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Post by valueinvestor123 on Dec 26, 2014 19:12:57 GMT
This is probably a stupid question but if I put a loan up for sale, do I still get capital/interest re-paid until it is sold? (It's just that I noticed that the loan then disappears from my list of loans...)
If yes, does it then make sense to put it up for sale after the payment is made or does the timing not really matter?
TIA, valueinvestor123
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fasty
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Post by fasty on Dec 26, 2014 19:44:35 GMT
Yes, I believe that the sale price reflects interest accrued up to the point of sale. So it doesn't matter when you sell.
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Post by valueinvestor123 on Dec 26, 2014 21:07:09 GMT
Thanks. Btw I notice loans can be sold at 3% premium; what stops people from buying loans at par and selling them straight away at 3% premium and repeat ad finitum? (It shouldn't be too difficult since a lot use autobid).
Presumably people know about it and exploit it? Or is there no advantage?
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Post by goldservice on Dec 26, 2014 21:07:19 GMT
Yes, loan parts that have been put up for sale no longer appear in the list of parts under Sell/Sell Individually. I think that this is so that one does not attempt to sell them again.
Parts up for sale will still appear under Summary/My Loan Parts until they have been sold.
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Post by goldservice on Dec 26, 2014 21:23:35 GMT
Thanks. Btw I notice loans can be sold at 3% premium; what stops people from buying loans at par and selling them straight away at 3% premium and repeat ad finitum? (It shouldn't be too difficult since a lot use autobid). Presumably people know about it and exploit it? Or is there no advantage? Yes, you can do that. But: you can buy loans at par either at auction (the Primary Market) or under Loan parts (the Secondary Market). On the primary market, if you add 3% to the rate you have bought at, then the effective rate for your buyer will be much lower than the rate that you bought at and thus unattractive so you may have difficulty selling. Sometimes, an auction closes at a high rate (if there are fewer investors, or if the loan sum is over £200k, say). Then you can more easily sell the parts on the SM at a good premium. Sometimes, a lender closes their auction early and very high rates can be obtained and a high premium charged on resale (flipping). But it takes luck, or lending across many loans at once together with chasing the rate down on each loan to catch the early enders. So reselling at any premium is not often possible. If you buy parts on the SM, then they will usually not be at par unless the rate is unattractive. AutoBid will ignore parts with a premium (or discount).
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Post by goldservice on Dec 26, 2014 21:26:44 GMT
Yes, I believe that the sale price reflects interest accrued up to the point of sale. So it doesn't matter when you sell. The sale price will actually increase by the occasional penny as the days pass while the part is up for sale - this is the price changing to reflect the daily accrual of interest. This ensures that the seller receives the interest up to the point of sale.
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Post by GSV3MIaC on Dec 26, 2014 22:12:12 GMT
Whoever owns the part when the interest is actually paid gets to pay the 1/12th of 1% FC lender fee. Apart from that, no difference, apart from rounding errors.
Yes, by all means buy at par and sell at 3% (or anything over the 0.25% selling fee FC charges) .. If you can.
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Post by valueinvestor123 on Dec 26, 2014 23:13:42 GMT
"AutoBid will ignore parts with a premium (or discount)."
Is that right? I couldn't find info on FC site to confirm this.
Another thing I noticed when my autobid was turned on is that it picked up the same loan quite a bit lower % than I did, doing it manually, on several occasions. I wonder how one can ensure getting the highest %age tranche of a loan. I guess it is not possible unless everything is done manually.
"Yes, by all means buy at par and sell at 3% (or anything over the 0.25% selling fee FC charges) .. If you can."
That's not something I'm especially interested in doing. I want to run things as automated as possible but I noticed a lot of posts advising people against using autobid. I also want to avoid costly beginner's mistakes.
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fasty
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Post by fasty on Dec 27, 2014 2:02:12 GMT
"AutoBid will ignore parts with a premium (or discount)." Is that right? I couldn't find info on FC site to confirm this. Another thing I noticed when my autobid was turned on is that it picked up the same loan quite a bit lower % than I did, doing it manually, on several occasions. I wonder how one can ensure getting the highest %age tranche of a loan. I guess it is not possible unless everything is done manually. "Yes, by all means buy at par and sell at 3% (or anything over the 0.25% selling fee FC charges) .. If you can." That's not something I'm especially interested in doing. I want to run things as automated as possible but I noticed a lot of posts advising people against using autobid. I also want to avoid costly beginner's mistakes. Yes, autobid will definitely only buy at par (no premium or discount) otherwise things would get terribly complicated. Personally, I stopped using autobid very quickly after joining FC. I suppose it's OK if you have got absolutely zero time to quickly scan loan requests and don't mind settling for a lower rate than is achievable. Think about it though... who bids on that slightly dodgy looking loan which manual bidders won't touch with a bargepole? erm... erm... well autobid of course. Who buys the loan parts that paid late last month but survived and are now being hastily flogged off at par on the secondary market? You get the idea. I tend to target a few choice loans to bid on each day. I chose quickly by examining a very few key indicators. Is the credit score going up or down? Is the company making more profit or less profit? You get the idea. I try to bid in the last few minutes of an auction if I can (often from my smartphone during a tea break at work!). You soon learn to estimate how many % points the max rate is likely to drop in the last 5 minutes etc. I'm an engineer, not a financial expert, but it seems to work well for me.
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Post by GSV3MIaC on Dec 27, 2014 12:43:47 GMT
"Yes, by all means buy at par and sell at 3% (or anything over the 0.25% selling fee FC charges) .. If you can." That's not something I'm especially interested in doing. I want to run things as automated as possible but I noticed a lot of posts advising people against using autobid. I also want to avoid costly beginner's mistakes. Autobid IS the number one "costly beginner's mistake" IMO. Yes it only buys at par - even if the same thing is on sale at a discount it will buy the par one. It will bid preferentially on stuff the manual bidders passed on. It is not a good plan. I spent several weeks of my life deriving a better alternative. FC keep promising to implement improvements, but they have not delivered on it yet. Just having the option to tell it to stay out of the secondary market would be a big plus. 8>.
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fasty
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Post by fasty on Dec 27, 2014 13:00:16 GMT
Would be fair to summarise : Autobid is great providing it's someone else that's using it" ?  |
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oldgrumpy
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Post by oldgrumpy on Dec 27, 2014 13:28:30 GMT
I cocked up initially by activating auto-bid (Dec 2012). I saw what  I got so about ten minutes later I switched it off. Since then I have chosen my own (including that Welsh one - just £20) so although my reported annualised return is only 7.6% (but rising) (and I know in actuality it is less than that) I'm sure I haven't got the <3% (or even overall losses) some have experienced. Now I spend far less time, just looking at A+ and A (occasionally B) in the last 36 hours of their auctions, and buying slightly larger tranches (of £20 lumps) to recycle payments. |
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Post by GSV3MIaC on Dec 27, 2014 15:47:48 GMT
Would be fair to summarise : Autobid is great providing it's someone else that's using it" ? 'Someone you don't care about' would just about nail it.
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sl75
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Post by sl75 on Dec 28, 2014 0:33:26 GMT
It seems to me that much of the negativity about autobid isn't about the tool, but about the way that a lot of people use that tool - in particular the below-market rates that many autobid users select (or leave selected).
There appears to be a false dichotomy being set up in such discussions between "autobid at low rates" and "manual bid at high rates". In fact each bidding method can be used for higher than average rates or for lower than average rates.
There are plenty of ways to use autobid, and selecting a low rate that effectively subsidises other users bidding at a higher rate is only one of many ways to use it.
In particular, it is perfectly possible to set up an autobid which bids only at the maximum rate for a risk band (currently 15% for all of them) - many of the criticisms against "autobid" are clearly not about the tool, as they would cease to apply if it were used in this way, or indeed in any other way that doesn't result in rates below the general market rate at that time.
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maxmarengo
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Post by maxmarengo on Dec 28, 2014 8:13:19 GMT
I would love to hear of someone who has had a success with using Autobid at higher rates. If you set the rate too high then you may find that your money spends a long time in limbo as autobid places bids which are knocked out a few days later.
So anyone with autobid successes they can share?
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I got so about ten minutes later I switched it off. Since then I have chosen my own 