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Post by scepticalinvestor on Jun 17, 2020 9:31:25 GMT
davee39 Not strictly P2P but what are your thoughts on Lendinvest, pretty much the only one where I'll have a substantial investment left once I'm out of RS and AC. P2p will survive but only the top 4. Not the 50 other also rans. I'm afraid my rose tinted glasses are in quarantine. FC - finished for 'ordinary' lenders. The founders have stashed their cash while investors lost theirs. Likely to continue as a commercially funded small business lender after probable takeover. Zopa - cannot make a profit. Banks can get their cash free from Government schemes or my offering 0.001% to savers. The P2P will be wound down, Zopa may survive as a bank. RS - In fire sale mode before the PF runs out. Desperately needs capital. Metro may only be interested in the loan book. If takeover goes ahead P2P will wind down. Assetz - Better placed than the above three. Quality and experienced management team, but some glaring mistakes and in need of more investment, Likely to become platform for institutional money and High net worth investors. My best guess would be that they could repackage the Access product into fixed term income paying bonds. P2P worked when interest rates were high, it cannot work in a low interest rate environment. It has also been tarnished by bandwaggon jumping platforms which have fooled investors into thinking property is 'safe'.
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r00lish67
Member of DD Central
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Post by r00lish67 on Jun 17, 2020 9:39:35 GMT
Or alternatively invest in a long term low cost world index fund, drip fed in to balance dips and peaks, if like me you don't think you're better at analysing market information than Goldman Sachs and the rest. Agreed on the general principle. But the gotcha in practice, is that “world index funds” are so much less diversified in detail than one expects naively (apologies if I’m being professor of the bleedin’ obvious here). 1) It’s hugely overweight in ultra-large caps - particularly a problem as Fama French tells us that large size consistently underperforms. 2) The USA is so heavily financialised, that its stock market is 50% of world total equity. US stock performance dominates “world index” results, out of all proportion to its contribution to world GDP and GDP growth. 3) US stock market is dominated by FAANG tech stocks. Worth having, but do you really want a quarter of your entire wealth concentrated in five rather bubbly companies......and the rest of world mega-stocks are dominated by global mega banks. Ditto, ditto. One might be very disappointed to discover that a fund of Global Top 100, has more weight in US tech stocks alone, than combined global utilities, raw materials, oil&gas, industrials, telecom, consumer goods. Instead, one needs to pick a wide spread of geographic, sector and theme funds; plus some (short duration) bond funds, plus currency hedges - otherwise all your geographic equity indexing actually becomes just a currency basket bet. And of course drip-feed & re-balance. Anyway, that’s my take on life. I know where you're coming from, it's a reasonable take, but I don't personally agree. A few reasons: 1) If 5 years ago, you had tried to 'be smart' and cut out stocks that have overperformed, then, well, you'd have missed out on the next 5 years of FAANG overperformance. 2) Plus, when FAANG performance does die out, we have no idea what will replace it. If you avoid the USA, you might be missing out on the next big boom companies in whatever trendy new sector. 3) The USA is 50% of global trackers because that's the genuine world situation. In the long term, if China increasingly dominates for example, then these trackers will gradually rebalance into China and benefit from it's overperformance. Providing someone is winning, it doesn't matter whether it's the USA, China, or wherever. 4) Same applies in shorter terms for your points about sectors. If industrials rally and Facebook falter, global trackers will capture that. Sure, you won't experience the burning hot overperformance of picking a winner, but likewise you won't experience the harrowing potential to lose huge sums of money. Global trackers work because they remove us from the equation. We don't know which company / sector / country is going to be successful in the long term, and for funds that really matter, I don't believe it's in anyone's best interest to try and guess. This is why pension schemes worldwide invest in them, and not in individual firms or hotshot managers.
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Post by gravitykillz on Jun 17, 2020 9:40:45 GMT
I have 3 loans on lendinvest overdue (2 since November 19). Total portfolio 23 loans. Platform seems stable majority of loans i have are not been repaid. I'm sure I will be repaid some point in the future due to the environment we are in. Hopefully with interest.
Same with crowdproperty but at least crowdproperty are giving a 2% boost to the interest for overdue loans (10%)
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Post by Deleted on Jun 17, 2020 10:41:47 GMT
With all this talk of 'imminent' demise, I do wonder how much cash RS are raking in from all these cancellation fees.
Especially on 5-year and Max, it must be a non-trivial amount.
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Post by davee39 on Jun 17, 2020 10:54:14 GMT
I have not considered any of the other lending platforms. My P2P exposure is limited to Zopa, RS and Assetz and I had been slowly exiting all three before recent events.
I am currently moving funds into income oriented Investment Trusts paying 7 - 8%, room for recovery over the next couple of years and income reserves to help with the quarterly dividend
- Aberdeen Standard Equity Income, Henderson High Income and Merchants Trust
For risk and exitement - Alternative lending Trusts
Pollen Street Secured Lending, VPC Speciality Capital (Yielding 11%). These depend on US Central Bank Stimulus to get Trump re-elected. They sufferred savage falls but have made a decent partial recovery.
For relative stability a mix of Bond Funds - a 3% yield and relatively unscathed.
The majority is in FSCS protected funds paying very little (1 to 2%). I am expecting a pensioner bond to be announced this summer as a sweetner for abolishing the triple lock.
The above is a snapshot of my portfolio and not investment advice.
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ashtondav
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Post by ashtondav on Jun 17, 2020 12:04:38 GMT
My p2p returns have caned that aberdeen trust over the last five years. But, granted, you may be right and it might come good. I hold it too
i personally like p2p if I can get 5% pa over the cycle (ten years). I think that’s doable.
But then unlike many on these platforms I never listened to the instant access tripe spouted by these guys. I always considered myself in a (probably) 5 year investment
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Post by bouncycastle on Jun 17, 2020 16:09:08 GMT
I don’t see p2p surviving after this, or at least not in the way it is built now. Without guaranteed liquidity retail products will always be non standard products and the likes of IFAs will steer clear. Secondly the cost of funds is simply too high to actually make any money via the margin. Thirdly the tech is decent, but needs overhauling constantly and that is expensive. RS went down the route of retaining much of the equity through a small group of investors and staff and didn’t open the doors to VC or PE. It looked like a good move, but only if they found a way to grow profitably. They couldn’t because the model doesn’t make money. FC in comparison raised money by giving away the equity and the founders marched off nicely compensated and in some ways quite rightly too: their idea. (Some strangled investors might disagree), but FC went mad on expansion and in the end the model came down the same flaw: it doesn’t make money I reckon the FCA realised this quite early on, but couldn’t stop the ‘regulatory approval train’ and approved too many. 36H might be the saviour here for retail lenders, and surely any deal done between Metro and RS won’t be sanctioned by the FCA unless the lenders at least get out at par. Best guess is that this glorified liquidity deal means that the RS lenders get taken out and repaid at par, and Metro service those juicy loans via deposits and government guarantees. Metro want a consumer loans business and have so far failed to crack that nut. This an oven-ready version that might suit them. Buy, not build basically. But in all truth 🤷
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Post by diversifier on Jun 17, 2020 16:17:33 GMT
Agreed on the general principle. But the gotcha in practice, is that “world index funds” are so much less diversified in detail than one expects naively (apologies if I’m being professor of the bleedin’ obvious here). 1) It’s hugely overweight in ultra-large caps - particularly a problem as Fama French tells us that large size consistently underperforms. 2) The USA is so heavily financialised, that its stock market is 50% of world total equity. US stock performance dominates “world index” results, out of all proportion to its contribution to world GDP and GDP growth. 3) US stock market is dominated by FAANG tech stocks. Worth having, but do you really want a quarter of your entire wealth concentrated in five rather bubbly companies......and the rest of world mega-stocks are dominated by global mega banks. Ditto, ditto. One might be very disappointed to discover that a fund of Global Top 100, has more weight in US tech stocks alone, than combined global utilities, raw materials, oil&gas, industrials, telecom, consumer goods. Instead, one needs to pick a wide spread of geographic, sector and theme funds; plus some (short duration) bond funds, plus currency hedges - otherwise all your geographic equity indexing actually becomes just a currency basket bet. And of course drip-feed & re-balance. Anyway, that’s my take on life. Had never seen the Fama French (point 1) about under performance before and take your point about the top 100 making up the vast percentage of a 3000+ all world index fund when the top 100 probably move the other 2900 most of the time.But would counter Fama French point of "consistently under performs" with something like the L&G global 100 index fund which seems to have preformed better then most over 10 years by using VWRL for a comparison passive (rather then say Fundsmith but which it still comes close to at times) Not to say that it will continue but its not a short period of time for them to use the word consistently but will have a read later We have different time-horizons, for the word “consistently” Ten years doesn’t even cover a single business cycle. Fama French 3-factor and 5-factor analysis was based on data from 1926 to present day. I personally don’t hold it that valid, going forward to a post-industrial non-democratic world, but I’d rather not bet against it “by accident”.
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macq
Member of DD Central
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Post by macq on Jun 17, 2020 17:07:33 GMT
Had never seen the Fama French (point 1) about under performance before and take your point about the top 100 making up the vast percentage of a 3000+ all world index fund when the top 100 probably move the other 2900 most of the time.But would counter Fama French point of "consistently under performs" with something like the L&G global 100 index fund which seems to have preformed better then most over 10 years by using VWRL for a comparison passive (rather then say Fundsmith but which it still comes close to at times) Not to say that it will continue but its not a short period of time for them to use the word consistently but will have a read later We have different time-horizons, for the word “consistently” Ten years doesn’t even cover a single business cycle. Fama French 3-factor and 5-factor analysis was based on data from 1926 to present day. I personally don’t hold it that valid, going forward to a post-industrial non-democratic world, but I’d rather not bet against it “by accident”. Well it saves me some reading then To be fair i just used 10 years as a quick check on Morningstar but feel (only anecdotal) from investing for 30 years and well diversified,that i would still not use the word consistently but then nobody is asking me to publish papers!
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Post by diversifier on Jun 17, 2020 19:45:31 GMT
Agreed on the general principle. But the gotcha in practice, is that “world index funds” are so much less diversified in detail than one expects naively (apologies if I’m being professor of the bleedin’ obvious here). 1) It’s hugely overweight in ultra-large caps - particularly a problem as Fama French tells us that large size consistently underperforms. 2) The USA is so heavily financialised, that its stock market is 50% of world total equity. US stock performance dominates “world index” results, out of all proportion to its contribution to world GDP and GDP growth. 3) US stock market is dominated by FAANG tech stocks. Worth having, but do you really want a quarter of your entire wealth concentrated in five rather bubbly companies......and the rest of world mega-stocks are dominated by global mega banks. Ditto, ditto. One might be very disappointed to discover that a fund of Global Top 100, has more weight in US tech stocks alone, than combined global utilities, raw materials, oil&gas, industrials, telecom, consumer goods. Instead, one needs to pick a wide spread of geographic, sector and theme funds; plus some (short duration) bond funds, plus currency hedges - otherwise all your geographic equity indexing actually becomes just a currency basket bet. And of course drip-feed & re-balance. Anyway, that’s my take on life. I know where you're coming from, it's a reasonable take, but I don't personally agree. A few reasons: 1) If 5 years ago, you had tried to 'be smart' and cut out stocks that have overperformed, then, well, you'd have missed out on the next 5 years of FAANG overperformance. 2) Plus, when FAANG performance does die out, we have no idea what will replace it. If you avoid the USA, you might be missing out on the next big boom companies in whatever trendy new sector. 3) The USA is 50% of global trackers because that's the genuine world situation. In the long term, if China increasingly dominates for example, then these trackers will gradually rebalance into China and benefit from it's overperformance. Providing someone is winning, it doesn't matter whether it's the USA, China, or wherever. 4) Same applies in shorter terms for your points about sectors. If industrials rally and Facebook falter, global trackers will capture that. Sure, you won't experience the burning hot overperformance of picking a winner, but likewise you won't experience the harrowing potential to lose huge sums of money. Global trackers work because they remove us from the equation. We don't know which company / sector / country is going to be successful in the long term, and for funds that really matter, I don't believe it's in anyone's best interest to try and guess. This is why pension schemes worldwide invest in them, and not in individual firms or hotshot managers. And I know where you’re coming from too. The standard Efficient Markets Hypothesis shows (mathematically!) that the optimum is to spread investment in exactly the same proportion as “everybody else”. That basically, it doesn’t matter whether a single sector is “over-represented” compared to fundamentals, because what really matters is variances and correlations, and the best trade-off is still to match the investment universe as best you can. But I have a more “black swan” perspective. I don’t like any allocation that leaves more than a quarter in the hands of “some crazy event”, and 50% in the USA is just too much. Political risks tend to make a mockery of mathematical economic models, which can wipe out 100% any single-country theme: Capital controls, with or without confiscation of foreigners assets Civil war Authoritarian government - with or without confiscation of assets, directly or by politicisation of legal system. Currency redenomination (Italexit) or loss of global reserve currency status (US) I consider Covid as barely a grey swan, as it’s unlikely to hit global GDP by more than 10% averaged over the next few years.
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r00lish67
Member of DD Central
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Post by r00lish67 on Jun 17, 2020 21:43:32 GMT
I know where you're coming from, it's a reasonable take, but I don't personally agree. A few reasons: 1) If 5 years ago, you had tried to 'be smart' and cut out stocks that have overperformed, then, well, you'd have missed out on the next 5 years of FAANG overperformance. 2) Plus, when FAANG performance does die out, we have no idea what will replace it. If you avoid the USA, you might be missing out on the next big boom companies in whatever trendy new sector. 3) The USA is 50% of global trackers because that's the genuine world situation. In the long term, if China increasingly dominates for example, then these trackers will gradually rebalance into China and benefit from it's overperformance. Providing someone is winning, it doesn't matter whether it's the USA, China, or wherever. 4) Same applies in shorter terms for your points about sectors. If industrials rally and Facebook falter, global trackers will capture that. Sure, you won't experience the burning hot overperformance of picking a winner, but likewise you won't experience the harrowing potential to lose huge sums of money. Global trackers work because they remove us from the equation. We don't know which company / sector / country is going to be successful in the long term, and for funds that really matter, I don't believe it's in anyone's best interest to try and guess. This is why pension schemes worldwide invest in them, and not in individual firms or hotshot managers. And I know where you’re coming from too. The standard Efficient Markets Hypothesis shows (mathematically!) that the optimum is to spread investment in exactly the same proportion as “everybody else”. That basically, it doesn’t matter whether a single sector is “over-represented” compared to fundamentals, because what really matters is variances and correlations, and the best trade-off is still to match the investment universe as best you can. But I have a more “black swan” perspective. I don’t like any allocation that leaves more than a quarter in the hands of “some crazy event”, and 50% in the USA is just too much. Political risks tend to make a mockery of mathematical economic models, which can wipe out 100% any single-country theme: Capital controls, with or without confiscation of foreigners assets Civil war Authoritarian government - with or without confiscation of assets, directly or by politicisation of legal system. Currency redenomination (Italexit) or loss of global reserve currency status (US) I consider Covid as barely a grey swan, as it’s unlikely to hit global GDP by more than 10% averaged over the next few years. I can see what you mean, but barring an immediate catastrophic event (nuclear bomb?), then in theory global trackers would automatically (frequently) rebalance into whatever currency/country/sector is becoming stronger. I mean, don't get me wrong, if the US enters into a civil war then let's be honest we're all screwed on the equities front. You say diversify, but in terms of equities as you know correlations are high across countries. "Some crazy event" knocking 60% off the US stock market would knock similar hefty chunks off most geographies and sectors too, even if it is a localised USA issue. It would be preferable if the World economy was a bit more country diversified I suppose. It would be good to see some outperformance of Emerging markets and Europe in the next few years to rebalance a little. I do occasionally buy a little extra of those regions in the faint hope of that. But excluding bonds/currency hedges as different asset classes, if not by market cap then what % should one allocate to different countries in terms of equities? Certainly a home bias over the last 10 years wouldn't have done us any favours. Nor weighting towards low CAPE valuations. I guess as it stands, I don't entirely discount that a global index tracker could seriously underperform in theory in some horrendous black swan event. But I struggle to imagine how in that case even the most attentively crafted DIY portfolio could avoid a similar fate for the equity component other than by pure luck in avoiding some particular aspect. Meanwhile, the complexity, cost and risk of maintaining and rebalancing such an operation manually as one ages in good (or otherwise) grace is not to be discounted. Plus the more tedious and far more likely risk you run of missing out your fair share of the world's leading economy (or whichever other element has been downplayed/eliminated). Btw If I had to pick equities by country based on my perception of strength I don't think I'd invest at all (USA - overegged, UK - doomed, Europe - doomed, Emerging markets - perennial underperformer).
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Post by ruralres66 on Jun 18, 2020 9:15:54 GMT
This story was delivered to Insider Intelligence Fintech Briefing subscribers Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Fintech industry with the Fintech Briefing.
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Post by Deleted on Jun 18, 2020 9:46:08 GMT
This story was delivered to Insider Intelligence Fintech Briefing subscribers Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Fintech industry with the Fintech Briefing. Thanks, but the above link isn't working. Try this.
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Post by ruralres66 on Jun 18, 2020 10:17:41 GMT
it worked first time then requires a signing up!
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Post by diversifier on Jun 18, 2020 10:44:36 GMT
And I know where you’re coming from too. The standard Efficient Markets Hypothesis shows (mathematically!) that the optimum is to spread investment in exactly the same proportion as “everybody else”. That basically, it doesn’t matter whether a single sector is “over-represented” compared to fundamentals, because what really matters is variances and correlations, and the best trade-off is still to match the investment universe as best you can. But I have a more “black swan” perspective. I don’t like any allocation that leaves more than a quarter in the hands of “some crazy event”, and 50% in the USA is just too much. Political risks tend to make a mockery of mathematical economic models, which can wipe out 100% any single-country theme: Capital controls, with or without confiscation of foreigners assets Civil war Authoritarian government - with or without confiscation of assets, directly or by politicisation of legal system. Currency redenomination (Italexit) or loss of global reserve currency status (US) I consider Covid as barely a grey swan, as it’s unlikely to hit global GDP by more than 10% averaged over the next few years. I can see what you mean, but barring an immediate catastrophic event (nuclear bomb?), then in theory global trackers would automatically (frequently) rebalance into whatever currency/country/sector is becoming stronger. I mean, don't get me wrong, if the US enters into a civil war then let's be honest we're all screwed on the equities front. You say diversify, but in terms of equities as you know correlations are high across countries. "Some crazy event" knocking 60% off the US stock market would knock similar hefty chunks off most geographies and sectors too, even if it is a localised USA issue. It would be preferable if the World economy was a bit more country diversified I suppose. It would be good to see some outperformance of Emerging markets and Europe in the next few years to rebalance a little. I do occasionally buy a little extra of those regions in the faint hope of that. But excluding bonds/currency hedges as different asset classes, if not by market cap then what % should one allocate to different countries in terms of equities? Certainly a home bias over the last 10 years wouldn't have done us any favours. Nor weighting towards low CAPE valuations. I guess as it stands, I don't entirely discount that a global index tracker could seriously underperform in theory in some horrendous black swan event. But I struggle to imagine how in that case even the most attentively crafted DIY portfolio could avoid a similar fate for the equity component other than by pure luck in avoiding some particular aspect. Meanwhile, the complexity, cost and risk of maintaining and rebalancing such an operation manually as one ages in good (or otherwise) grace is not to be discounted. Plus the more tedious and far more likely risk you run of missing out your fair share of the world's leading economy (or whichever other element has been downplayed/eliminated). Btw If I had to pick equities by country based on my perception of strength I don't think I'd invest at all (USA - overegged, UK - doomed, Europe - doomed, Emerging markets - perennial underperformer). The problem with crazy events is that markets don’t have time to rebalance before the shutters go down. Ratesetter liquidity freeze is a classic example. Using the EMH to price political risk is like saying nobody ever got stuck on the wrong side of the Berlin Wall as it was being built, because they could have walked across the day before. A crazy event would be Trump deciding that foreigners can’t transfer US assets out of the US. Other markets would certainly be affected, but our US assets would be effectively worthless overnight, because while it wouldn’t be expropriation as such, you would never be able to actually *use* them. Capital controls aren’t exceptional, they are rather normal, and only removed in the U.K. in 1979. I agree that weighting differently to market caps, probably loses a few % expected value over decades. But by limiting maximum per country (USA 25%, China 15% = fraction of world GDP), I ensure that the chance of there being “nothing left” in thirty years is small. It also doesn’t make any sense to use market cap weighting, when much of that represents countries with non- free markets! For example, Chinese companies might make tens of trillions of IPO’s over the next decade, financialising to match the USA - in itself, that’s just an increase of weight, not a rise in the value of your investment. You may consider it justified and rational. But you cannot ignore that the weighting you would be seeing is the policy of the CCP, not the consensus of world capital.
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