upland
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Post by upland on Apr 25, 2018 12:58:10 GMT
Well, the diversification would vary anyway, and would eventually tail off to the same. Example 1: put £10k in in one go; gets allocated in £50 chunks Example 2: Put £10k in in £2k chunks; first £4k gets allocated in £20 chunks, then once you put the third £2k in, that moves to £30 chunks, then £40, then £50. As capital is repaid, it gets reallocated in £50 chunks, so they eventually tend towards the same allocations. I wonder whether larger chunks have a higher probability of picking up secondary market loans? I've been in for about a month, and I've already got £200 of loans that are late, vs about £80 of earnings. Almost all of the late ones came from the SM. I was looking for some other possible effect as I do believe that its the losses that dictate how well you do. I was wondering if 'connected' loans were offered quite close together. That would be a way of ending up with a badly skewed portfolio. Then if one of them fails it knocks the lot for six.....
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Post by Badly Drawn Stickman on Apr 25, 2018 13:25:47 GMT
Well, the diversification would vary anyway, and would eventually tail off to the same. Example 1: put £10k in in one go; gets allocated in £50 chunks Example 2: Put £10k in in £2k chunks; first £4k gets allocated in £20 chunks, then once you put the third £2k in, that moves to £30 chunks, then £40, then £50. As capital is repaid, it gets reallocated in £50 chunks, so they eventually tend towards the same allocations. I wonder whether larger chunks have a higher probability of picking up secondary market loans? I've been in for about a month, and I've already got £200 of loans that are late, vs about £80 of earnings. Almost all of the late ones came from the SM. I was looking for some other possible effect as I do believe that its the losses that dictate how well you do. I was wondering if 'connected' loans were offered quite close together. That would be a way of ending up with a badly skewed portfolio. Then if one of them fails it knocks the lot for six..... For as long as I can remember with FC, people have been running in-depth analysis of the loan book coming up with various results. 'Skittle theory' is a new angle, but no more likely to solve the mystery than any of the others I suspect. Random chance is always what produces an average. Manual intervention, limited as it is possible to do these days would only alter the outcome slightly. Its a black box, admire how black and shiny it is and wait for fate to give you your share. If they get the average they are projecting, it would really be quite a good investment these days.
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Post by mrflibble on Apr 25, 2018 14:08:47 GMT
If they get the average they are projecting, it would really be quite a good investment these days. Yes, I'm hoping that it averages out after a while (and some of the late ones actually catch up), as at the moment it's looking pretty pants. I've even had a couple of loans with no notes on them go late within a month of having bought them on the SM. I can understand the ones that were late on recent months, but to have otherwise "good" ones go bad immediately after I bought them seems a tad unlucky...
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Post by Badly Drawn Stickman on Apr 25, 2018 14:41:07 GMT
If they get the average they are projecting, it would really be quite a good investment these days. Yes, I'm hoping that it averages out after a while (and some of the late ones actually catch up), as at the moment it's looking pretty pants. I've even had a couple of loans with no notes on them go late within a month of having bought them on the SM. I can understand the ones that were late on recent months, but to have otherwise "good" ones go bad immediately after I bought them seems a tad unlucky... Late and non payers have a higher impact when they happen early in the life of an account obviously. As the interest builds up on the 'good' loans it starts to look better. Its surprising how many loans that look lost come back to life, and eventually in a good few cases the recoveries trickle in on the defaults. Keep the faith and don't look to often is probably the solution. Disclaimer. I have never actually had an account running on the new system, currently watching my account unwind from the position I put it in before the changes, and a bit of small time experimenting with other accounts. Probably will at some point just fill and forget.
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sussexlender
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Cheat seeking missile
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Post by sussexlender on Apr 26, 2018 6:25:41 GMT
Hi VI.
How long do you think it will be before the "shiny black box" allocates a new and unsuspecting FISA investor with an entire portfolio of just about to default loans?
All the best, SXLR.
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ashtondav
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Post by ashtondav on Apr 26, 2018 7:43:05 GMT
I should think never, as it would be unlikely to meet the projected return.
Of course the “head for the hills” F.C. conspiracy theorists would think the opposite. They are after all “out to get you”...
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Post by Badly Drawn Stickman on Apr 26, 2018 10:01:34 GMT
Hi VI.
How long do you think it will be before the "shiny black box" allocates a new and unsuspecting FISA investor with an entire portfolio of just about to default loans?
All the best, SXLR.
Sadly sussexlender old friend, these days I am a battle scarred veteran (think better looking Brad Pitt, in the film Fury). I realise I can't win every battle without a few losses, and its the outcome of the war that matters. I think the 'shiny black box' will work ok, at least for a while until FC realise they can tweak the rate down a bit unnoticed. I suspect quite a few of us would be happy with 7.2% without much effort. p.s I suspect the Moderators would be happier if we kept the heavy duty FC bashing on the London Hotel thread.
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Post by mrflibble on Apr 26, 2018 14:04:31 GMT
Late and non payers have a higher impact when they happen early in the life of an account obviously. As the interest builds up on the 'good' loans it starts to look better. Its surprising how many loans that look lost come back to life, and eventually in a good few cases the recoveries trickle in on the defaults. Keep the faith and don't look to often is probably the solution. Yes, I realise that; I'm planning on leaving it for a while to see what happens; I was just a little surprised. Especially at one loan that has had what appears to be a faultless 18-month repayment history only to be downgraded almost immediately after I bought it because the borrower is putting the company into administration. 
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blender
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Post by blender on Apr 27, 2018 12:40:17 GMT
The black box has dealt me eight late loans. One of them is to fund 'asset purchase'. Do we have a charge on those assets we are buying? You guessed right! Too much bovver.
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dorset
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Post by dorset on Apr 27, 2018 18:27:26 GMT
28 defaults (all loans taken up pre Sept 2017) so far in 2018. This is about 60% up on the same period in 2016 and in 2017.
13 of the defaults occurred after only a few payments. FC seems now to be fully established as the final go to lender when 1) other finance sources say no thanks 2) the business expects to go belly up and 3) borrower hopes to buy itself a little more time before the inevitable end.
Have run my holding down by about 30% since last September. No regrets so far. Question has anyone done any DD on FC's stress tests for a recession (assume they exist) and what then happens to the 7%?
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ashtondav
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Post by ashtondav on Apr 27, 2018 20:54:27 GMT
Naive lenders. You want some sh*t action? Come over to FS. FC is Chanel No. 5 by comparison. Of course views are tainted by the old spivs who flipped and ripped off the innocent poor in the older days.
FC, does what it says on the tin. So far......
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blender
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Post by blender on Apr 27, 2018 22:02:52 GMT
28 defaults (all loans taken up pre Sept 2017) so far in 2018. This is about 60% up on the same period in 2016 and in 2017. 13 of the defaults occurred after only a few payments. FC seems now to be fully established as the final go to lender when 1) other finance sources say no thanks 2) the business expects to go belly up and 3) borrower hopes to buy itself a little more time before the inevitable end. Have run my holding down by about 30% since last September. No regrets so far. Question has anyone done any DD on FC's stress tests for a recession (assume they exist) and what then happens to the 7%? Have you missed 4) When an unexpected CCJ is expected?
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ashtondav
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Post by ashtondav on Apr 28, 2018 7:40:47 GMT
28 defaults (all loans taken up pre Sept 2017) so far in 2018. This is about 60% up on the same period in 2016 and in 2017. 13 of the defaults occurred after only a few payments. FC seems now to be fully established as the final go to lender when 1) other finance sources say no thanks 2) the business expects to go belly up and 3) borrower hopes to buy itself a little more time before the inevitable end. Have run my holding down by about 30% since last September. No regrets so far. Question has anyone done any DD on FC's stress tests for a recession (assume they exist) and what then happens to the 7%? Unfortunately borrowing and lending is subject to business conditions. Regardless of credit vetting defaults will increase as the business cycle fluctuates. Just take the “beast from the east” - many property and other weather related firms will have had negative cash flow in March so they are unlikely to pay all their bills. As we are at the top of a business cycle you can expect bad debt to accelerate. My personal approach to p2p wrt to FC is to hope for 7% across the business cycle but to expect more like 4% to 5%. Applying the same logic to Zopa explains why I have been withdrawing repayments for nearly 18 months. its been 10 years since the bad debt tsunami of 2008. 2008, or similar, will happen again. Those who are late to the party will always suffer most. Oh, and believe me there are worse culprits than FC.
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dorset
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Post by dorset on Apr 28, 2018 9:34:58 GMT
4% FC return seems a bit optimistic IMO. Even those of us who have been with FC since the beginning have not seen FC in a recession environment as for example the Zopa vets did in 2008.
I would expect FC significant aggregate loan capital losses at the depth of a recession. Perhaps by as much as 10%. I’m afraid all of the new punters piling in with their ISA allowance will be in for a hard lessons about risk and return.
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bigfoot12
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Post by bigfoot12 on May 1, 2018 7:26:10 GMT
vaelin, Great work - I have two further suggestions for possible explanations. Firstly I don't remember when D and E loans were introduced, perhaps it is after your start date, and in any case perhaps the proportion of higher risk loans has increased over this time. Secondly the rate paid on D and E loans increased during this time, perhaps that allowed for a higher default rate. To see if this is an issue you could plot the average rate of new loans to see if this increases, and if it does it might be worth normalising the proportion in each band. Might be worth excluding property loans, too.
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