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Post by GSV3MIaC on Apr 20, 2016 7:45:07 GMT
Or the housing, or commercial property, or whatever market goes pop. Great time to buy at a fat discount, although that's not currently an option with SS.
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Post by Financial Thing on Apr 20, 2016 12:00:22 GMT
Or the housing, or commercial property, or whatever market goes pop. Great time to buy at a fat discount, although that's not currently an option with SS. If the platform can survive, sure.
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Apr 20, 2016 16:55:37 GMT
I suspect that people don't quite realise the scale of the risk with SS. The longer one is invested, the more complacency kicks in. On the other hand the longer one is invested the bigger the accumulated extra interest compared with "safer" investments which would offset losses, provided one is well diversified.
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Post by earthbound on Apr 20, 2016 18:40:59 GMT
I suspect that people don't quite realise the scale of the risk with SS. Very true. The risk associated with these 12% platforms is quite high. The longer one is invested, the more complacency kicks in. When the stock market goes pop and consumer confidence falls, the real test of p2p sustainability will begin. I always find it interesting when folks quote the stock market with regards to P2P, in 1999 the stock market was 6900&odd , in the last 17 years it has only gone above 7000 once, today 6400, and its a 2016 high, stocks in the UK are under-priced at the moment, dragged down in recent years by , BP, TESCO, and virtually all the banks, but i dont see any pressure now or in the near future, even with brexit in mind, brexit either way may have a short term effect, but i will be expecting UK stocks to head back toward 7000 before the year end, excluding oct/nov time, which are always bad stock investment months, any P2P platform risk is by and large down to the professionalism of the people running it, ie good companies that provide accurate valuations, low as possible LTV% and always a first charge (personally i do not like 2nd charges), Only time will tell, but i do not see the stock market going pop any time soon. I'm sort of making the point that platform risk is not down to stock market volatility. (edit) over the last 12 months the stock market has lost over 10%, whereas property prices have increased 6.4% and predicted to rise over 7% in 2016 (depending on where you look)
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Post by Financial Thing on Apr 20, 2016 20:45:35 GMT
Very true. The risk associated with these 12% platforms is quite high. The longer one is invested, the more complacency kicks in. When the stock market goes pop and consumer confidence falls, the real test of p2p sustainability will begin. I always find it interesting when folks quote the stock market with regards to P2P, in 1999 the stock market was 6900&odd , in the last 17 years it has only gone above 7000 once, today 6400, and its a 2016 high, stocks in the UK are under-priced at the moment, dragged down in recent years by , BP, TESCO, and virtually all the banks, but i dont see any pressure now or in the near future, even with brexit in mind, brexit either way may have a short term effect, but i will be expecting UK stocks to head back toward 7000 before the year end, excluding oct/nov time, which are always bad stock investment months, any P2P platform risk is by and large down to the professionalism of the people running it, ie good companies that provide accurate valuations, low as possible LTV% and always a first charge (personally i do not like 2nd charges), Only time will tell, but i do not see the stock market going pop any time soon. I'm sort of making the point that platform risk is not down to stock market volatility. (edit) over the last 12 months the stock market has lost over 10%, whereas property prices have increased 6.4% and predicted to rise over 7% in 2016 (depending on where you look) You make some very valid points. The problem is the UK's stock market psychologically (and systematically) follows the USA's. There are times when the FTSE & S&P mirror each other even when it makes no logical sense. With what's going on economically, the S&P can't continue as is (Shiller PE's are 26). When the US market pops, you can be sure the FTSE will follow suit. Then confidence falls, people run for the exits and knock on effects are normal.
www.google.com/finance?q=INDEXSP%3A.INX&ei=HegXV8ntJ9LzeO6ThZAEYou can see how the ups and downs of each indexes are mirrored. Valuations aren't always accurate and even if they are, those values aren't forced to be achieved during a fire sale. There haven't been too many property defaults that I know of and the one's that have occurred through AC, some of the values have been difficult to achieve. As far as risk, one of the biggest IMO is consumer confidence. If everyone heads for the exits, the platform may struggle to survive.
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mikes1531
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Post by mikes1531 on Apr 20, 2016 21:27:26 GMT
As far as risk, one of the biggest IMO is consumer confidence. If everyone heads for the exits, the platform may struggle to survive. Everyone heading for the exit certainly wouldn't do the platform any good. It would impair their ability to fund new loans, and existing investors would be locked in until loans mature. But on it's own it shouldn't cause losses to investors unless the property market tanks as well, borrowers can't repay loans, and the security held can't be sold for enough to cover investors' capital.
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Post by Financial Thing on Apr 20, 2016 21:46:11 GMT
As far as risk, one of the biggest IMO is consumer confidence. If everyone heads for the exits, the platform may struggle to survive. Everyone heading for the exit certainly wouldn't do the platform any good. It would impair their ability to fund new loans, and existing investors would be locked in until loans mature. But on it's own it shouldn't cause losses to investors unless the property market tanks as well, borrowers can't repay loans, and the security held can't be sold for enough to cover investors' capital. But if platforms don't grow and become profitable, eventually they will be forced to close (especially the smaller one's) and surely this would cause losses to investors. I haven't seen many platforms that posted profitable numbers. Most are losing money or breaking even.
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mikes1531
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Post by mikes1531 on Apr 21, 2016 0:51:30 GMT
Everyone heading for the exit certainly wouldn't do the platform any good. It would impair their ability to fund new loans, and existing investors would be locked in until loans mature. But on it's own it shouldn't cause losses to investors unless the property market tanks as well, borrowers can't repay loans, and the security held can't be sold for enough to cover investors' capital. But if platforms don't grow and become profitable, eventually they will be forced to close (especially the smaller one's) and surely this would cause losses to investors. I haven't seen many platforms that posted profitable numbers. Most are losing money or breaking even. If regulated platforms are following the rules, then there shouldn't be losses to investors -- because the platforms are supposed to have plans in place for the orderly rundown of their loan books in the event of their inability to continue. If they don't, then the regulators will have failed to do their job appropriately.
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Post by Financial Thing on Apr 21, 2016 12:33:39 GMT
But if platforms don't grow and become profitable, eventually they will be forced to close (especially the smaller one's) and surely this would cause losses to investors. I haven't seen many platforms that posted profitable numbers. Most are losing money or breaking even. If regulated platforms are following the rules, then there shouldn't be losses to investors -- because the platforms are supposed to have plans in place for the orderly rundown of their loan books in the event of their inability to continue. If they don't, then the regulators will have failed to do their job appropriately.That hasn't happened before now has it 
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Post by valueinvestor123 on Apr 22, 2016 12:19:51 GMT
Posted this on another thread but this is perhaps more relevant here (the other thread seems locked so not sure anyone will read it).
My question relates to security and 1st/2nd charge etc.
I can understand the mechanisms of vetting the security itself and establishing an LTV etc however how can one be absolutely sure whether SS (or any other p2p company) has a 1st charge on it? Especially if the borrower borrows internationally?
In the case of bankruptcy, there will be a queue of people asking for the security and the LTV might become irrelevant.
It does seem plausible that if a 'high-net worth' individual needs to borrow at 12%+ then he is likely to be a distressed borrower, no?
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Post by mrclondon on Apr 22, 2016 12:40:07 GMT
Posted this on another thread but this is perhaps more relevant here (the other thread seems locked so not sure anyone will read it). My question relates to security and 1st/2nd charge etc. I can understand the mechanisms of vetting the security itself and establishing an LTV etc however how can one be absolutely sure whether SS (or any other p2p company) has a 1st charge on it? Especially if the borrower borrows internationally? In the case of bankruptcy, there will be a queue of people asking for the security and the LTV might become irrelevant. It does seem plausible that if a 'high-net worth' individual needs to borrow at 12%+ then he is likely to be a distressed borrower, no? All charges against land are registered at the Land Registry, and the order listed is the order of the charges - see this thread on the general board
All charges against company assets are registered at companies house
If a borrower can make a return of 25% on capital employed, why not borrow at 15-18% (typical bridging finance rates) ? That's how to make money .....
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locutus
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Post by locutus on Apr 22, 2016 13:47:01 GMT
I've downloaded a couple of titles and will share redacted findings on the other thread.
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