jj
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Jolly Jammy
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Post by jj on Nov 24, 2019 13:30:26 GMT
I believe that the P2P sector is an early indicator of the health of the whole economy, even the whole world economy.
The whole P2P sector seems to be affected. The weak ones get infected first.
There is a problem with the debt & lending, which is a follow-on off the financial crisis in 2008.
If you study the USA in particular it seems that the banks are borrowing more & more. I think to cover their debt.
Gold might be a good investment.
" I believe that the P2P sector is an early indicator of the health of the whole economy, even the whole world economy." Why should the relatively tiny and immature P2P market be a better economic indicator than those markets traditionally considered to be the best forward indicators, namely the enormously sophisticated global bond market, and also the FX and equity markets ? " Gold might be a good investment." Again , why ? It earns no interest at all (unlike P2P, and most stocks pay a dividend), and gold also has very little utility. Warren Buffet puts it best, albeit a bit tongue-in-cheek : "Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head." Well I'm sure you get the point - apart from the relatively tiny jewellery market, gold is hardly used for anything. A good measure of the value of something is to gauge how life would be without that commodity. eg. a world without iron or nickel would almost unthinkable (no steel for starters) but what about a world without Gold ? Very little disruption compared to most other items of value - damn near "business as usual" tbh. "a rising tide lifts all boats"
And a ebbing tide sinks all boats. Do you think this long bull market is going to last forever?
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Post by samford71 on Nov 24, 2019 13:34:21 GMT
Can’t help but feel that now may be a good time to pull the plug on p2p .... Is this something others on this forum are concerned about? Interested in any words of wisdom  If you are asking this question then, in all likelihood, you should have pulled the plug on P2P about 2 years ago. You're investing in illiquid, often high risk, fixed income loans. By the time you can see the defaults are going to be bad, by the time that the platforms starting dropping, it's already way too late. It's all gone illiquid and you can't get out. You have to anticipate these issues, look for negative signals, and take action early.
I have been accused by some on this forum of being a panic seller, so maybe you shouldn't listen to me. No that is the correct strategy. Dump the loan first, ask questions later. It's saved me a six figure sum in P2P. Buy-and-hold is a fool's errand in P2P.
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corto
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Post by corto on Nov 24, 2019 14:24:22 GMT
(This comment relates to jj's from about an hour ago)
I agree that gold adds stability to a portfolio.
What I wanted to point out is that there are other precious metals (and perhaps too much an obsession on gold). The volatility of gold isn't that much different from that of palladium; the difference is the gold price has been flat for years whereas palladium has seen quite some growth.
Platinum, palladium, rhodium are rarer than gold and they are used in catalytic converters in cars.
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ozboy
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Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on Nov 24, 2019 14:32:02 GMT
You forgot "FCA Risk" Deees , arguably the biggest risk of them all. I am NOT joking. Bailey and the entire FCA "top tier", should all be disgraced and fired for gross incompetency. |
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blender
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Post by blender on Nov 24, 2019 14:38:53 GMT
Can’t help but feel that now may be a good time to pull the plug on p2p .... Is this something others on this forum are concerned about? Interested in any words of wisdom If you are asking this question then, in all likelihood, you should have pulled the plug on P2P about 2 years ago. You're investing in illiquid, often high risk, fixed income loans. By the time you can see the defaults are going to be bad, by the time that the platforms starting dropping, it's already way too late. It's all gone illiquid and you can't get out. You have to anticipate these issues, look for negative signals, and take action early.
I have been accused by some on this forum of being a panic seller, so maybe you shouldn't listen to me. No that is the correct strategy. Dump the loan first, ask questions later. It's saved me a six figure sum in P2P. Buy-and-hold is a fool's errand in P2P. Yes, I agree, but there are three aspects, getting out of loans, getting out of platforms and getting out of p2p. I don't plan to get out of p2p but the funds are not coming in as they were, due to poor platform performance, failures of platforms and new rules of FCA scaring the punters (which is their intention). That causes liquidity problems (such as FC) which tends to reinforce the need to get out as in your first point. You have to choose platforms carefully and be prepared to rebalance or move according to how things are looking. Even with diversified platforms you need to anticipate falling liquidity. On the high interest self-select loans it's better to be safe than sorry. I find an SM essential and try to get out after six months, or at the first sign of trouble - whichever is sooner. 10% and your capital back is much better than 13% followed by a loss. New loans for old is the thing, especially on interest-only loans where the risk is end-loaded. I avoided FS and Lendy and got out of FC before it went illiquid. But it was sheer luck to avoid Coll. Best to limit exposure when problems can be foreseen and just suffer the losses on the unforeseeable.
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macq
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Post by macq on Nov 24, 2019 15:00:26 GMT
the problem for the p2p industry at the higher risk end(a higher % platform seems to be the unwritten rule) is that this is a pro/positive forum or was until the start of the year so what chance of getting any new money from those investors and how will they attract new punters to grow the business?
i was one of the first to complain about the new changes to rates on RS,my main feeling was that it was to soon after the relaunch but i also did chip in about low rates.On reflection a company like Landbay has trundled on offering low rates but with hardly any posts on here due to i would guess the low rates don't attract many who use the forum maybe or because they have not had any problems(yet).It maybe that will be the sorta product that attracts the general public a low rate which hopefully gives coverage for defaults and passive in decision making.
But i am still not sure that however big the warnings on a platform that everyone will understand the lack of liquidity at times
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corto
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Post by corto on Nov 24, 2019 15:28:40 GMT
I have a tremendous respect for some posters here. As a newbie in p2p (~18months) they are a source of wisdom very much appreciated. Thank you!
Yet, I understand that even them have been hit by Col, Ly, FS -- and some badly.
I was not in any of these; so perhaps I am still too optimistic.
I am not pulling the plug. Rather I will diversify more across platforms to counteract platform risk.
There is now only one platform that if it went bust, which is not likely, could eliminate the p2p gains of the previous year.
I also adapt the amount of funds in any platform according to perceived risk.
FC got on my nerves, so I moved out.
MT I moderated down, but I still have trust in them. Their SM is improving (after 20% of loans were up for sale a few weeks ago) and I wish them success.
A good word about the FCA too: Currently I am at roughly 15% of funds in p2p. Their 10% seem to be a good target. I am going for it. Slowly
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Post by propman on Nov 25, 2019 14:53:31 GMT
IIRC IFAs always treated P2P like unlisted investments. The FCA doing likewise is telling. yes there is grandfathering, but I agree that this is the wild west and not suitable for most that are invested. I always stayed away from the higher yield platforms as too risky. However you do need to appreciate the difference between uncertainty and risk. Platform failure and particularly the consequences of P2P panic are inherently uncertain so diversification within P2P isn't the answer. Either you fancy the odds, play for fun and accept the possible losses or get out!
I do think Platform risk at the larger players has increased. This is because the losses on FC must have reduced the availability of funding. Also, the days of huge cash piles are behind us.
As for the future, I think low yield products are a possibility. The assumption at the start was that P2P could use technology and lack of capital tied up in antiquated systems to lend more efficiently and so able to reduce the margin between lenders and borrowers. This was always open to the risk that the other providers cut their own costs (especially with greater economies of scale). I think there is an opportunity here. unfortunately the likes of LW have shown that there is insufficient funds for low risk low return lending. This could only come after years of low default evidence to lower investors expectations. Unfortunately going for growth has killed this story that would need to be demonstrated from scratch. maybe this is what RS is now trying to do. If so, i may start investing with them again in 3 years when I see sufficient evidence. In the meantime reducing exposure to tfy and ge out with a decent return.
- PM
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Post by brettb on Dec 6, 2019 11:13:44 GMT
I just sold my BTL, so my P2P exposure is down to just 5% of my total assets.
I'm going to cut it down to less than that, although I still like Unbolted as it's a cheap way to hold gold.
The world is entering a deflationary bust. China will be exposed for the ponzi that it is, and that will rip the face off of countries like Brazil and Australia. Brexit has halted investment, and partly why I had to flee to an overseas job.
I did have 30% of my non-property assets in P2P at one point which was foolish but I wound the holdings down at exactly the right time.
We'd probably be reading more about the disaster that P2P is turning into, except for the bigger stories with Woodford (2019), CRE funds (2020?) and Challenger Banks (2021?).
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Post by zzr600 on Dec 6, 2019 11:42:11 GMT
A deteriorating global economy is killing off the weakest companies. The failure of P2P platforms in the UK (in addition to other growing problems in share funds and property funds) indicates the gradual failure of the underlying economy. Moneything is the latest to cease activities. No need to pull the plug on P2P, people will just withdraw money and nature will take it's course
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r00lish67
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Post by r00lish67 on Dec 6, 2019 12:00:03 GMT
It's far too early to judge the fate of P2P in my opinion.
Moneything, Lendy, FundingSecure and Collateral represent one tiny corner of the UK P2P sphere. The state of the UK and global economy cannot be blamed for their failure. Their failure is a story of greed, inexperience, and fraud from various parties underpinned by an incompetent financial regulatory authority. They paid huge rates of interest to lenders off the back of even larger APR's to borrowers, which attracted far too much totally inappropriate lending.
Not that I'm particularly optimistic about wider P2P. My fear is of a totally separate wave of failure that is brought about by a change in local/global economic forces. There are some far larger platforms than the above who appear to be struggling with loan origination and/or loanbook performance, which I find quite worrying in what still are relatively sanguine economic times.
With some luck, we could see some of the future platform endpoints being in the form of mergers/buyouts that strengthen rather than weaken the remaining competitors in the market. But it very much depends on circumstances and the order of things.
Point remains that the fate of the likes of Zopa/RS/FC/Assetz is not IMO related particularly to these four in any meaningful way.
'
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ashtondav
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Post by ashtondav on Dec 6, 2019 12:04:08 GMT
Landbay, however, shows the model is not flawed but simply difficult to make money out of retail punters. That they can sell their loanbook to a bank shows it's e decent loanbook.
Wonder if FC would be able to flog their loanbook 
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Post by zzr600 on Dec 6, 2019 12:05:09 GMT
The state of the UK and global economy cannot be blamed for their failure. ' I'd disagree. WeWork for example was a major investor in London property but it's been exposed as a fraud. This may already be having an impact on commercial property not just in the UK but major cities worldwide. In the UK most lending seems to be against property, there must also be a very large amount in cars. What else do you lend against in the UK? Hardly any industry left to borrow, and those that are healthy enough to do will approach banks, not bitty P2P lenders..
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r00lish67
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Post by r00lish67 on Dec 6, 2019 12:22:57 GMT
The state of the UK and global economy cannot be blamed for their failure. ' I'd disagree. WeWork for example was a major investor in London property but it's been exposed as a fraud. This may already be having an impact on commercial property not just in the UK but major cities worldwide. In the UK most lending seems to be against property, there must also be a very large amount in cars. What else do you lend against in the UK? Hardly any industry left to borrow, and those that are healthy enough to do will approach banks, not bitty P2P lenders.. Well, I would agree that in the case of MT their unfortunate failure to be able to move into this sort of lower-risk, lower-rate lending space is in part because of what you say. Like many others, I do believe they are much better actors in all of this than the other 3 platforms mentioned. I don't believe however that the lending they actually did do fit into this category. Nor the vast majority of lending done on Lendy, FS, Collateral (with the odd exception here and there). I'm sure there are plenty of individuals out there who would still be very happy to borrow 6 or 7 figure sums at a nominal 20% interest against their 'high value assets' given half a chance.
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ashtondav
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Post by ashtondav on Dec 6, 2019 12:28:03 GMT
The state of the UK and global economy cannot be blamed for their failure. ' I'd disagree. WeWork for example was a major investor in London property but it's been exposed as a fraud. This may already be having an impact on commercial property not just in the UK but major cities worldwide. In the UK most lending seems to be against property, there must also be a very large amount in cars. What else do you lend against in the UK? Hardly any industry left to borrow, and those that are healthy enough to do will approach banks, not bitty P2P lenders.. Well most lending seems to be cars, yes, but also debt consolidation, weddings, house improvements. Collectively these are bigger than cars.
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