Toughing it out

Pah... geraldine1210 .... give it a week.. who knows where the SM will go.. no one? .. sentiment is a bit negative at the moment, but it wont last.. 

So glad I don't need any money out for the next month.

If people had not brought what they had no intention of holding onto then there would not be this issue. The main people that have an issue at the moment are the ones that were gready and brought way more then they wanted with the intention of selling it on the secondary market before it came  to term.

I think things have changed on SS the SM has NEVER been as full as this about 85% of loans are readily available and almost impossible to sell unless you sell some of the 15% or wait a week and I wonder how much pent up additional selling there is because people have not listed because of no chance of selling in the short term.

Probably some of the old timers were not caught out but I know I have been guilty and I suspect many others were of not doing enough DD because ' did not really matter because once it got nearer term you could flog it anyway'. And new people were happy to buy older loans because ' people never lose money and there is always a ready market anyway' the case of people buying PBL 20 after default instead of other loans proves the point. At one time having run my own equity hedge fund many years ago I started thinking perhaps these people knew something about PBL20 I don't and maybe they think they will get more money back, then I had to pinch myself and say this is debt in the best case all you will get back is principal and accrued, the same as all the other loans, however none of them were in default.

Anyway in a round about way I think the market for short dated loans is dead for some time to come and we all will have to hold them to term, even if a batch repay soon that does not really help because then you have the uncertainty of repayment risk. SS are not helping they are so bad at predicting/ telling us when something due to repay that I think I would rather not have there disinformation. Two recent cases about three months ago on the update came PBL 62 & 63 'in legal to repay' at the time they were my largest positions, they were small loans and the security looked good so as not to have them suddenly repay and to be left with a lump of cash and no where to go I sold out of 75%, now three months later still not repaid and instead my money in much worse credit loans. PBL 59 & 72 SS made it clear that a repayment was due but they led us to believe that either PBL72 would repay or some of both 59 & 72. I liked the security and at the same yield I placed all my eggs in the PBL 59 basket and avoided the inferior security of 72. We all know what happened 59 repaid I was left with a lump of cash and no exposure to the security I liked. One of the consolations of the nine is that I have been able to buy a big slug of 72 again ( will probably repay next week knowing my luck). Anyway like I said given the quality of recent repayment information, no information is better than what we are getting !!

Anyway end of rant except to say IMHO SS have found the golden goose but given what happened the last two days they are in danger of killing it, it needs nurturing and love and careful management and then over time it will lay many more golden eggs but for short term gain the goose is in danger of serious poor health.

Am I just rambling or is there any truth to what I have said ?

We do not actually know how much this playing the system was costing SS and with them wanting to get approval to sell the ISA they might have had to do this. If enough people were playing the system SS could have ended up in reality funding parts of the loans themselfs which would not be approved.

Also to the vast majority of the investors the secondary market is probably not used to sell just to buy until now.

It needs a repayment or 2 within the next couple of weeks combined with SS not launching a new loan within the next couple of weeks and further saturating an already saturated market place. That will allow the SM to creep back to something resembling what we have come to regard as 'normality' and that will restore confidence and lead to people like me investing more because liquidity is a big concern for some investors.

I have had some bits of the Farmland loans up for sale for 3 days now and I'm still a fair way back from the front of the queue. It is moving very slowly indeed on those agricultural land loans.

Perhaps we will get lucky and a big hitter investor will sign up tomorrow with £2 million in his back pocket to invest. That's all it takes.

I never thought I would say this. I have always got excited to get an advance 24 hour notice loan go live email. But if I got one tomorrow or early next week I would be very unhappy if I'm honest.

Have you got any Mulberry wine left over from last time?
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Granted, the SM is a bit more clogged up than it has been before, but it's been the biggest week on SS to date - hardly much of a surprise. The above quote is just 3 months old from -this- thread, which was the nervous hangout at the time. There was probably a similar one last Sept ('15) when a few large loans hit at once and our old friend cashback was employed to help clear the oversupply. (did someone just say cashback?  )

If nothing new goes live in the next 3 weeks and the SM is still clogged up I'll eat SteveT's hat. I'd say Ilmoro's but that might take more 'preparing' to make it, err, palatable given what's nesting on it. Brexit vote adds another dimension, but loans won't suddenly default on the 24th, it'll be months before quantifying any impact is even possible. If anyone is nervous about not being able to sell a loan part for a few days, then you have too much in SS. What is the point of worrying about something you can't change i.e. selling queue size? You're just gonna have to roll with it. Give it a couple of weeks, reduce to a more comfortable level and move on.

The proportion of the loan book on the SM is small, if there was a dash for the exit ensuing there would be 10-20% min but it's only in the low single figures, so what's for sale is just the result of the recent influx. To be honest, c£3m on the SM in a week of £15m of new loans is pretty good going. Barring the big 3, there's only LendInvest (or possibly AC/TC combined) I reckon that could come close to absorbing that much. Even on the big 3, it would have a very noticeable effect.

I'm in the same situ as adrianc, I don't want to hold anything to term, but if I have to there's always the security to fall back on.