eddie
i have put up with a great deal from the likes of you people, a very great deal....
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Post by eddie on Sept 26, 2015 20:02:49 GMT
Wonder what the secondary market default rate is compared to the..... whats it called? Primary market? Auction market? wish i had asked myself that question 2 years ago.
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adrianc
Member of DD Central
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Post by adrianc on Sept 27, 2015 8:31:46 GMT
Surely a defaulting loan would default whether you bought your parts in it on the PM or the SM...?
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Post by goldservice on Sept 27, 2015 9:06:35 GMT
SM parts may be more likely to default for at least two reasons:
- PM parts can't default for a while by definition (they are not yet accepted); and
- SM parts may have been placed there by those operating the 'sell after 6 months' strategy so they are of an age when defaults are more likely.
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Post by ratrace on Sept 27, 2015 11:04:38 GMT
lt all depends on what you are buying and when in the loan term you are buying it.
A large part of my own investment plan is buying on the SM loans parts in D band loans after at least 21 repayments have been made. Which l think is when the risk of default is at around the same level as holding onto A band loans for the full term.
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eddie
i have put up with a great deal from the likes of you people, a very great deal....
Posts: 63
Likes: 21
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Post by eddie on Sept 27, 2015 16:20:52 GMT
I get the feeling there is a measurable difference, which becomes significant when margins between being in profit and showing a loss are tight anyway. I just spent 2 years building up my loans on the SM, 32,000 in. gross yeild 14.7. annualised return 6.0. estimated return 7.9. Thats 2,300 net earnings and 2,286 losses with 160 in recoveries. Im sure the recoveries will keep rolling in but unfortunately i had 1.480 in losses in the last 6 weeks. I had been very happy till then, but since this loss fest started i have been wondering what it is i could have done wrong, im guessing not being carefull enough going thru the loan information, and buying solely on the SM as at work all day. Anyway im out now, last few loans trickling away, im off to SS. Might try and rebuild thru the auction and be more careful next time. Part of me is saying tough it out, but i dont have the guts to sit here with 32000 hard earned in with 52 thursdays in the year when im averaging 250 losses a week. Im going to have some time on my hands now.
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adrianc
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Post by adrianc on Sept 27, 2015 16:50:24 GMT
32,000 in. gross yeild 14.7. annualised return 6.0 To have 14.7 GY across that much invested, I'm guessing you're not widely diversified (how many loans?) and probably in quite a few high risk-band loans. Nearly £1500 in six weeks? There's only been 21 borrowers gone into default in the last five weeks, according to the default updates on the Help tab. How many of those have bitten you? Surely not all...?
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eddie
i have put up with a great deal from the likes of you people, a very great deal....
Posts: 63
Likes: 21
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Post by eddie on Sept 27, 2015 17:12:53 GMT
32,000 in. gross yeild 14.7. annualised return 6.0 To have 14.7 GY across that much invested, I'm guessing you're not widely diversified (how many loans?) and probably in quite a few high risk-band loans. Nearly £1500 in six weeks? There's only been 21 borrowers gone into default in the last five weeks, according to the default updates on the Help tab. How many of those have bitten you? Surely not all...? yes annualised was 8.9% till beginning of Aug, diversity 1.1% in 200-220 lumps, risk was taken to be 5% as said, which is why im thinking the SM default rate overall is different to the 5% predicted on the loan particulars. im not moaning by the way, i just dont need to lose any more profit. or survive another thursday.
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adrianc
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Post by adrianc on Sept 27, 2015 17:48:26 GMT
diversity 1.1% in 200-220 lumps Your average loan exposure is over £200? No wonder a few defaults hits your bottom line hard! I'd be FAR more diversified than that... I am far more diversified than that, despite a considerably smaller total investment in FC - and I've not been with FC for as long as you, either. My average exposure to a loan is about £30, and about £36 per borrower. 5% is the annual estimated default rate for D band loans, which for many people are somebody-else's-bargepole territory. I'm guessing you've also got a fair few Es in there, to have 14.7% GY, right? Either that, or you've bought all the loans everybody else is avoiding... It's worth also pointing out that if your losses are £2,300 from £32k, then you're a good chunk ahead of that 5% estimate! You're down 7.1% after two years, so just over 3.5% annually - about right for C band. I'm in the throes of selling all my Bs at the moment to reduce nominal risk - I have nothing at all lower than that. 10.5% GY, 10.2% AR, 8.1% EFDR. I'm a horrendous diversity criminal in one way, though, because I've got 14% in one of the high-rate short-term secured property loans. Other people have different approaches, of course, notably ratrace. Like I said way up there ^ - if a loan is going to default, it makes no difference if you bought it on the SM or the PM, since every single part in that loan goes south in the exact same way. Every single loan on the SM was auctioned. Every single loan that's been auctioned has been on the SM at some stage.
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Post by ratrace on Sept 27, 2015 18:04:17 GMT
With a GY of 14.7% its clear you have gone for a high risk/high return gamble, which sadly has not paid off.
The 14.7 GY suggests that you bought D bands loans in the first 1 to 15 month of there loan terms. Which can be risky as between 5 and 15 months is the time when the loans are at greatest risk of default. lf you were buying D loans very early in the loan terms, it would have been better to buy them on the PM. As you would have been able to avoid the extra costs which you have to bare by buying them on the SM. Which no doubt added to your losses.
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eddie
i have put up with a great deal from the likes of you people, a very great deal....
Posts: 63
Likes: 21
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Post by eddie on Sept 27, 2015 18:53:58 GMT
ratrace and adrian c your both right of course i will be the first to admit my mistakes. sure i will do better than i have here at ss tho as on the face of it they seem idiot proof. i aim to find out exactly how idiot proof, and will update whenever i get any recoveries worth shipping across.
going back to sm and pm default rates, if you auto bid a portfolio on pm and auto bid a portfolio on sm, pm will win out, FACT.
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eddie
i have put up with a great deal from the likes of you people, a very great deal....
Posts: 63
Likes: 21
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Post by eddie on Sept 27, 2015 19:04:36 GMT
although having said all that losing 1,480 in 7 weeks i dont give a stuff im off.
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Post by ratrace on Sept 27, 2015 19:32:36 GMT
lf you are going to invest in very high return loans. Then you have to understand there is a very good reason why they offer such a high return, 'they are high risk'. l myself have bought quite alot in D loans on the SM, but am clear about the risk am taking. So l only buy them after at least 21 repayments have been made. As l believe this is where the best value is on offer in the D loans on the SM.
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eddie
i have put up with a great deal from the likes of you people, a very great deal....
Posts: 63
Likes: 21
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Post by eddie on Sept 27, 2015 19:47:47 GMT
lf you are going to invest in very high return loans. Then you have to understand there is a very good reason why they offer such a high return, 'they are high risk'. l myself have bought quite alot in D loans on the SM, but am clear about the risk am taking. So l only buy them after at least 21 repayments have been made. As l believe this is where the best value is on offer in the D loans on the SM. So D loans up to 6 repayments on PM, then over 21 repayments on SM? OK.
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eddie
i have put up with a great deal from the likes of you people, a very great deal....
Posts: 63
Likes: 21
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Post by eddie on Sept 27, 2015 19:57:17 GMT
Adrian c.
7.1% after two years, so just over 3.5% annually - about right for C band.
does that mean my net earnings is just over 3.5% annually too?
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Post by ratrace on Sept 27, 2015 20:14:41 GMT
lf you are going to invest in very high return loans. Then you have to understand there is a very good reason why they offer such a high return, 'they are high risk'. l myself have bought quite alot in D loans on the SM, but am clear about the risk am taking. So l only buy them after at least 21 repayments have been made. As l believe this is where the best value is on offer in the D loans on the SM. So D loans up to 6 repayments on PM, then over 21 repayments on SM? OK. Well as part of a investment plan on FC for the last few months its been working out fairly well. Currents returns are GY 12.6% AR 11.2% FEDR 7.4%.
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