sl125
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Post by sl125 on Jun 30, 2017 8:17:51 GMT
All us ordinary investors who dutifully pay our premiums to you flippers are no doubt right now smugly gloating feeling rather sorry at this misfortune. Hah ha, absolutely. schadenfreude and all that. Although it's quite a shock to the "system", as it were, I'm not too dis-heartened, as I crunched the numbers of the loan book and found that this is a rare event. So in the long term it is still within my acceptable risk profile, but the risk creates these occasional big shocks.
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sl125
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Post by sl125 on Jun 30, 2017 7:05:23 GMT
Up until now, I've made a pretty decent return from flipping.... buy heavy in a D or (if I'm lucky to get hold of one) an E then try to sell before the first, second or third payment.
Buying heavy introduces a black swan risk: the rare occasion that I'm still holding a heavy stake whilst the company goes belly up by the first or second payment.
Within a few days I've had a fast food business go late on the first payment leaving me exposed to the sum of £1500. Then today 37958 has been defaulted just three weeks after taking out the loan. Bang goes another £1600.
The fast food business is particularly... interesting... a quick search on Companies House shows that the director appears to have a history of indebted businesses that get struck off....
Ah well, I shall chalk it down to experience. It does confirm a point I was making a few weeks ago that those who bemoan the "guaranteed" returns of the flippers don't necessarily accept that it is still quite a risky approach.
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sl125
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Post by sl125 on Jun 8, 2017 9:57:34 GMT
I think 35677 demonstrates quite well the "black swan" risk of a flipping strategy (ie. buying large stakes in loans that you are confident you can offload on the SM). 35677 was an E rated loan, so a good proportion was bought by "fastest fingers first" and placed on the secondary market. Given it will accrue at 21.9%, a flipper is playing a subtle game of Russian Roulette.... how long to hold an E rated loan at a lucrative rate before the risk outweighs the gain (they are rated E for reason at the end of the day)? 1 month? 2 months? 3 months? Clearly, anything beyond 1 month on any loan introduces the risk of a loan falling at the first repayment, but an E more so. Thankfully, those events are quite rare.... but given that in order to make any serious money out this strategy you would have to bid large, when that risk materialises you stand to lose big also.
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sl125
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Post by sl125 on Jun 1, 2017 8:31:48 GMT
How is it possible to get 9% Plus on funding Circle I have used funding Circle for a number of years and only managed to get between six and seven percent According to funding circle stats, it is possible. This is the principle of Yin and Yang, someone makes 10% in Funding circle and someone else makes 4% in Funding circle. Life is not always fair, but that how it works in funding circle. To be honest, this is true with all forms of investment. If I bought a share in Xyx Plc for £1 and I subsequently sell it for £1.20, should I be worried if the share price suddenly goes sky high meaning the person that bought it from me made a huge profit whilst I only earned a reasonable profit? Or the other way round, where a share has had a meteoric rise and I then buy it for £1 only for it to crash and burn? should I be annoyed that the "market" has allowed the previous owner of that share to profit whilst I made a loss? And so it is with life... I may be perfectly happy with my income, but my boss may earn twice what I earn, and his boss twice that and so on. ie. there is always going to be someone who makes a bigger profit than me, but if I am happy that I am meeting my own goals, that should be all that matters.
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sl125
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Post by sl125 on May 27, 2017 21:45:47 GMT
I am unable to understand why anybody with a minimum discerning power can still be in FC. Sorry to be direct. Just read the forums. Care to elaborate why you think that? I am very discerning in my investments, and I've found FC has outperformed the rest.
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sl125
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Post by sl125 on May 26, 2017 14:51:20 GMT
I’ll probably be pilloried for suggesting this, it’s still possible to make 9%+ on Funding Circle with a usually active secondary market although not today, besides the obvious platforms such as Lendy and Money Thing. How is it possible to get 9% Plus on funding Circle I have used funding Circle for a number of years and only managed to get between six and seven percent Here is one way (albeit very crude): If you can accept the risk, then by actively using the secondary market in FC you can make good returns. E.g. By a 17.9% D on the primary market and sell at par the day before its first payment is due. This will net you 14.9% Apr (after accounting for the 0.25% selling fee, which for one month reduces the Apr by 3%). Clearly, to make this technique work, you need to be buying serious amounts on the primary market and be confident you can offload it the day before their first payment is due. If you look at FC today, the market has turned in just one day, and there are far more sellers than buyers on the secondary market. So the risk is you could end up holding a lot more of a debt than you'd bargained for... so not a technique for those who want to sleep soundly...
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sl125
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Post by sl125 on May 25, 2017 7:22:29 GMT
It's a good point about the lack of an auction bringing about a reduction in cash drag (i.e. Cash sitting in the holding account earning nothing).
When FC abandoned the auction system in favour of fixed rates, I thought at the time that my opportunities for making good money out of FC was over. But what I realised was that the auction system itself bred some very perverse behaviours from investors (myself included, as I competed with the other bidders): as soon as an auction was announced place bids at 15% then drop slowly in increments as I was outbid. Occasionally a borrower would close early, giving those bidders lucky enough to be at the top rate an arbitrage opportunity by selling at a premium on the SM.
Looking back, this was an unsustainable model: the website had to cope with a ridiculous volume of bids, whilst the lenders were placing bids with little hope of the deal being struck.... leaving money sitting in the holding account for up to 2 weeks earning no interest.
Along with Zopa and RS, FC is by far the largest and longest established of the P2P players. Its track record shows that it has consistently achieved over 7% to those who just blindly diversify, and it has such a good volume of both borrowers and investors that diversification is easy to achieve and liquidity is good should one need to exit in a hurry. That is why I would recommend it to the OP given the criteria stated.
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sl125
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Post by sl125 on May 24, 2017 12:41:24 GMT
Exactly right. The liquidity has been very good such that a 5 year loan can easily be offloaded almost immediately. So you wouldn't need to limit to short term loans.
As others have pointed out, diversity is the key to managing risk... not just with FC but with all P2P platforms. That's why I am perplexed by the FC bashers that decry the individual loans that go bad whilst ignoring the overall returns.
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sl125
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Post by sl125 on May 23, 2017 22:03:42 GMT
The negativity directed towards FC by some of the forum posters is baffling. Particularly the last two comments, which give the impression that rates are low.
Given the OP's states aims of wanting the safest platform with minimal effort expended, then FC with autobid would satisfy that aim completely. The returns after fees and bad debts are about 7% this way. Proven returns year on year by seeing the results in the loan book.
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sl125
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Post by sl125 on May 19, 2017 9:29:48 GMT
... 1) Zopa - Long track record, moving towards Banking Licence so subject to more FCA scrutiny, unfortunately NOT available to new customers. .... It goes without saying that anyone who suggests FC, should be smacked very hard until they come to their senses. .... I find those two statements completely baffling and contradictory. When I look at my portfolio acquired over the years, I see that my Zopa returns have stabilised at about 4% per annum. Safe, yes, but still just 4%. FC, on the other hand, with a fully diversified portfolio and just blindly using Autobid will achieve twice that return after fees and defaults. My own portfolio on FC has achieved over 10% per annum consistently since 2012 when I joined FC. So, what you're saying is it's good to recommend a platform achieving just 4%, but anyone that invests in one that achieves twice that level of return (if you follow the basic principle of diversity) should be smacked very hard??? given the objective of investment is to maximise one's returns, that sure is odd advice.
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sl125
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Post by sl125 on May 10, 2017 21:38:30 GMT
Download the loan book. It will tell you how much has been recovered against each defaulted loan. Also, you can still contact their customer service.
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sl125
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Post by sl125 on May 7, 2017 11:42:42 GMT
Risk. Flippers take little risk. Grab all and sell at premium. Majority gets bought. Whats to declare at year end jmun terms of income? 0 tax 0. Capital gain 0 as incentive to trade. Tax 0. A couple of months ago, I was responding to a few posters that claimed that "far too many" loans default before their first or second payment. Now I find other posters claim that a "Grab all and sell at premium" involves little risk. Well, clearly, those two views aren't compatible, since if my strategy is to buy up, say, 20% of a juicy £100K D grade loan... I'm running a very real risk that if I don't manage to offload £20,000 of loans at 0.5% premium (which is all you'll get on the secondary market for a D grade loan of that size) then my potential gain of just £50 (£20k * 0.5% minus the 0.25% selling fee) is offset by the real risk that I may not recover a full £20,000 if that loan goes south before I can reduce my exposure sufficiently. So, it depends what your risk appetite is. As I say, I'm risking a full £20,000 on one single loan in order to make just £50! Now, personally, I'm comfortable with that risk... and there are enough D grade loans coming through that the 50 quids do add up... but I am well aware that this certainly ain't risk free, or even "little" risk! Edited to add a couple of other aspects: 1. in order to have the spare cash available to grab as much as £20k in any one loan, I must have to ensure I've sold enough so that my holding account is flush with cash.... whilst it's sitting in the holding account is is earning zero interest... so I'm taking another risk: opportunity cost of lost interest by not holding that loan for longer. 2. The time involved in either pressing F5 all the time to wait for the loans to be placed on the primary market, and setting up the sell instructions equates to money. As does writing code to automate this, and maintaining that code whenever FC changes some minor aspect of their website. Flipping is not a passive investment, so you have to think of what your hourly labour rate is and take this into account.
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sl125
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Post by sl125 on Apr 19, 2017 18:12:45 GMT
Not wishing to be impolite, Bobo, but I don't think your expectation of fees aligns with the reality of how fees are applied to any investment, not just FC.
0.25% represents about 1-2 weeks of lost interest. In other words, to reap the benefit of breaking a 5 year investment contract early, I forego just 1-2 weeks interest. Compare this to breaking any other 5 year investment early... typically several months interest has to be given up. Looked at another way: I've just checked the early redemption fees for my 5 year fixed rate mortgage: 5% of the redeemed amount must be paid...
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sl125
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Post by sl125 on Apr 19, 2017 6:55:55 GMT
When you buy a loan part on the SM you pay: 1. The price of the loan part's outstanding principal. 2. Any premium that the seller has placed 3. The accrued interest from the date of the last payment. This is because, when you receive the next payment from the borrower you will receive the entire month's interest for that part, so the payment you make at the time of SM purchase prorates the allocation of interest between the two investors that held the loan during the month.
To the poster that says "massive" fee to sell: is 0.25% a massive fee? Judging by the sheer volume of sales going through the SM, most investors don't think it is a large fee to pay for the benefits it brings.
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sl125
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Post by sl125 on Mar 28, 2017 20:38:24 GMT
Hi Infosecguy
Whilst I commend you for the intent of your analysis, I still cannot agree with your view that an organisation's CISO has any responsibility to respond to an unsolicited email from an anonymous blogger asking them about their security policies. Newp2p hits the nail on the head when he draws a distinction between the use of "security through obscurity" at a technical level (which I agree are counter productive) versus obscuring what security policies an organisation has put in place (which is very much encouraged).
Indeed, your own analysis points out the reasons for obscuring certain things (eg. account disclosure via password reset... absolutely good advice you give there to ensure the message conveyed to the user does not give away the inclusion or omission of that user account in the set of valid users). And that is my point - no information security officer in their right mind would disclose what techniques they use to a person they have no knowledge of, and so cannot trust.
So yes, it is about who you are, since trust is the key to personnel security.
Where I would agree on re: the obscurity debate is the implementation of security technologies. Take encryption: we know that public-private key encryption is robust because of the wealth of peer-reviewed scientific evidence that is freely available concerning the mathematical relationship between the keys (and the research into finding a proof for the Riemann Hypothesis).
As was pointed out by some of the respondents, your analysis was simply conducted against their "front door" and so it would be simplistic to infer anything about the wider security policies of those organisations. Often, it's the business processes behind the scenes that are the weakest link.
Finally, you might want to look at NCSC's latest guidance on password policies (https://www.ncsc.gov.uk/guidance/password-guidance-simplifying-your-approach), and why they consider complex password policies are a bad idea.
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