be hold to maturity and they don't need to justify their investment decisions. Clearly you are against investing in the stock market where there is instant liquidity and everything trades at a discount or premium depending on sentiment. The same principles apply. Its quite clear that the investment in MT is not planned to be a highly liquid frequently traded resource, so its very unlike shares. From the website "Loans are made to smaller companies over a period of up to 5 years and as such, loans can be illiquid." So when undertaking the loan you already have that, then you have to consider the nature of the investment, often property, so often many issues that can arise. People should not be investing in MT loans if they cannot handle them going beyond term, let alone going to term. They are upto 5 years long, and should be deemed illiquid, if you can sell them before term, and should you wish to, thats a bonus.
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justme
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Post by justme on Aug 30, 2017 8:11:13 GMT
It seems to me you both are right , you are just talking on slightly different subjects. The topic is not how MT manages loans and how their communications is and whether they are good as a platform or not. The topic is whether trading at anything than par is good. I do not see how trading at premium or discount would have helped with loan origination. Buying at premium would likely to help to invest initially a bit but as there are not so many loans/borrowers present it would be just initially and not a proper solution for loan origination.
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bg
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Post by bg on Aug 30, 2017 8:13:39 GMT
Its quite clear that the investment in MT is not planned to be a highly liquid frequently traded resource, so its very unlike shares. From the website "Loans are made to smaller companies over a period of up to 5 years and as such, loans can be illiquid." So when undertaking the loan you already have that, then you have to consider the nature of the investment, often property, so often many issues that can arise. People should not be investing in MT loans if they cannot handle them going beyond term, let alone going to term. They are upto 5 years long, and should be deemed illiquid, if you can sell them before term, and should you wish to, thats a bonus. Yes I agree. People should only invest in a loan assuming they may have to hold to term (as I do on MT). That wasn't the point I was making though.
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