archie
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Post by archie on Sept 18, 2017 17:43:03 GMT
What worries me about FC now is if there is more cash trying to move out then there is coming in then what will FC try to do stop that. Because if there is a large increase of sellers over buyers then that's going to take alot of money away from the PM. So in order to try and stop that happening. FC could stop sellers offering a discount to try and sell their loan parts and only let them sell at par. Also FC may slap a fee on buying and selling in the SM but not on buying on the PM so in order to try and increase the flow of money going into the PM. Until l know the answer to that am staying clear and will be investing in P2P through investment trusts. I thought under the new system you can only sell at par and have no control over what's sold.
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agent69
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Post by agent69 on Sept 18, 2017 17:44:32 GMT
I got out of FC at the time of the scrappy fiasco, although I've still got £6.50 in my account from recoveries.
Must admit I'm tempted by the fund and forget ISA if it achieves anywhere near 7.5%
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blender
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Post by blender on Sept 18, 2017 17:52:56 GMT
About the risk of more buyers than sellers - and consequent threats to liquidity and new loans. First, I think that FC have timed the change carefully, in September, to avoid that. Secondly they have two options. The first is to divert new loans to the corporate lenders. The second is to launch the IFISA, which will increase funds inflow and reduce the selling. They are holding back on the IFISA at present, but not for long.
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Post by ratrace on Sept 18, 2017 18:05:11 GMT
What worries me about FC now is if there is more cash trying to move out then there is coming in then what will FC try to do stop that. Because if there is a large increase of sellers over buyers then that's going to take alot of money away from the PM. So in order to try and stop that happening. FC could stop sellers offering a discount to try and sell their loan parts and only let them sell at par. Also FC may slap a fee on buying and selling in the SM but not on buying on the PM so in order to try and increase the flow of money going into the PM. Until l know the answer to that am staying clear and will be investing in P2P through investment trusts. I thought under the new system you can only sell at par and have no control over what's sold. Yes it now seems that you can only sell at par now and its the lack of control over what you can sell it what now turns me off FC .
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rogerthat
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Post by rogerthat on Sept 18, 2017 18:12:42 GMT
I thought under the new system you can only sell at par and have no control over what's sold.
Yes it now seems that you can only sell at par now and its the lack of control over what you can sell it what now turns me off FC .
Are you serious about not being able to sell what the hell you like ?..(I couldn't give a fig about a + or - premium) cos ive got nothing left to sell...if that is the case, then FC are managing everyones portfolio as they see fit...what is the point of that?
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Post by ratrace on Sept 18, 2017 18:19:18 GMT
About the risk of more buyers than sellers - and consequent threats to liquidity and new loans. First, I think that FC have timed the change carefully, in September, to avoid that. Secondly they have two options. The first is to divert new loans to the corporate lenders. The second is to launch the IFISA, which will increase funds inflow and reduce the selling. They are holding back on the IFISA at present, but not for long. Yes as long as the music keeps playing then there is no issue. But if and when music stops then the smart money of the big corporate leaders will be the ones bailing out first. So leaving the small retail investor to end up been the "tail end charlie" to pick up the mess. lf things go wrong then l want a ready exit route and investment trusts give me that.
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Post by ratrace on Sept 18, 2017 18:26:35 GMT
I thought under the new system you can only sell at par and have no control over what's sold. Yes it now seems that you can only sell at par now and its the lack of control over what you can sell it what now turns me off FC . Are you serious about not being able to sell what the hell you like ?..(I couldn't give a fig about a + or - premium) cos ive got nothing left to sell...if that is the case, then FC are managing everyones portfolio as they see fit...what is the point of that? With these changes to FC l now believe at the moment there is more money to be made from investing in P2P through lT's. So that's where my money is going.
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agent69
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Post by agent69 on Sept 18, 2017 18:51:09 GMT
About the risk of more buyers than sellers - and consequent threats to liquidity and new loans. First, I think that FC have timed the change carefully, in September, to avoid that. Secondly they have two options. The first is to divert new loans to the corporate lenders. The second is to launch the IFISA, which will increase funds inflow and reduce the selling. They are holding back on the IFISA at present, but not for long. But if and when music stops then .... Everyone investing in P2P will be up to their necks in the sticky brown stuff
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Post by ratrace on Sept 18, 2017 19:35:30 GMT
But if and when music stops then .... Everyone investing in P2P will be up to their necks in the sticky brown stuff Yes but with investment trusts you get a warning when that is more likely to happen. Because if a P2P investment trust share price swings from a large discount into a price above its NAV. Then it suggests that interest in P2P is at its peak. So maybe you should be looking to reduce your holdings in the sector.
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fp
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Post by fp on Sept 18, 2017 19:40:27 GMT
Everyone investing in P2P will be up to their necks in the sticky brown stuff Yes but with investment trusts you get a warning when that is more likely to happen. Because if a P2P investment trust share price swings from a large discount into a price above its NAV. Then it suggests that interest in P2P is at its peak. So maybe you should be looking to reduce your holdings in the sector. Which trusts are these, there is only one I know which isn't selling at a large discount on NAV?
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Post by ratrace on Sept 18, 2017 20:00:07 GMT
Yes but with investment trusts you get a warning when that is more likely to happen. Because if a P2P investment trust share price swings from a large discount into a price above its NAV. Then it suggests that interest in P2P is at its peak. So maybe you should be looking to reduce your holdings in the sector. Which trusts are these, there is only one I know which isn't selling at a large discount on NAV? At the moment its only the FC lT where the share price that is above its NAV "maybe a warning" ? But the shares in P2P Global and RDL are near there widest discounts since been on the market. Which suggest to me that interest in these funds could pick up and so this is where the best value lays.
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blender
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Post by blender on Sept 18, 2017 20:50:28 GMT
One interesting aspect of the poll is the difference between the balanced and conservative options. Perhaps the forum members are most able to understand the risks involved with the balanced and to opt for the conservative. But no - everyone takes balanced. What are these risks? The statistical distribution of the returns means you may get more extreme results with balanced? Or is it the risk of more CDE failures in the next downturn? For the consumer lender, if asked whether they want 4.8% or 7.5% - who is going to opt for 4.8% without some clear risks attached to the 7.5%? I rather think that the vast majority will go for the balanced 7.5% and everyone will get 6% to 6.5%. (A cynic might think that 7.5% was a number they wished to float, and that the two options and projected split might be a device to justify that 7.5% for a year or two.)
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IFISAcava
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Post by IFISAcava on Sept 18, 2017 21:54:16 GMT
One interesting aspect of the poll is the difference between the balanced and conservative options. Perhaps the forum members are most able to understand the risks involved with the balanced and to opt for the conservative. But no - everyone takes balanced. What are these risks? The statistical distribution of the returns means you may get more extreme results with balanced? Or is it the risk of more CDE failures in the next downturn? For the consumer lender, if asked whether they want 4.8% or 7.5% - who is going to opt for 4.8% without some clear risks attached to the 7.5%? I rather think that the vast majority will go for the balanced 7.5% and everyone will get 6% to 6.5%. (A cynic might think that 7.5% was a number they wished to float, and that the two options and projected split might be a device to justify that 7.5% for a year or two.) Growth Street 2?
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Post by peerlessperil on Sept 19, 2017 20:46:24 GMT
One of the reasons I ran this poll was to see if anyone here would opt for "conservative".
My hunch would be that there is probably better value in the conservative option, but that hunch doesn't really stand up to much scrutiny. How some of the loans get rated as A/A+ has constantly surprised me, at least based on the accounts presented. Sometimes the accounts look blatantly wrong and autobid mops them up before FC bother to lift a finger.
I have to say I've struggled to make much sense of FC's rating system - and I say that as someone who once upon a time could explain where Moody's methodology differed from S&P's.
However, it may all make a little more sense if your credit process gives significant weight to Directors' guarantees. We don't get to see the quality of the PG, and given this is mostly unsecured lending the financial reserves of a company sponsor do make a difference - and it would chime with FC's head of risk coming from a consumer credit background (credit cards, as opposed to corporate lending or bonds).
What will be interesting to see is how FC manages the relative demand for the conservative and balanced options. To generate 7.5% for the balanced they need a certain proportion of lenders to buy the conservative option. Demand for the two options is not necessarily going to match the existing loan book, and this is where it gets interesting.
FC can either vary the rates offered to align demand with supply (e.g. offer a higher rate to tempt more into conservative), or they can skew their credit ratings to make the loan book fit the investor demand (start rating weaker A rated loans as Bs). Either way there is going to be a transfer of value in risk/reward terms between investors in the two options.
Over time they can probably steer their loan origination to match demand more closely, but that will take time...
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blender
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Post by blender on Sept 19, 2017 21:52:00 GMT
However good they are at risk assessment and rating, I have never thought much of their grasp of psychology. I wonder if they have taken any expert advice on the likely take up between conservative and balanced. Even the name balanced has avoided the sense of risk which should be there to achieve the desired result. How can the consumer lender judge the difference in the probabilities of loans having three or five times the expected loss rate? It's like when they started and the B band was below average risk; when the C band was introduced it became average risk. The implications of a D band were evaded by calling it C- at first and avoiding any statement of risk level. Finally the E band required the change from C- to D, and the nasty risk descriptions were done away with altogether. Never have FC said that any loan was above average risk. By now they will know whether the split of lender cash matches their forecast, and therefore whether those numbers are valid, and honest to maintain as projections. How many investors have accepted 4.8% so that others may receive 7.5%, and how are they weighted? I think I can guess how many have been scared off from selecting a balanced portfolio. Especially when that was what Autobid was giving them a week before the change.
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