robski
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Post by robski on Aug 30, 2017 8:18:53 GMT
I would also like to point out that if you truly want an open market you need to be able to put up requests for purchase as well as bits for sale There will be even more conspiracy theories about bots (who seem to be on holiday right now), and insider trading and all other angles people can come up with if you can pay a premium for a loan and it repays the day after or buy a discounted loan and it defaults the day after
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robski
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Post by robski on Aug 30, 2017 8:20:59 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. Well I was mainly referring to this comment you made because its IMHO completely wrong in the case of MT "They also have the right to switch that money to a better opportunity or remove it and spend it if they so wish."
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bg
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Post by bg on Aug 30, 2017 8:23:44 GMT
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. Well I was mainly referring to this comment you made because its IMHO completely wrong in the case of MT "They also have the right to switch that money to a better opportunity or remove it and spend it if they so wish." I probably didn't phrase it correctly. I meant that if a SM market exists (which it does) they have the right to put it up for sale to try and remove their money if they wish (and the reason for the sale can be anything). Of course there has to be a willing buyer for this to occur but that is true of any market.
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Post by Deleted on Aug 30, 2017 8:41:28 GMT
"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"
not at all, I'm not saying that all investement opportunites/risks/mechanisms should be the same in fact nothing I have written suggests that.
You/I invest across a range of products. Some have premiums and discounts some don't.
Given the very many P2P portals I don't see any reason why all portals should be the same, nor that paying a premium or receiving a discount makes the portal any better or more attractive. In fact it is clear that MT gets just as much investment as it needs. I don't even think that having a very liquid market is especially exciting.
In terms of your share analogy there is some interesting stuff. That there is a premium/discount is partially driven by availabilty and partially by manipulated availability (the official spread not being the true spread and the market makers official share stock not being maintained to specification) is that such a great idea? So sentiment is only a very small part of the driver of the P/d. Sentiment does drive the actual SP that is very true. But share trading is a different beast (equity not a loan).
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Post by Butch Cassidy on Aug 30, 2017 11:07:23 GMT
Well currently the No/Yes split is a decisive 2/3 v 1/3; not too surprised that a majority of people like simplicity, KISS principle & why change something that works pretty well already. What does rather surprise me is the apparent lack of understanding surrounding the basic economic fundamentals of supply & demand & how price can alter liquidity, which will all have a bearing on the health of the platform going forward.
How MT will decide to deal with future defaults will be very interesting; as without the ability to discount parts, so the price finds a level where willing buyers & sellers can trade, holders will essentially be left to rot at par without any possible exit until after the recovery process is completed, which may take many years. This I imagine would be a game changer for many investors & could hinder MT's ability to fund multi tranche larger, riskier projects - interesting times ahead.
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hazellend
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Post by hazellend on Aug 30, 2017 11:29:00 GMT
Well currently the No/Yes split is a decisive 2/3 v 1/3; not too surprised that a majority of people like simplicity, KISS principle & why change something that works pretty well already. What does rather surprise me is the apparent lack of understanding surrounding the basic economic fundamentals of supply & demand & how price can alter liquidity, which will all have a bearing on the health of the platform going forward.
How MT will decide to deal with future defaults will be very interesting; as without the ability to discount parts, so the price finds a level where willing buyers & sellers can trade, holders will essentially be left to rot at par without any possible exit until after the recovery process is completed, which may take many years. This I imagine would be a game changer for many investors & could hinder MT's ability to fund multi tranche larger, riskier projects - interesting times ahead. Simple. Introduce a defaulted loans tab to the site. Shuffle ugly loans ruining the pleasant view on the main page over there. Out of sight out of mind.
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bg
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Post by bg on Aug 30, 2017 11:36:20 GMT
The thing is with this KISS principle is that investing in loans in this fashion is not simple.
Under the MT model, investors are expected to read all the loan info, do appropriate DD and then make investment decisions based on that. That is far from simple, most people can't do it. In fact I would say that allowing loans to be traded at a discount is a far simpler concept to understand. I even think it aids people with a weak understanding as buying loan X at a discount is better than buying at par (as they would do now). On top of that a significant discount indicates a potential issue with a loan. Consider an forum member unearths a problem with a loan, posts about it and forum members all rush to sell on the SM (as has happened before). Unsuspecting investors would continue to pick up loan parts (at par) wheras if discounting existed a significant discount would develop (quickly) which may set alarm bells ringing - and even if it didn't at least they would be getting into the loan at a better (and fairer price) - cushioning any potential losses.
If you really want a KISS model then we should really be heading down the Z, RS and now FC model. One click investing, now that really is simple.
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archie
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Post by archie on Aug 30, 2017 11:40:57 GMT
Extract from 'Meet the Things' :-
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r00lish67
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Post by r00lish67 on Aug 30, 2017 14:31:36 GMT
Extract from 'Meet the Things' :-
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Post by spiker on Aug 31, 2017 8:28:35 GMT
I think you should be able to sell defaulted loans at a selected discount. Obviously to increase clarity and avoid errors, just have a 'defaulted loans' tab.
Having the option to sell a defaulted loan is a huge benefit, as not everyone may want to wait years.
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toffeeboy
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Post by toffeeboy on Aug 31, 2017 11:00:38 GMT
I think you should be able to sell defaulted loans at a selected discount. Obviously to increase clarity and avoid errors, just have a 'defaulted loans' tab. Having the option to sell a defaulted loan is a huge benefit, as not everyone may want to wait years. I doubt that anyone would want to wait years especially not knowing if you will get the full amount back or not.
I would be disappointed if it took MT years to get our money back but I don't know how the system works with repossessions but didn't think it would take more than a year if it was required.
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robski
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Post by robski on Aug 31, 2017 11:20:41 GMT
The biggest risk for this is actually borrower death If there is a disputed will the whole thing can get tied up in the courts with assets frozen, they can last decades if the estate is big enough and the people disputing have enough will to drag it on
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yangmills
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Post by yangmills on Sept 2, 2017 14:50:58 GMT
This whole concept of "keeping it simple" seems like a bit of a collective delusion. It's like people want to keep pretending these are high yielding term depos. The problem is they are the exact opposite. Property platforms, MT included, are offering highly speculative development loans (senior-stretched and subordinated debt). Institutional fixed-income investors, if they have any interest at all (most would not), would typically focus on the safest super-senior tranches. They would steer clear of these types of loans simply because evaluating a product where you have subordinated tranches, counter-party risk, default correlations etc would be too complex.
If posters here are clearly so confident as to be able to price all these factors accurately, how is it that something as simple as a loan price-yield relationship on a platform like ABL can confuse them? If you want a KISS model then logically you should be investing via "collective investment scheme" models like Z, RS, FC, AC's GBBA etc. If you want to pick individual loans then surely variable pricing is the least of your problems.
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stub8535
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personal opinions only. Not qualified to advise on investment products.
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Post by stub8535 on Sept 2, 2017 15:09:51 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. You are comparing apples with pears. The size of mt and lendy are so different I cannot see their sm operating to freeze point on mt. Fs land increasing discounts is nothing to do with value it is everything to do with fear of being left with carp that defaults as the recovery process is so bad.
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elsee
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Retired:D
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Post by elsee on Sept 2, 2017 15:29:31 GMT
Discounts and premiums mean more brainwork but worst of all they involve jumping through hoops for HMRC (I think, maybe I'm wrong) Is there actually anything wrong with the SM at the moment? Anything put up for sale goes - except the one about to default and you wouldn't expect that to be very liquid anyway.
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