sl125
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Post by sl125 on Nov 1, 2014 10:46:07 GMT
Ah, the old second hand car analogy.... Otherwise known as "Akerlof's lemons" after the 1970 paper by the economist George Akerlof.
As I think another poster pointed out, this is a false analogy. In the market for second hand cars the seller has the advantage of knowing what faults there are with the car; the buyer has an unfair disadvantage because they have less access to information about the car. The market for second hand cars is therefore biased against a) the buyers, and b) the sellers of good cars (because the market price will be lower to reflect the fact that the buyer has no way of knowing whether the car is a lemon).
The key difference is the seller of a loan part doesn't have this information advantage over the buyer, as both buyer and seller have access to the same information - the loan application, the repayment history, etc.
Therefore, the seller is simply selling in their belief (rather than certain knowledge) that the loan may go bad, whereas the buyer is buying in their belief - using the same information about the loan - that the loan will be profitable to them. There is a key difference between selling something to take advantage of asymmetric information and selling something by drawing a conclusion based on symmetric information.
The FC secondary market scenario it is therefore amoral rather than immoral.
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sl125
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Post by sl125 on Oct 31, 2014 18:23:45 GMT
Sterling
What you are missing is the fundamental ammoral (rather than immoral) nature of markets.
Put simply: In any market, whether it be for bonds, equities, forex or whatever, a seller is selling at a given price because he believes the price will fall; whereas a buyer will buy from him if he believes the price will rise. Buyers are matched with sellers at an equilibrium market price.
what, therefore, is immoral about selling something in the belief it may (note: may) default to a buyer who believes it may not?
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sl125
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Post by sl125 on Oct 15, 2014 15:51:55 GMT
Whilst we're on the topic of secondary market buyer rates: I notice a huge volume of loan parts at 3% premium with buyer rates less than 7% (some as low as 4%). Does anyone actually buy these? (or rather, would anyone actually admit to buying these?)
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sl125
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Post by sl125 on Oct 15, 2014 15:47:27 GMT
That's interesting, seeing it represented graphically. I do something similar in order to determine what my minimum bid rate should be on the primary market, taking into account premium charged as well (my idea being, that if I want to buy something on the primary market, I want to know that I have a reasonable expectation of being able to resell it on the secondary market should I need to liquidate my holdings).
One other interesting analysis for those regular secondary market sellers is to graphically show the trend for what rates people are actually buying your loan parts at. ie. although the 500th loan part on the secondary market may be at x%, if the first 100 parts aren't shifting that fast, then it becomes moot what the 500th loan part is up for sale at.
For example, I've noticed that those loans I hold at C and C- are becoming increasingly slow to sell even at high rates (eg. 13.5% for C, and 14% for C-). This doesn't bother me so much, as the interest accruing at those rates offsets the opportunity cost of not selling them quickly.
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sl125
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Post by sl125 on Oct 7, 2014 12:15:50 GMT
Based on your sample, there is no statistical significance in the days of the week that these early enders occur. This is because the sample size is so small, that random clustering will overshadow any statistical significance.
For example, if a rolled a dice 24 times, I may get the following distribution: 1: 3 times 2: 2 times 3: 8 times 4: 4 times 5: 0 times 6: 7 times
Would we conclude that the dice is biased towards 3 and 6, and against 5? If I rolled it a further 24 times and received the following distribution: 1: 2 times 2: 4 times 3: 2 times 4: 4 times 5: 4 times 6: 8 times
What would I conclude?
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sl125
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Post by sl125 on Sept 9, 2014 8:30:40 GMT
Out of curiosity: If you are transferring loans from one account to another by putting them up for sale, why would you do so at a discount? Surely, putting them on at discount makes them attractive to all the other people browsing the secondary market. Wouldn't it make more sense to apply a 3% premium, so that they are not attractive to anybody but you?
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sl125
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Post by sl125 on Aug 19, 2014 20:24:33 GMT
What technology do you use for scripting? if you're using Selenium webdriver it should be straightforward
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sl125
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Post by sl125 on Aug 2, 2014 18:04:29 GMT
Gs...
In traditional software development that may well be the case, but when you need to test the effect of incremental changes across whole populations of users that have different browsers, OS, etc, then A/B testing is a good strategy.
A/B testing is similar in principle to a randomised control trial: you assign x% of visits to your website the "new" version, and the remainder of users act as your control. I see that FC use Optimizely, which is a tool specifically for this purpose.
As a fellow FC investor that has built a suite of Selenium / Java scripts to automate my bidding, it is frustrating when the website changes its DOM, etc, but that is their prerogative at the end of the day. I just react by tweaking my code.
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sl125
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Post by sl125 on Jun 11, 2014 15:01:00 GMT
Well, it looks as if the tall one has got well over £50k of 6477, all in £960 chunks. It'll be interesting to see what he/she does with them on the secondary market.
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