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Post by ablrateandy on Sept 21, 2015 14:27:10 GMT
Assume that you were investing to maintain an amount of liquidity (ie not just yield hunting) and you could invest 300k in the 6 platforms of your choice. Suddenly, you get a letter out of the blue from your long lost Nigerian cousin saying that if you send him £300k tomorrow, he will send you back £286,000,000 by return. How much do you think you could raise through secondary market sales in that 24 hour period from your 300k? Please assume : 1. I don't want to know the platforms (  ) 2. That there is some amount of defaults in line with your experience on those platforms (ie. if you chose a platform where you have a 20% impairment rate and you can't sell impaired loans then you should assume that it can't be sold) 3. There don't have to be six platforms - it is a maximum 4. Selling at a slight loss is acceptable It's for a blog post that I am writing about liquidity. |
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Post by ablrateandy on Sept 21, 2015 15:16:08 GMT
Thanks all so far! Really interesting! (I reckoned about 200).
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arbster
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Post by arbster on Sept 21, 2015 15:21:57 GMT
24 hours really isn't very long, and if I wanted to maintain significant liquidity over such a short period I probably wouldn't choose P2P.
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james
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Post by james on Sept 21, 2015 15:22:35 GMT
Fifty thousand or so is probably reasonably credible with no haircut at SavingStream. Quite possibly hundreds of thousands. Compared to nil for a typical fund or fund and share account with three day settlement and BACs time. Your 24 hour time could be eaten up just by BACS delays at some platforms, making zero the only possible amount on those.
People's estimates for one day and one month liquidity/haircut levels for various platforms would be interesting.
Another question is what timespan is really needed for various situations. Many months is likely to be fine for most P2P investors and beyond that on a sliding scale based on various needs/timelines.
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Post by ablrateandy on Sept 21, 2015 15:23:38 GMT
That's what I am comparing - can you tie up a reasonable sized sum and still achieve some measure of liquidity?
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james
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Post by james on Sept 21, 2015 15:25:21 GMT
What do you recon the credible amount is at Ablrate? Given that I've seen withdrawing times ranging from hours to more than a day? I think that I'd have to count on zero being the possible amount at Ablrate. Count on, rather than hope for.
Given the description of the problem for most of us I think that the correct answer can only rely on instant access current or savings accounts. And that money laundering checks will severely cap the amount well below the level you have specified.
Given the real world constraints I've decided that I'll vote zero. I simply don't have confidence that I can both sell at any platform, get a transfer done and get the money out within 24 hours. But there's no zero choice, a major oversight IMO.
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Post by ablrateandy on Sept 21, 2015 15:30:48 GMT
Today you could easily clear 50k in a day (assuming you email the boss to get your cash out quickly!)
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stevio
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Post by stevio on Sept 21, 2015 15:34:48 GMT
Liquidity and a strong SM is often a criteria for selection of a platform.
Your answer depends heavily on what platforms you are including. It would also be effected by the state of the economy at the time. And finally blind luck that a buyer comes along that wants what your selling at the right price.
Or are you just trying to get an average between all platforms?
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james
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Post by james on Sept 21, 2015 15:36:03 GMT
I'm also being somewhat cruel with my definition of liquidate, to include the whole timeline and related catches, not just the selling of investments.
To try your Ablrate suggestion, lets pretend that it is 4AM on the Sunday morning. How much could I sell and get out of Ablrate?
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Post by ablrateandy on Sept 21, 2015 15:38:11 GMT
I'm just trying to get a "general idea". Assume that no-one else is panicking and it is just you that needs to get hold of some money for an emergency. james - if you emailed me at 4am on a Sunday and said that you needed it I couldn't wire you the money until the bank opens but we could do it as soon as it does. Obviously liquidity bumbles up and down but if you were selling at a slight discount there are plenty of pots of money that we could call to flag the interest. |
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james
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Post by james on Sept 21, 2015 15:40:02 GMT
You could, but when I gave the answer "for my Nigerian cousin" you're going to end up getting familiar with SAR Online and making a "consent required" request to them. They do work 24/7 but for a Nigerian cousin I'm not sure they would say release the money within the 24 hour timescale. |
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Post by ablrateandy on Sept 21, 2015 15:41:34 GMT
ha! OK let us assume that the platform :
1. Is returning money to the same bank account
2. Can expedite a transfer quickly if poked with a stick
3. Is not aware of your Nigerian cousin's existence
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Post by nickthefool on Sept 21, 2015 15:43:23 GMT
I reckoned about 200k as well, but I forgot to factor in the time it takes the money to get to your bank account; essentially I interpreted it as "how much would you expect to be able to sell on the SM in 24hrs" rather than the actual question. Oops.
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Post by ablrateandy on Sept 21, 2015 15:46:28 GMT
Sorry - my error for not being clear. Happy for people to assume that if you phoned any platform they could effect a very rapid transfer.
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stevio
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Post by stevio on Sept 21, 2015 15:50:27 GMT
I vote 1x 6th of the amount, assuming 6 platforms, as there is only one platform I know that I can say I would likely get a sale and access to my money in that short time scale
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