copacetic
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Post by copacetic on Jul 12, 2018 9:38:01 GMT
I thought this was an interesting poll by samford71 taken at the end of March last year and was curious to see if people's opinions have changed much just over 15 months later. For reference:
I've never done a poll but this forum has been around 3.5 years and P2P has grown exponentially. We are being deluged by new platforms: take a look at the plethora on the "More P2X sites" board. Further growth is guaranteed with FCA authorizations in full swing and IFISAs being launched daily. Against that there are complaints about falling yields, higher risk loans, the inability to deploy funds, poor quality valuations and weaker customer service. Platforms like to say P2P is a new asset class. Well, new asset classes often end up in asset bubbles. So study the diagram in this Wikipedia link and please vote where you think P2P is in the typical life-cycle of an asset bubble. Note that you can think of the y-axis "valuation" as the inverse of yield (adjusted for risk i.e losses given default). The lower the risk-adjusted yield, the higher the price and valuation. Let's see where the consensus stands. Cheers samford71
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Post by GentlemansFamilyFinances on Jul 18, 2018 15:18:59 GMT
I think that P2P can't really fall into the bubble trap - mostly what I see it is debt-based lending.
Where my concern is (and I have been burnt) is with Crowdfunding - that's a good way to lose your money!
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Post by GentlemansFamilyFinances on Jul 18, 2018 15:20:33 GMT
just to add - I'm sure that some crowdfunding is fine and that some people may make money from it - and my shares in Brewdog are worth 40 times what I paid for them. However I think that overall, there will be 10 losers for everyone 1 winner in these schemes.
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bigfoot12
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Post by bigfoot12 on Jul 20, 2018 0:47:55 GMT
...and my shares in Brewdog are worth 40 times what I paid for them. ...there will be 10 losers for everyone 1 winner... So if everyone's 1 winner increases 40 fold, even with 10 losers we will all be happy! Seriously, isn't that close to what we are expecting - that about 1 in 10 will pay for other 9, and if we are lucky we will get 2 out of 10? Edit: and another thing I think that P2P can't really fall into the bubble trap How about more platforms run by people with less experience, more money going into platforms run by people with less experience, or platforms increasing the number of defaults and those running them don't know what to do, and how about platforms keeping an ever higher proportion of the rate paid whilst allowing the quality of the proposition to fall,... much of the problem of 2007 and 2008 was debt based lending, as was the Russian crisis (1998?), Third World debt (1980-1985), Savings and Loans, Spanish banking, etc.
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Post by GentlemansFamilyFinances on Jul 20, 2018 9:29:13 GMT
Well - I've been lending on Zopa since 2006 and other platforms after that. The single biggest lesson I've had is that return of capital is more important than return on capital. However, I think that debt based P2P lending or asset backed lending is on the whole a lot less risky than the crowdfunding investing that I see. Over 12 years I've made about 10% return on P2P lending (IRR) after tax which is great - but I don't expect that over the next 12 years and I know that I would have saved time and money by just chucking it all in an ETF tracker. But that's life.  Back to the orignal point - I don't think that P2P is in a bubble because so long as you are not reckless and you diversify (hard lessons learnt by me) you should in a worst case scenario make some money or not lose money on P2P. But the valuations I see on Crowdfunding just seem ridiculous* and that's where bubbles will burst. *one brewery I was tempted to invest in has gone belly up with all investment lost - and it didn't get the EIS that it hoped for. |
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bigfoot12
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Post by bigfoot12 on Jul 20, 2018 21:15:35 GMT
However, I think that debt based P2P lending or asset backed lending is on the whole a lot less risky than the crowdfunding If your thesis is that crowdfunding is worse you won't get an argument from me on that, but I do think P2P lending is a bubble, but I am happy to agree that equity crowdfunding is an order of magnitude worse. The latter is like trying to find a needle in a dung heap. I have lots of the smelly stuff in my portfolio.
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Post by pmac67 on Jul 24, 2018 22:13:26 GMT
I think for the high yielders the bubble is set to burst yes... The number of new loans issued this year is very low, and even if they do issue any I 'm not investing any more in P2P... I think consumer confidence has been severely tested, at least where existing investors are concerned. I'm surprised Ly got the FCA accreditation, I think the FCA is monitoring that circus closely, it's essentially a legalized Ponzi scheme. Zopa is the grand daddy of P2P but for the low return against the risk with no protection fund anymore ? and the fact that their annual accounts are so bad after 13 years ?
I feel it's not that the bubble is going to burst, just contract, and leave the better companies still standing...
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Post by GentlemansFamilyFinances on Jul 27, 2018 13:53:05 GMT
It is funny that in my 12 years of P2P investing it has become very mainstream. I think I remember seeing a lot of P2P advertising on the tube when last in London - all over the place. Now, I've never borrowed using P2P lending but I might give it a go (especially if I was terminally ill like one of my Zopa borrowers who borrowed, gave his partner the money and died. Zopa didn't think it polite to ask too harshly for my money back). If I was starting a business, it would seem that you are trodding a well worn path. All companies now need to have a (social media) presence and gaining investors who are loyal to your business would be critical to success. But think that it's all a bit of a waste of time and it's mostly style over substance. On Crowdfunding - I don't think that your average joe is able to make a good estimate of what a company is worth - plain and simple. My few crowdfunding investments are doing ok but I'd have been better sticking the money in an ETF (even with EIS/SEIS relief). The best investments were generally in renewable energy - but then I know a bit about what I was putting my money into |
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empirica
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Post by empirica on Aug 6, 2018 13:13:06 GMT
I don't seriously advocate this as a strong indicator but if participation in P2P is important to its health and 'survivability' and we then consider that the original 'bubblicious' poll had 84 voters and this one taken some 16 months later had 20 voters, then maybe some small inference can be drawn?
(Those more learned souls amongst us would probably point out that the duration of both polls may not be equal and that their timing _ one in March, the other July _ may impact things, plus any number of other influencing factors, but ... )
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