sl125
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Post by sl125 on Nov 18, 2017 11:13:00 GMT
I've been playing around with the sell functionality in order to try to offload any A+ and A loads that the system buys for me. Because my portfolio is large, occasionally I get allocated a single loan part of over £1000 from the secondary market. So, on the sell page I can enter £1000, and thankfully the system selects that specific part to sell. It then takes ages to sell, because it needs to find another person with a very large portfolio to sell it to.
However, what is fascinating is how the sell functionality works for the plethora of £100 parts it allocates on the primary market. I too thought that if I wait until the first payment had been made, then I should be able to sell a specific part based on entering the exact amount of the amortised balance (eg. a £100 A loan part with 59 weeks left will have a balance of £98.64). But whatever value I enter above £90, the system always selects a £100 loan part randomly. If, however, I enter a value of, say, £89, the system will select a loan part whose current balance is indeed around £89. And this seems to work for all smaller amounts too.
So, it leads me to think that FC have hardcoded a condition between £90 and £100 to always round up to £100, so as to avoid people gaming the system by selecting the residual balance amount of known A+ and A loans within the first few months.
Meanwhile, I have another headache: today is the 2nd month anniversary of the new system, and yet in all that time the automated system has allocated to me mostly A+, A, and one B and one C. Not a single D or E. Not sure how "balanced" this is, and how the new loans allocated to me will achieve the 7.5% goal.
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sl125
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Funding Circle (FC)
Huh?
Oct 6, 2017 23:15:27 GMT
markr likes this
Post by sl125 on Oct 6, 2017 23:15:27 GMT
Well I have registered with assetzcapital and I'm on the move, I'm fed up with these clowns. Farewell, Thunderchild.
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sl125
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Post by sl125 on Sept 30, 2017 10:23:16 GMT
Ah, Zopa....
I too started my P2P journey with Zopa several years ago. I shifted to Ratesetter and Funding Circle, and then watched as the P2P marketplace developed. What concerned me about the other entrants is that it was very difficult to determine which platform would last the course - it reminds me of the early days of the dot-com era, or even the early days of the railways, or the telephone, or the oil industry even... consolidation and the emergence of a few strong players will be the inevitable outcome, and on that note I can see why Funding Circle (my main platform for quite some time) has moved towards a value proposition for investors that is simple to operate for the many.
Anyway, I'm interested in the previous poster's view about the IRR on Zopa. Whilst in the early days over 6% was the rough net return after losses, I've found that it has stabilised to around 4%, certainly since Safeguard was introduced. So, with the move away from Safeguard announced recently but with little prospect of increased returns, I have very little left in Zopa.
BTW: The "IFA" chap has been awfully quiet?
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sl125
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Post by sl125 on Sept 30, 2017 10:14:58 GMT
The FC FD must be trembling over his spreadsheet at the thought of those 62 leavers. It'll crush his business model. Absolutely. Although this poll is an interesting amusement, at the end of the day it is an extreme illustration of self-selection bias, and is hardly representative of FC's overall population of investors. The proof will be in the pudding, and it will be interesting to see if in a year's time FC have grown their business by attracting investors who would otherwise have been put off by an overly complicated (to them, at least) investment process. Another thought that comes to mind: people are advocating moving to platforms such as AC, FS, etc. But what I don't quite understand is that those funds appear to provide substantially lower returns than the target return that FC claims to achieve (I say "claim"... in practice, we still have the transparency of the loan book so that we can use real evidence to substantiate that claim, which appears to hold up so far). This, coupled with FC's sheer scale compared to those platforms means that it is easier to achieve a diversified portfolio and (in theory at least, since I haven't tried it since the new autosell regime kicked in) much more liquid. Those of us with a sizeable portfolio would be more concerned putting our money in those much smaller platforms.
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sl125
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Post by sl125 on Sept 26, 2017 20:51:51 GMT
Harsh. There's probably more lender side knowledge of P2P (in the UK) here than anywhere else, by quite some margin. Most people, even IFAs, won't even have heard of it. Of those that have their knowledge will be limited (Zopa, FC, err, the end). All will consider it to be an esoteric asset class. What better place to come top find out more than here? Harsh, perhaps. But I cannot see how eliciting anecdotal statements from people on a web forum is any substitute for empirical analysis into the risk versus reward that different forms of P2P offer. This to me seems absurdly dangerous. The general public put their trust in IFAs, and they pay their hard earned money to the IFAs for the advice they give, and they base their investment decisions on the advice given, putting their life savings at risk. The general public should be aware that the person they have asked for advice has about as much knowledge of the subject as they do. My "day job" is as a management consultant. The companies that pay for my advice do so because they know I have the knowledge and experience to offer the advice which forms the basis of spending decisions that could affect the success, or otherwise, of those companies. I could not justify to them or myself charging for advice that I've simply picked up from asking anonymous people on the internet. I am not usually harsh on this forum, but on this matter I feel justified in being somewhat "red in the face" in my criticism.
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sl125
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Post by sl125 on Sept 26, 2017 19:58:28 GMT
I'm an IFA, and am considering advising my clients on P2P. Therefore, I'm currently in the process of learning more about P2P lending, and am keen to hear war stories from people who have actually lost money in the process of investing. Wow... I mean just... wow! Assuming this is for real, you are an independent financial advisor.... so people pay you money to receive advice on how they should invest their money.... and what qualifies you to offer that advice? you've simply elicited the views of some anonymous people on a web forum! Beggars belief really.
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sl125
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Post by sl125 on Sept 26, 2017 19:39:01 GMT
What they are probably doing here is making it easier to fund large loans, and subsequent loans to a borrower, by making sure they get the full 0.5% from each investor - rather than just £20. It means that on average 0.25% of your portfolio will always be un-lent. The formula for calculating your returns, to compare with the FC projections, excludes un-lent cash, and so this will not affect your return . To be fair to FC, this would only reduce your return by 0.01875% (i.e. 0.25% of FC's predicted 7.5%), which is hardly worth worrying about. I too asked FC's customer services why my money hadn't been lent out as yet and was told that the new autobid waits until your available funds is over 0.5% of your portfolio. A tad frustrating, but as I say, it hardly affects the overall return.
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sl125
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Post by sl125 on Sept 26, 2017 9:41:18 GMT
Are you sure that you can do that? I thought that investment income would fall under non-trading income, so you would not be able to account for it as a trading loss. It would, however, be able to take it into account when calculating the non-trading income.
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sl125
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Post by sl125 on Sept 22, 2017 17:58:54 GMT
I have been monitoring the loans on the primary market since 18th (the loan requests page is still accessible if you have the URL bookmarked), and I notice that FC's new autobid appears to place "orders" (i.e. "Bids" in old money) sequentially by loan and by lender.
Under this new fairer (which probably should be in quotes) system it appears to give as much as it can to each lender presumably up to the 0.5% limit. So quite a few people with large portfolios are getting over £1000 in each loan. This strikes me as odd, since I notice that I have not received a single order whatsoever. Surely it would have been fairer to the investors for FC to allocate a loan to as many different lenders as possible?
So, I'm interested to know if other people have found they have had no orders placed as yet. I have checked my settings and it is definitely set to balanced and not paused.
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sl125
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Post by sl125 on Sept 20, 2017 20:28:41 GMT
An unintended consequence and extra transparency from FC. If you look at any loan and click the "all orders" tab you can see the amount of each bid. Multiply this by 200 to see how large that bidders account is! I assume auto bid will bid at 0.5% if you have enough funds available or a lesser amount otherwise. I have seen bids for less than £20 so I'm not really sure. Yes, I noticed this as well. Quite a few people with 20 £100 "orders", suggesting a portfolio of £400k. Another thing I noticed is if you view the HTML source of the loan, there is a lot of the legacy code, including the bit of the code that updates the amount bid, etc. I wonder if anyone has been tempted to fire a HTTP post command to see if it successfully records a manual bid for them.... (not that I would suggest such a thing). Meanwhile, I've not had one autobid allocatted to me as yet. Ah well.
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sl125
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Post by sl125 on Sept 13, 2017 18:45:52 GMT
So Thunderchild, I thought I'd put a couple of my thoughts about your many posts into just one reply.
Yesterday you said: "Since I have been on funding circle getting D and E loans has been impossible, because people used software to interact with the website and run it like a stock exchange". So, surely you must be supportive of the fact that FC have done something about this by removing the arbitrage opportunities that automated bots had over the rest of the market.
You also said: " Instead they let the situation carry on with some people making by my estimate 76% (if you turn around a loan part every 2 weeks at 3%) with no risk while I'm getting 20% and take the risk for 5 years......". Well, that's a big big "if"! Just because there are some people putting loan parts for sale at 3% speculatively does not mean they actually sell at that premium.
My own experience, as someone running a bot and flipping a portfolio of over £250k, is that the premium I actually sell at rarely goes above 0.5%. I also reiterate a point I've made on many posts that there is a black swan risk of holding a large amount in a loan ready to flip, and the loan goes belly up (a relatively unusual event, but nonetheless, with the amounts held on a loan to make flipping worthwhile, it is a risk that occasionally loses me a couple of thousand pounds).
My XIRR has been about 16%, which has been a very good run, and believe me when I say I'm both disappointed that my personal good times are coming to an end on 18th Sep, but I'm pleased for the good of FC and the FC investing community that the system is becoming fairer for all. In theory at least, you should now have as equal a chance of getting an E loan as I have.
One other thing you mention is that you haven't experienced poor performance. You must be the only one then... since the FC web servers must have had a huge problem coping with people pinging html gets every few seconds from their bots.
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sl125
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Post by sl125 on Aug 22, 2017 8:06:12 GMT
From a personal perspective, I am gutted that FC are changing the game. But looking at the bigger picture I completely understand why they have done so, and I agree that it will make FC much fairer for all rather than benefiting the few. I've had a good ride over the years with a strategy that involves a fair bit of flipping ("boo, hiss the villain") but now I'll have to find a way to maximise my returns under the new rules (although looking at the Q&A it appears we have no levers at all to influence the lending and selling).
What is frustrating for me is that in the new world we can only choose between "balanced" (A+ to E) and "conservative" (A+ to A). My strategy has been to invest in C to E loans only, as I am prepared to accept the risk and volatility that goes with those loans in exchange for the potentially higher returns. It would be good if in the new world FC could offer a "Risky" (I'm sure FC's marketing team can find a less emotive word) autobid option that only invests in C, D and E loans.
On the Autosell: does anyone know how the FC algorithm will choose which parts to sell on your behalf? Will it apply a FIFO, LIFO or random approach?
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sl125
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Post by sl125 on Jul 3, 2017 6:54:52 GMT
"Then today 37958 has been defaulted just three weeks after taking out the loan. Bang goes another £1600." Do you mean defaulted or RBR? If defaulted, then they can't have gone off with the money before the first repayment because FC wouldn't know that yet. In either case, it may be a long drawn out whimper of recoveries rather than going off with a bang. Rather unusually, they have defaulted immediately rather than go to RBR first: "We have received notice from a third party that the business will cease to trade and that the personal guarantor is not in a position to service their loan. We will be carrying out a full investigation and therefore are defaulting this loan in order to protect your position by crystallising the liability of the guarantor. "
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sl125
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Post by sl125 on Jun 30, 2017 13:41:03 GMT
Yorkshireman: Presumably, you're referring to this quote about an E loan: "Now, how long to keep it, one month or two? Two weeks. " This may have been in jest, but I'll bite in any case: The difficulty is if you sell an E after only 2 weeks you will not have crystalised a particularly large gain. eg. if you're "lucky" enough to have secured £5,000 on a large E loan, and you offload it after two weeks, the interest will only have been £42. If you hold it for 4 weeks that would have been £84 interest, or £186 over 8 weeks. Now, offset this against the probability of the loan going bad after 2 weeks, 4 weeks, 8 weeks, etc. Other than the one I referred to at the top of this thread, I have never had a loan go south under 3 weeks from the loan origination date, and crunching the loan book I can't see evidence of a material risk at those short timescales. So, one for the maths people: at a given interest rate and given risk profile, what is the optimum time to hold a loan before the risk outweighs the interest rate?
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sl125
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Post by sl125 on Jun 30, 2017 8:33:28 GMT
How on earth did such a company get past FC's DD? ? I was thinking that myself, but then I thought about the size of the two loans concerned: the were both for about £10k. I've always advocated that one has to take into account the labour cost of due diligence - from our perspective as investors, that's the time we spend deciding whether to invest in individual loans, managing our accounts, etc. If I've invested £100k in FC returning 10% pa, then £10k pa isn't much if I'm spending 10 hours a week doing due diligence. So it must be with FC's due diligence: presumably the effort they expend is commensurate to the size of the loan, as it wouldn't make commercial sense for them to have to pay more for the due diligence effort than they could recover in fees.
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