iren
Member of DD Central
Posts: 302 
Likes: 300
|
Post by iren on Oct 19, 2020 0:58:33 GMT
Cleaning out process is a natural way of selection. It happens to all new markets as they move to maturity. You may look at the stock market during tech bubble. I mean stocks were skyrocketing up with no acceleration in earnings, actually, with no earnings at all. When the market eventually came to senses, lots of bankruptcies followed. From the bubble arose some of the greatest companies we have now: Amazon, Google, eBay and about ten more. The same will happen with the P2P alternative platforms. More will be uprooted and will be remembered no more. Others will rise and start dominating the field. Regulation is a plus, despite it does not always work. But those platforms that are willing to be licensed at least show they want to be transparent and responsible with investors' funds. Other factors should be there too. Viventor is now moving towards securing an Investment Brokerage License. That's a great plus for them, including strengthening of AML/KYC procedures: www.viventor.com/blog/posts/viventor-launches-automated-and-kyc-aml-compliant-onboarding-process If anything, FCA regulation has provided only a false cloak of respectability to the platforms and the illusion of a degree of security for investors, while adding to costs and diverting platforms’ attention to useless projects with no value relative to real-life events, such as the creation of wind down plans. Comparison to the stock market is useless. In P2P you don’t find you’ve invested in an Amazon that compensates for the failure of other firms, because your upside is never more than the payment of agreed interest. Indeed, upside for a borrower is often downside for a lender, as the best loans are most likely to be repaid early. P2P investments cannot tolerate any platform failure, because P2P investment lacks the distinction between platform and underlying investments that exists with stock market investments. Platform failures have repeatedly proved catastrophic for investment value. The whole structure of P2P needs to be rethought to make it worthwhile as an asset class.
|
|
r00lish67
Member of DD Central
Posts: 2,692
Likes: 4,048
|
Post by r00lish67 on Oct 19, 2020 8:58:43 GMT
If anything, FCA regulation has provided only a false cloak of respectability to the platforms and the illusion of a degree of security for investors, while adding to costs and diverting platforms’ attention to useless projects with no value relative to real-life events, such as the creation of wind down plans. Comparison to the stock market is useless. In P2P you don’t find you’ve invested in an Amazon that compensates for the failure of other firms, because your upside is never more than the payment of agreed interest. Indeed, upside for a borrower is often downside for a lender, as the best loans are most likely to be repaid early. P2P investments cannot tolerate any platform failure, because P2P investment lacks the distinction between platform and underlying investments that exists with stock market investments. Platform failures have repeatedly proved catastrophic for investment value. The whole structure of P2P needs to be rethought to make it worthwhile as an asset class. Seconded, to all of the above. Despite the current backdrop, there are currently quite a few platforms operating fairly merrily in the circumstances and seeing their offerings easily filled. I'd love to be confident enough to invest in them, but it seems to me that there is a small but very real risk with each of them that they are either not what they appear (i.e. some malfeasance afoot) or that they are totally genuine but their supposedly sound wind-down plans aren't actually fit for purpose. Some platforms and people who invest in those platforms will undoubtedly continue to do very well, but the survivorship bias looking in the rearview mirror is horrendous. Some say "invest only X% in P2P of your portfolio and be prepared to lose all of it". Well, that's all well and good, but why should I take on any single digit % return investment which could disappear entirely? Excepting end of world scenarios, my index funds never will, nor Government bonds, nor cash, nor gold. P2P doesn't offer anywhere near the 'double-bagger' type level of returns required to justify such catastrophic impact risks.
|
|
|
|
Post by Ace on Oct 19, 2020 20:13:18 GMT
If anything, FCA regulation has provided only a false cloak of respectability to the platforms and the illusion of a degree of security for investors, while adding to costs and diverting platforms’ attention to useless projects with no value relative to real-life events, such as the creation of wind down plans. Comparison to the stock market is useless. In P2P you don’t find you’ve invested in an Amazon that compensates for the failure of other firms, because your upside is never more than the payment of agreed interest. Indeed, upside for a borrower is often downside for a lender, as the best loans are most likely to be repaid early. P2P investments cannot tolerate any platform failure, because P2P investment lacks the distinction between platform and underlying investments that exists with stock market investments. Platform failures have repeatedly proved catastrophic for investment value. The whole structure of P2P needs to be rethought to make it worthwhile as an asset class. Seconded, to all of the above. Despite the current backdrop, there are currently quite a few platforms operating fairly merrily in the circumstances and seeing their offerings easily filled. I'd love to be confident enough to invest in them, but it seems to me that there is a small but very real risk with each of them that they are either not what they appear (i.e. some malfeasance afoot) or that they are totally genuine but their supposedly sound wind-down plans aren't actually fit for purpose. Some platforms and people who invest in those platforms will undoubtedly continue to do very well, but the survivorship bias looking in the rearview mirror is horrendous. Some say "invest only X% in P2P of your portfolio and be prepared to lose all of it". Well, that's all well and good, but why should I take on any single digit % return investment which could disappear entirely? Excepting end of world scenarios, my index funds never will, nor Government bonds, nor cash, nor gold. P2P doesn't offer anywhere near the 'double-bagger' type level of returns required to justify such catastrophic impact risks. I agree with most of this, but I don't think it applies to the whole sector. There are honest P2P platforms out there with perfectly viable business models that offer good returns for the risks being taken. I'll resist from naming my favourites again as its probably becoming boring. The vast majority of platform catastrophes have been caused by malfeasance. The law and the FCA should and could have protected us from these. Perhaps the FCA should become culpable for any wind-down plan failures and any overruns in wind-down costs. It might concentrate their minds a bit better. Other platforms have failed due to failed business plans. I don't expect to see major losses from these, and in many cases overall returns will still be positive despite some capital losses. This feels like an acceptable part of a diversified portfolio to me. I don't expect to avoid all losses when investing. OK, I may be simply suffering from survival bias, but to me, I think there are excellent, hardworking platforms across the range. Something for everyone. I think that one of the biggest problems is getting some independent analysis by respected organisations on which platforms are honest and have workable business plans. For now it seems that the best way of finding out is: to do your own platform DD, follow this forum, try out the platforms that respected members favour with a small investment, and keep an eye out for early warning signs of malfeasance or failure. P2P is a growing investment class that's here to stay with something for almost everyone IMO, but would be so much better if the FCA earned a bit of respect.
|
|
r00lish67
Member of DD Central
Posts: 2,692
Likes: 4,048
|
Post by r00lish67 on Oct 20, 2020 7:53:01 GMT
I agree with most of this, but I don't think it applies to the whole sector. There are honest P2P platforms out there with perfectly viable business models that offer good returns for the risks being taken. I'll resist from naming my favourites again as its probably becoming boring. The vast majority of platform catastrophes have been caused by malfeasance. The law and the FCA should and could have protected us from these. Perhaps the FCA should become culpable for any wind-down plan failures and any overruns in wind-down costs. It might concentrate their minds a bit better. Other platforms have failed due to failed business plans. I don't expect to see major losses from these, and in many cases overall returns will still be positive despite some capital losses. This feels like an acceptable part of a diversified portfolio to me. I don't expect to avoid all losses when investing. OK, I may be simply suffering from survival bias, but to me, I think there are excellent, hardworking platforms across the range. Something for everyone. I think that one of the biggest problems is getting some independent analysis by respected organisations on which platforms are honest and have workable business plans. For now it seems that the best way of finding out is: to do your own platform DD, follow this forum, try out the platforms that respected members favour with a small investment, and keep an eye out for early warning signs of malfeasance or failure. P2P is a growing investment class that's here to stay with something for almost everyone IMO, but would be so much better if the FCA earned a bit of respect. I take your points, and you're certainly right about the difficulty in independent analysis <cough, 4thway, cough> I have no doubt that you're right too that there are excellent firms out there. I think it's just the tail risk that I struggle to live with. You can certainly reduce this risk by taking the actions you suggest but you can never eliminate it. Aside from the risks made apparent with the huge number of casualties strewn around already, how many platforms that are currently popular run these sorts of risks? Very small. Very new. Established, but with a very limited borrower pool and/or common directors. Unprofitable. Newly minted entirely unregulated Latvian operations run by a handful of finance grads offering loans against half built shells in the hinterland. Ok you can disregard that last one  I suppose in a similar way to individual share picking, if you have the discipline to diversify heavily that certainly helps (though perhaps don't mention that to those who spread investments between LY, FS and Collateral!) Anyway, I'm sounding 100% against P2P, which I'm not really. I just perceive the risk to be too great at the moment in the vast majority of cases. I was happy to have small investments in Assetz/LC until the pandemic hit which they can hardly be blamed for. I think they're both good platforms, albeit with some real challenges afoot now. Never say never and all that, I don't want to be accused of hypocrisy when I dive back in with some tantalising new offer. PS - A growing investment class, though? Not saying you're wrong, but that surprises me. By what measure/s do you mean? I found this data but this just seems to highlight how dominant the top 3 are/were, and those are platforms now very much less popular with retail investors currently (FC, RS, ZP)
|
|
|
|
Post by Ace on Oct 20, 2020 9:45:41 GMT
I agree with most of this, but I don't think it applies to the whole sector. There are honest P2P platforms out there with perfectly viable business models that offer good returns for the risks being taken. I'll resist from naming my favourites again as its probably becoming boring. The vast majority of platform catastrophes have been caused by malfeasance. The law and the FCA should and could have protected us from these. Perhaps the FCA should become culpable for any wind-down plan failures and any overruns in wind-down costs. It might concentrate their minds a bit better. Other platforms have failed due to failed business plans. I don't expect to see major losses from these, and in many cases overall returns will still be positive despite some capital losses. This feels like an acceptable part of a diversified portfolio to me. I don't expect to avoid all losses when investing. OK, I may be simply suffering from survival bias, but to me, I think there are excellent, hardworking platforms across the range. Something for everyone. I think that one of the biggest problems is getting some independent analysis by respected organisations on which platforms are honest and have workable business plans. For now it seems that the best way of finding out is: to do your own platform DD, follow this forum, try out the platforms that respected members favour with a small investment, and keep an eye out for early warning signs of malfeasance or failure. P2P is a growing investment class that's here to stay with something for almost everyone IMO, but would be so much better if the FCA earned a bit of respect. I take your points, and you're certainly right about the difficulty in independent analysis <cough, 4thway, cough> I have no doubt that you're right too that there are excellent firms out there. I think it's just the tail risk that I struggle to live with. You can certainly reduce this risk by taking the actions you suggest but you can never eliminate it. Aside from the risks made apparent with the huge number of casualties strewn around already, how many platforms that are currently popular run these sorts of risks? Very small. Very new. Established, but with a very limited borrower pool and/or common directors. Unprofitable. Newly minted entirely unregulated Latvian operations run by a handful of finance grads offering loans against half built shells in the hinterland. Ok you can disregard that last one I suppose in a similar way to individual share picking, if you have the discipline to diversify heavily that certainly helps (though perhaps don't mention that to those who spread investments between LY, FS and Collateral!) Anyway, I'm sounding 100% against P2P, which I'm not really. I just perceive the risk to be too great at the moment in the vast majority of cases. I was happy to have small investments in Assetz/LC until the pandemic hit which they can hardly be blamed for. I think they're both good platforms, albeit with some real challenges afoot now. Never say never and all that, I don't want to be accused of hypocrisy when I dive back in with some tantalising new offer. PS - A growing investment class, though? Not saying you're wrong, but that surprises me. By what measure/s do you mean? I found this data but this just seems to highlight how dominant the top 3 are/were, and those are platforms now very much less popular with retail investors currently (FC, RS, ZP) My "growing" comment was more of a personal impression than a proven fact, hence the "IMO". Its true of the vast majority of my current favourites, though some have reduced lending due to Covid19. I was sure I read an article with some stats that showed the trend was growing recently, but failed to find it when looking before posting. I came across the same source that you did, but couldn't find any tend analysis beyond the "vs previous 90 days", which isn't really sufficient. Perhaps wiseclerk could add a trend graph to his monthly lending stats? Brismo do some analysis of P2P platforms, but I'm not sure of their independence or what it might cost for access. I agree that the risks you've listed apply to many platforms, but not all, though I may just have a lower threshold for the terms "small" and "new". In any case, I'm looking to manage risk rather than eliminate it. I wouldn't worry too much about the hypocrisy thing. I'm a serial offender, as you may well have noticed. I think of it as simply changing my mind occasionally 
|
|
|
|
Post by valueinvestor1234 on Oct 29, 2020 19:17:55 GMT
If anything, FCA regulation has provided only a false cloak of respectability to the platforms and the illusion of a degree of security for investors, while adding to costs and diverting platforms’ attention to useless projects with no value relative to real-life events, such as the creation of wind down plans. Comparison to the stock market is useless. In P2P you don’t find you’ve invested in an Amazon that compensates for the failure of other firms, because your upside is never more than the payment of agreed interest. Indeed, upside for a borrower is often downside for a lender, as the best loans are most likely to be repaid early. P2P investments cannot tolerate any platform failure, because P2P investment lacks the distinction between platform and underlying investments that exists with stock market investments. Platform failures have repeatedly proved catastrophic for investment value. The whole structure of P2P needs to be rethought to make it worthwhile as an asset class. Why anything? That's a nihilistic point of view. Those platforms that want to do business fairly, it is more than a cloak of respectability, but also a proof how they want to operate, fairly, not under shady jurisdictions.You can compare anything to anything. Stock market is used for investments, the same with P2P. It is obligation of the one who invests in the stock market to do due diligence and not to dive into any stock that is rising. The same with P2P platforms, you do your own due diligence. Regarding platforms, if a platform has a lot of loan originators, and one fails, it will most likely not drown the platform. On the other hand, if the platform is not a marketplace, but issues loans on its own without doing proper due diligence, then yes, this is likely.
|
|
ashtondav
Member of DD Central
Posts: 1,814
Likes: 1,092
|
Post by ashtondav on Nov 2, 2020 11:06:51 GMT
My 15 years in Zopa has delivered attractive, risk adjusted returns.
FTSE100? 20% below where it was 20 years ago, excluding dividends. So if I’d spent my dividends (as I do my p2p interest) i’d Be 20% down. Au contraire, my Zopa Capital remains intact.
Give me the friggin p2p Wild West. Low volatility, decent returns.
my personal view is to have a portfolio of p2p, gold, bitcoin, equity, private equity, infrastructure, and bonds. I wouldn’t demonize any of them. They all have their place - FOR INVESTORS WHO KNOW WHAT THEY’RE DOING.
|
|
ceejay
Posts: 975
Likes: 1,149
|
Post by ceejay on Nov 2, 2020 12:59:19 GMT
My 15 years in Zopa has delivered attractive, risk adjusted returns. FTSE100? 20% below where it was 20 years ago, excluding dividends. So if I’d spent my dividends (as I do my p2p interest) i’d Be 20% down. Au contraire, my Zopa Capital remains intact. Give me the friggin p2p Wild West. Low volatility, decent returns. my personal view is to have a portfolio of p2p, gold, bitcoin, equity, private equity, infrastructure, and bonds. I wouldn’t demonize any of them. They all have their place - FOR INVESTORS WHO KNOW WHAT THEY’RE DOING.Well, that bit that you capitalised and which I have further emboldened, is perhaps the crux of the matter. It might be taken to suggest that anyone who has lost money (that they couldn't afford to lose) has only themselves to blame - that P2P is just another investment class which those with the necessary nous can take advantage of. I'm not sure that's fair. I imagine that there are some effective small platforms (I have experience of ABL, I assume there are others) who have found themselves a niche and managed to do good business using a relatively small number of well-informed investors. That's fine. But the platforms that have tried to go for scale - Z, FC, RS - have all gone for large-scale consumer "investors" who are really "savers". I can't see any way, in hindsight, that this was ever a good idea - there is an inherent contradiction between going for volumes of investors and having sophisticated investors. And I absolutely agree with @wallstreet 's comments that the regulators have completely cocked this one up. Perhaps I'd put it this way: it is conceivable that there could have been such a thing as an effective P2P market, but its not the one that we have. Perhaps Covid has done us a favour by precipitating a few failures, lessons and exits, and in a few years we will have an appropriately regulated and marketed offering. In the meantime, I am proceeding with some caution...
|
|
ashtondav
Member of DD Central
Posts: 1,814
Likes: 1,092
|
Post by ashtondav on Nov 2, 2020 17:57:21 GMT
my personal view is to have a portfolio of p2p, gold, bitcoin, equity, private equity, infrastructure, and bonds. I wouldn’t demonize any of them. They all have their place - FOR INVESTORS WHO KNOW WHAT THEY’RE DOING.
Well I do know what I'm doing, and put it this way .... some of us like to sleep at night. 
What you have done there is enumerate a list of predominantly high risk investments (or so-called "investments" in some cases). The only possible lower risk exceptions on your list are equities (as long as you don't dabble in the wrong corners of the stockmarket - illiquid micro/nano/smallcaps) and bonds (as long as you don't go for junk bonds).
For example, I know people who work in private equity and frankly I wouldn't give them a penny that I found on the street, let alone any of my own money. Its a horrible business and quite frankly they're not interested in anyone but themselves, and that includes no interest in giving you assurance on any sort of return on your money.
Is the money you've got in "p2p, gold, bitcoin, equity, private equity, infrastructure, and bonds" really money you can afford to loose ? I jolly well hope so !!!
Er, so where do you “invest” - the building society? Of course I have a substantial sum of cash and if the world fell out of my more speculative investments my pensions are sufficient to maintain my lifestyle. Everyone has different needs. I was merely pointing out that a diversified portfolio is a good idea. Oh, and just because you don’t like the PE mob doesn’t mean you can’t have a few shares in them and share the rewards of their dubious deals!
|
|
|
|
Post by nooneere on Nov 2, 2020 20:21:53 GMT
My 15 years in Zopa has delivered attractive, risk adjusted returns. FTSE100? 20% below where it was 20 years ago, excluding dividends. So if I’d spent my dividends (as I do my p2p interest) i’d Be 20% down. Au contraire, my Zopa Capital remains intact. Give me the friggin p2p Wild West. Low volatility, decent returns. my personal view is to have a portfolio of p2p, gold, bitcoin, equity, private equity, infrastructure, and bonds. I wouldn’t demonize any of them. They all have their place - FOR INVESTORS WHO KNOW WHAT THEY’RE DOING. Good to hear from someone satisfied with P2P, and I feel the same about my holdings in the safer small platforms (e.g. Loanpad, Unbolted). But I have to counter your negativity about stockmarket investments. The S&S JISA I run for my son is up 45.9% over the last 12 months, even after the recent market weakness. My own S&S ISA, which has a greater loading of conservative income investments, is up 14.7% over 12 months. You are right about the FTSE100 but the answer is to diversify globally.
|
|
