fogey
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Post by fogey on Mar 3, 2017 14:01:39 GMT
Ok thanks for that advice I would never have worked that out my myself It still sounds rather complicated so I will see how I get on !
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fogey
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Post by fogey on Mar 3, 2017 13:46:59 GMT
Just joined here and trying to get to grips with the hyperlink features here. I can see buttons for hyperlinking to a URL or a user, but how do you hyperlink to a previous entry here ?
I have an attachment on an earlier post as ... 90days.pdf... which comes up as a blue hyperlink to my pdf file download which I used to place that file on my post.
What I want to do now is hyperlink across to that download in later posts but I am unable to find a way to do this.
Sorry if I appear dumb but I have little experience of using forums and this one in particular !
perhaps this would be better on the chat board so I will try my luck there !
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fogey
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Post by fogey on Mar 3, 2017 12:27:17 GMT
Yes I am already seeing an effective annual return of 7.1% to 7.2% on my deployed funds each day, so I am assuming this is my accrual rate at the moment. To get this return over a full year I would have to remain close to 100% deployment nearly all the time, so one obstacle would be the speed at which I could get the matured short term loans redeployed. These come up frequently so it is a continual problem.
But the real flies in the ointment that I see now are the sporadic one day losses, which seriously clobber the 7% target and I have already seen two of these within 7 days towards the end of last month ( See my 90days.pdf attachment to my previous post here). I am thinking that you certainly did not experience any of these sporadic losses in your excellent results for last December.
I am really not sure that SF's recent explanation given to me here can fully account for the way this scale of loss might occur for a typical account holding of 50 loans at 2% allocation, so I may need to specifically address that issue in a later post.
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fogey
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Post by fogey on Mar 2, 2017 21:00:44 GMT
First attempt at attaching my pdf failed not sure why here is second attempt ... Success I will keep these plots up to date and post here each month. Has anyone here actually achieved the 7% target ?
Attachments:90days.pdf (119.16 KB)
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fogey
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Post by fogey on Mar 2, 2017 19:31:38 GMT
I waited until the situation here last autumn had improved before investing at the start of December.
My initial deposit took 44 days to reach over 95%, but part of that was over xmas/new year so that can be used as an excuse for me ! Subsequent additional smaller deposits have stabilised within 21 days. Reached 90 days at the end of February and I now have the official email that I am 100% invested. Just waiting to see how long that lasts now ..
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fogey
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Post by fogey on Mar 2, 2017 18:37:04 GMT
Obviously some loans are not performing as expected when the accrued to paid interest conversion has an unexpected negative influence on the total returns. But the more frequent and severe these incidents become, the more likely the target rate of 7% will not be met.
Some of these incidents may be classified as "known unknowns", especially where a loan is repaid early for example or where minor accounting errors are identified. But there are also likely to be "unknown unknowns" having regard to the handling of so many sets of data which cannot be fully automated.
So within all these unknowns there is an element of risk in reaching the 7% target. As the background element of the daily balance increase is just above 7% of the total investment amount (which I had assumed to be the accrual rate), any sudden changes which cause the daily balance return to fall into negative territory will soon cause the target rate to be missed, as my pending plots will show.
It is the accumulated balance returns that determine whether the 7% target is met and as soon as these start to significantly deviate from expectations then this target is at risk.
I am not clear about the remark regarding interest earned on cash, does this mean that sometimes part of deployed funds are treated as cash ?
I believe there is no interest paid on the "cash in bank", especially when it is awaiting deployment in the initial ramp up.
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fogey
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Post by fogey on Mar 2, 2017 14:54:41 GMT
I am wondering if anyone else here has witnessed sporadic one day losses in their daily balance returns and also the clumping of low rate loans within a single allocation day. By low rate I am referring to loans below 7% of course. I will try and upload my plots in a later post on this thread.
Yes, I've seen this, as recently as yesterday, with the balance being a few tens of pence (40p I think) lower than the previous day. I took this as being a discrepancy between the accrued and actual interest paid, and possibly an artefact of the aggregation process, but would welcome an explanation from BM if one is forthcoming. Yes this is exactly the process I would expect here. But as the accrual rate is set just above 7% ( my latest calculation gives a result of 7.13%), then the accrued to paid conversion for that day should only give a negative result if that loan has given a poor return. Furthermore the weighting of that negative loan contribution would need to be larger than the positive contributions from all your other loans on that day. I would assume that this positive contribution is reflected in the steady positive daily accrual rate. This is why I am thinking that such daily losses may be caused by the simultaneous maturity of a number of several short term low rate loans or possibly the maturity of a single poorly performing loan over a long term.
Such events will always cause your total returns to detract from the 7% target. The larger these day losses become and the more frequently they occur, then the more they will reduce your total returns. If you are to meet the 7% target, then these losses need to be very small indeed and also very infrequent. My charts will help to illustrate this, provided I can upload them ( hoping to do this before tomorrow ! ).
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fogey
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Post by fogey on Mar 2, 2017 14:10:15 GMT
I have also incorporated my two plots onto a single word page file, which includes some explanation text too. Is there any easy way to post this or is it better to post the two plots separately ? Sure, you can add an attachment (using the 'Add Attachment' button top-right of the Create Post window) but I would suggesting saving the Word document as a PDF file as pretty much everyone can deal with PDF whereas application specific documents can be trickier to open. Thanks I will give this a go in a short while. I have not previously converted to PDF but I suspect there will be a tool there on my word program to do this. Fingers crossed !
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fogey
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Post by fogey on Mar 2, 2017 13:39:02 GMT
My meaning of a "daily loss" is where the balance at the end of that day is less than the end of the previous day. This is very easy to check providing you log your daily balance at the end of each day. In the absence of any other change (my meaning of a "quiet" day) the daily balance increment can be multiplied by 365 and then divided by the total amount deployed to give an indication of the accrual rate. This is where I currently see a result of 7.1% to 7.2%.
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fogey
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Post by fogey on Mar 2, 2017 13:28:22 GMT
Thanks for the reference on posting images here. I had not looked into this previously so any advice on the best way forward is greatly appreciated. I have also incorporated my two plots onto a single word page file, which includes some explanation text too. Is there any easy way to post this or is it better to post the two plots separately ? As you may already gather, I am not an expert at using uploads here !
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fogey
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Post by fogey on Mar 2, 2017 12:38:56 GMT
This is my first foray into p2p and my first post here too. I have just completed my first 90 days with BM. I have plotted my cumulative daily balance returns against a reference investment of 7% pa and I will endeavour to upload this shortly. As expected there is a time lag in the comparative performance due to the initial ramp up, but eventually these two plots should track each other if the 7% target is to be met. If it exceeds 7% then these two plots should eventually meet. I have also plotted the daily XIRR and will endeavour to upload this too.
From my current plots the comparative performance with the 7% target line has recently started to diverge, after initially having a very close track. This is tending to show that the 7% target is becoming more difficult to attain as time goes by. From the XIRR plot, this has recently started to flatten out just below 5%, again showing that the 7% target is going to be very difficult to reach, if at all.
Analysing the accrual rate from the "quiet" daily rate of uplift in the cumulative balance, it appears to be set just above 7%. However I have recently had two days where there has been a negative daily balance return. These have a significant effect on the projected long term target and explain why there is a growing divergence away from the 7% reference plot. They also cause the XIRR to flatten as you might expect.
I have mailed BM for an explanation of these two loss days but have had no reply as such. As the low rate loans on my allocation list appear to be clumped together on the same day, one possibility is that they may all mature on the same day. In this case the conversion from accrual to paid could easily cause a daily loss. It is also interesting to note that all the loans within these periodic clumps are at identical rates.
I am wondering if anyone else here has witnessed sporadic one day losses in their daily balance returns and also the clumping of low rate loans within a single allocation day. By low rate I am referring to loans below 7% of course. I will try and upload my plots in a later post on this thread.
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