wysiati
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Post by wysiati on Oct 28, 2014 10:54:37 GMT
I have an even more retarded and morally bankrupt practice. I actually sell loan parts which have gone late and come back, thinking them to be risky and knowing that another lender will buy them, perhaps through Autobid. I can hardly live with myself. It's almost as bad as selling equities which you think are at their peak price, or buying those which you think will rise - without thinking about the other anonymous party. There are two sides to a trade typically because opinions/expectations vary. Notably where a premium is involved another party is positively electing to take actions which reflect a different viewpoint. If everyone agreed there would be no trading.
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Post by GSV3MIaC on Oct 28, 2014 11:29:05 GMT
Not sure I buy that .. trading/barter was invented long before arbitrage and margin selling, along the lines of 'I've got milk, you've got wool, let's swap'.
Of course that was trading stuff people actually needed, 'right now', 'to live', as opposed to trading loan parts (which are electronic figments of some server's imagination) for money (which is electronic figment of some computer's imagination), traded in order to attempt to acquire more of the latter. As FC have amply demonstrated recently, a few hiccups in the software can turn either the parts, or the money, into electronic confetti, with no counter-party required.
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blender
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Post by blender on Oct 28, 2014 11:36:12 GMT
True enough Wysiati, and financial market trading works best where each party is there to optimise his or her position, not where one party has to worry about the other anonymous party. It is for the market authorities and their regulator to set out any rules to provide protection for the innocent, or Autobidders.
Remember the market trading scene in the Life of Brian, where Brian needs to purchase a gourd urgently and is happy to pay the asking price and be done and away? But the vendor insists that his asking price is too high - his gourd is not worth that many shekels - and that Brian must haggle the price down before the vendor will sell, a process which uses valuable time.
Perhaps when we put up a loan part for sale we should have a 1000 character free-text field in which to enter our reasons for selling and any warnings of which we think the potential buyers should be aware. If we are subsequently judged to have mis-sold the loan part (depending perhaps on whether it is defaulted), then we could be liable for compensation. Yes that should work.
GSV, what kind of milk do you have available?
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Post by GSV3MIaC on Oct 28, 2014 12:21:15 GMT
Milk? None - that was= olden days=, now-a-days we've sold milk futures out to Xmas 2017 in order to buy more cows .. Oh wait, I think we're cross-threaded with the DAD jokes?!
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Post by bracknellboy on Oct 28, 2014 12:23:43 GMT
This strategy (and I was tempted by it myself for a while) is one of the most retarded possible strategies there are. Firstly it's totally immoral because ....... Whether its retarded and morally bankrupt I guess is a subjective matter. Though if one feels that it is an inherently unsuccessful strategy (as posted) that rather reduces the level of moral depravity which can be applied to it. What I would have thought was not subjective - indeed is unequivocal - is that a p2p platform as presented by FC provides a "market" in which all participants are free to engage as they wish, and in which none are forced to participate. Undoubtedly not a perfect market with perfect information, but nonetheless a market complete with 'price signals'. And one which is pretty much equally transparent to all participants if they choose it to be (apart from perhaps the very rare case where a lender has access to additional 'insider information' which no other normal party could have access to. Surely its not up to me or anyone else to decide what another person's trade-off is between labour input - appetite for risk - required return etc. should be. After all their circumstances will be different to mine. And to do so in my eye smacks of 'statism'. Indeed someone selling off loans which they deem to be too risky for their own appetite provides a service to others by way of increasing the size of the tradeable market. [One caveat: this does require that historic information such as payment history is available for those who choose to invest the additional time to investigate, and by and large anything other than trivial non-compliance is flagged and available]. I seem to recall the merits of a free market and pricing signals being discussed on another thread, but I can't recall where.
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sl75
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Post by sl75 on Oct 28, 2014 14:22:23 GMT
The success of such a strategy would also depend in part on what strategies other participants are adopting.
If you're blindly attempting to sell "everything" after 6 months, you'll already be left holding the ones that are late, downgraded or defaulted at that point.
If, in addition the buyers are doing some level of due diligence before buying, they'll grab all the good stuff, so the ones you're left holding after an unsuccessful sale would tend to be the dross that nobody wants.
In practice, I remain to be convinced that enough buyers are sufficiently selective that their collective actions will avoid buying dross along with the good stuff, but with thousands of loans to choose from, buyers can certainly afford to be somewhat selective.
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blender
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Post by blender on Oct 28, 2014 14:49:15 GMT
... In practice, I remain to be convinced that enough buyers are sufficiently selective that their collective actions will avoid buying dross along with the good stuff, but with thousands of loans to choose from, buyers can certainly afford to be somewhat selective. Agreed, and for those lenders who purchase through Autobid, and do not invest their time and skill, then it is for FC to ensure that the combination of selling and buying protocols results in adequate returns. If you allow the supermarket to choose and deliver your fruit and veg, then the supermarket is responsible for quality.
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Post by davee39 on Oct 28, 2014 14:51:59 GMT
So far Autobid, at par, has always hoovered up the unwanted dross.
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Post by GSV3MIaC on Oct 28, 2014 15:31:45 GMT
Except for property loans of course ... although whether those are dross has yet to be proven. They certainly are not very liquid (at par).
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blender
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Post by blender on Oct 28, 2014 15:50:55 GMT
They drip slowly at par. But they are default-proof until the end of the term because the cash to pay the interest is taken from us as part of the loan, kept by FC and paid back monthly to us as if it were interest paid by the borrower. Strange - but safe until the penultimate interest payment is made.
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Post by Deleted on Oct 28, 2014 16:00:55 GMT
In the interests of clarity, there's an important difference between saying something's immoral and saying someone should pass a law.
I'm not talking about what you should be allowed to do: of course the secondary market's a market like any other and of course caveat emptor as always.
That doesn't change the fact that from a moral perspective, if you're offloading something you think is a high bad debt risk then you're also saying you're comfortable with someone else making an unwise decision. It doesn't follow from that that there should be a law against it: there are plenty of immoral things that are perfectly and rightly legal, such as adultery.
Yes, good point whoever it was that extrapolated to trade in general: indeed if you think the good you sell to someone is harmful, dangerous or bad for their wellbeing, you're acting immorally. Absolutely. Again it doesn't mean it's illegal to sell booze to an alcoholic or accept a bet in a casino from someone who stands to lose his house over it. It just means you're doing something you think will harm other people. Since you have their consent, there should never be a law against it.
We're all so used to the nanny state passing laws whenever harm or risk of harm is present, it makes us reluctant to come out and condemn something morally unless we're prepared to ban it with threats of imprisonment.
Hope that clarifies matters: you shouldn't be prevented from selling someone a micro-loan you fully expect to go bad but unless you're a heartless piece of garbage that hates humanity, you shouldn't do it.
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blender
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Post by blender on Oct 28, 2014 16:48:58 GMT
Hi sterling, I think we can probably all distinguish between immoral and illegal behaviour and we can throw out the illegal red herring with the garbage. There are rules (not laws) attached to our market, set by FC, and my argument is that the rules are there to protect people and as long as you comply with the rules of the market (enforced by the platform) then you do not need to worry about morality when dealing in loan parts. If there is some pathology in the market operation which systematically hurts particular lenders or types of lender then the problem is not with the other party or parties - who may have no knowledge of the hurt - but with the rules of the market. There is no communication between buyers and sellers on the secondary market, and no way in which the parties can know how the other values the loan part being traded. Essentially there is no relationship within which you could call a trade immoral. A seller can put a high-interest-rate loan-part up at par because it does not fit the seller's perceived risk profile, and the buyer can purchase it at what the buyer perceives is an attractive rate. No-one knows whether a loan will default (we are not discussing insider information) and so it is not decided which of the parties has benefitted until the loan has defaulted or the repayments all been made. The key point is that it is FC who says whether a loan is tradeable - up to date with payments and risk band not removed - and that is the sole condition. If FC says the loan part is tradeable then there should be no need to worry about morality. You could be very moral in selling a loan part with a perfect record and a high interest rate at a 3% discount, and in a week it could default. Is the morality to be found in the intention, or the action and consequences? Impossible. You just sell things you do not want, for whatever reason, at a price at which it will sell, and you buy what you wish to buy. FC is the responsible intermediary and your relationship is with FC.
When you play monopoly, sterling, do you play to win within the rules or do you play for a timed-out draw to avoid hurting someone's feelings? The game is what it is, the choice is whether to play, not how to play, imho.
Question. Is it reasonable for a pig to hate humanity? Discuss.
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Post by bracknellboy on Oct 28, 2014 17:02:14 GMT
Question. Is it reasonable for a pig to hate humanity? Discuss. I think Napoleon did, but then in the end I think he didn't much like other pigs either.
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maxmarengo
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Post by maxmarengo on Oct 28, 2014 17:50:46 GMT
It is only immoral if you are making your trade based on information that is not available to the purchaser.
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Post by GSV3MIaC on Oct 28, 2014 18:58:31 GMT
Some purchasers don't use what IS available though ... Cf the assertion that there is no evidence that older loans are more risky. Sterling not done his/her homework.
Yes, autobid is pants, FC seem to like it that way. But anyone can look at the forum links (even the FC forum carries the info) and find that out for free.
I don't buy 'immoral' though, or the suggestion that the nanny state is best supplanted by the nanny individual minder ... Let's go with Niven's 'Evolution in action'. 8?>.
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