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Post by zzr600 on Jul 5, 2016 14:55:08 GMT
You could take the view that money secured against a real asset (or indeed the asset itself) is safer than in a bank account (over £75k) - negative gilt yields are evidence that the market believes an asset (IOU) is better than cash .................................................. P2P is going to grow and grow and zero/negative interest rates is only going to speed that up - P2P now is not what P2P will evolve into in 2 or, even more so, in 5 years time I would agree if you can afford to hold the asset long term and don't need the income. Unfortunately with loans made against property, the lenders have no control over what happens to the asset, and the loans are made on the assumption of the debtor getting a loan (such a developer loan or BTL loan elsewhere) or selling the property on to repay the loan. If they can't, the P2P lender is stuck with the asset. The P2P company isn't a property management company so will seek to sell to reimburse lenders and to maintain cash flow in the sort term, rather than try and realise a profit in the long term. Ultimately, it's not the P2P company's money on the line, it's the lenders'.
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locutus
Member of DD Central
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Post by locutus on Jul 5, 2016 15:07:21 GMT
In 2007/8 it was widely repeated that what was important was a 'return OF capital' rather than a 'return ON capital'. What we are seeing now includes: 1. Massive sterling devaluation 2. Slow motion implosion of Italian banks ( with ~€360 B bad loans will they do a Cyprus and confiscate deposits?) 3. Capital flight and unsustainable debts from China 4. Deutsche Bank share price closely following Lehman's before it collapsed and triggered the 2008 depression 5. Tanking UK bank shares- many are down 95%+ from their peaks 6. Rapid drop in value of UK property funds and house-builders 7. Restrictions on withdrawals from property funds So, on the upside, 10%+ annual interest on investments On the downside, another (at the minimum) property crash and possible disappearance of liquidity as with 2008. So yes, I have VERY cold feet and I'm liquidating all my property-linked P2P investments. If I'm wrong, I may lose a few months interest, but if I'm right then I may have saved myself from losing a large portion of my investments. What you say makes sense but the outcome is certainly not definite. Out of interest, where are you diverting your property-linked P2P funds to? Where do you see as a safe haven from the possible upcoming storm.
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Post by zzr600 on Jul 5, 2016 15:13:14 GMT
If I knew the outcome for certain I'd be a billionaire by now! I'm transferring to plain vanilla current accounts (some yielding very little interest, others between 3-5%) and precious metals.
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Post by Financial Thing on Jul 5, 2016 22:50:25 GMT
In 2007/8 it was widely repeated that what was important was a 'return OF capital' rather than a 'return ON capital'. What we are seeing now includes: 1. Massive sterling devaluation 2. Slow motion implosion of Italian banks ( with ~€360 B bad loans will they do a Cyprus and confiscate deposits?) 3. Capital flight and unsustainable debts from China 4. Deutsche Bank share price closely following Lehman's before it collapsed and triggered the 2008 depression 5. Tanking UK bank shares- many are down 95%+ from their peaks 6. Rapid drop in value of UK property funds and house-builders 7. Restrictions on withdrawals from property funds So, on the upside, 10%+ annual interest on investments On the downside, another (at the minimum) property crash and possible disappearance of liquidity as with 2008. So yes, I have VERY cold feet and I'm liquidating all my property-linked P2P investments. If I'm wrong, I may lose a few months interest, but if I'm right then I may have saved myself from losing a large portion of my investments. If your doom and gloom predictions come true, why would you put your money in the bank? If banks were to collapse, no guarantee that the gov. will be able to cover all the loses as people panic withdraw.
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Post by propman on Jul 6, 2016 8:05:07 GMT
You could take the view that money secured against a real asset (or indeed the asset itself) is safer than in a bank account (over £75k) - negative gilt yields are evidence that the market believes an asset (IOU) is better than cash .................................................. P2P is going to grow and grow and zero/negative interest rates is only going to speed that up - P2P now is not what P2P will evolve into in 2 or, even more so, in 5 years time I thought the main reason for negative bond yields was that the bonds could be used as collateral for banks to borrow more cheaply than otherwise available. So they are valuable to banks and investors are betting they will remain so. That said, we also have negative Euribor which suggests deflation (ie negative interest was less than anticipated reduction in value of tangible assets). Alternatively it is invested money looking for a safe home while the storm continues with the banks NOT considered as safe beyond FSCS.
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Post by lb on Jul 6, 2016 9:11:47 GMT
well if you run a large hedge fund in the current climate where would you want to put a large chunk of it to protect it ... in something where you will not lose anything (other than tiny interest each year) and if you are in sterling you probably wont want exchange rate risk so gilts it is ...
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Post by beatthesystem on Jul 18, 2016 21:02:53 GMT
In 2007/8 it was widely repeated that what was important was a 'return OF capital' rather than a 'return ON capital'. What we are seeing now includes: 1. Massive sterling devaluation 2. Slow motion implosion of Italian banks ( with ~€360 B bad loans will they do a Cyprus and confiscate deposits?) 3. Capital flight and unsustainable debts from China 4. Deutsche Bank share price closely following Lehman's before it collapsed and triggered the 2008 depression 5. Tanking UK bank shares- many are down 95%+ from their peaks 6. Rapid drop in value of UK property funds and house-builders 7. Restrictions on withdrawals from property funds So, on the upside, 10%+ annual interest on investments On the downside, another (at the minimum) property crash and possible disappearance of liquidity as with 2008. So yes, I have VERY cold feet and I'm liquidating all my property-linked P2P investments. If I'm wrong, I may lose a few months interest, but if I'm right then I may have saved myself from losing a large portion of my investments. Agreed, just liquidated 175K out of 200K. P2P has not experienced a downturn yet, lets see how it pans out...
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adrianc
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Post by adrianc on Jul 18, 2016 21:18:32 GMT
If banks were to collapse, no guarantee that the gov. will be able to cover all the loses as people panic withdraw. If it ever gets THAT bad, then the best investment may turn out to be shotgun shells, tinned food and bottled water...
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Post by oldnick on Jul 18, 2016 21:46:30 GMT
If banks were to collapse, no guarantee that the gov. will be able to cover all the loses as people panic withdraw. If it ever gets THAT bad, then the best investment may turn out to be shotgun shells, tinned food and bottled water... Can I add a shot gun, a can opener and some Whisky to that list - just being practical. 
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archie
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Post by archie on Jul 19, 2016 6:48:46 GMT
Large property deals still being done link. It's not all doom and gloom  |
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bg
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Post by bg on Jul 19, 2016 7:46:47 GMT
Large property deals still being done link. It's not all doom and gloom Agreed. A little perspective needed here. I firmly believe the country would be better off IN but have increasing confidence we can retain access to the single market and free movement of people will remain (in some form of renamed guise) - although there is a risk this proves impossible which would likely plunge us into a general election and further uncertainty. Hopefully we can also negotiate some favourable trade deals with non EU members. On the property front, the fall in the currency makes UK assets much more appealing to overseas investors. Residential property - after a this small blip will continue to rise (demand still outweighs supply massively providing we don't start deporting millions of people). Commercial property is more worrying with it being so illiquid - but I don't think business will completely collapse. This is no 2008. The banks are well capitalised and willing to lend and we are talking a pure demand issue. I am wary of anything with 70%+ LTV with an exit route through sale in the next few months but 50% LTV and/or repayment by refinance I am OK with. The freezing of open ended property funds is panicking people but this is just a temporary measure (IMO it's foolish to invest in property through an open ended vehicle) - prices will adjust and buyers will come in. Bank rate will soon be zero, the hunt for yield will continue and intensify.
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bigfoot12
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Post by bigfoot12 on Jul 19, 2016 8:58:37 GMT
It's not all doom and gloom As bg says some perspective would be good, but I am reducing a number of my P2P investments, for three reasons: - I didn't expect to earn 10-12% per year every year, nor did I expect defaults to be uniform. I think this could be the thing that triggers the very low or negative returns.
- More generally the risks seem to have increased, but the rates I am getting haven't. If cashback returns to FC I might invest more.
- Somewhat related to to 2, other property related investments have fallen, I'd rather invest more in those at these prices.
I think that the UK can do very well out of the EU, but I think that uncertainty has increased, that many speculative property developments always looked risky and they are easy for me to avoid. It is possible that some of these look cheap when priced in USD or EUR and will sell easily - I don't know. I think that we will almost certainly lose Euro clearing. The ECB tried to take it away from the UK several years ago, but because of EU rules we hung on to it. Those will no longer apply. As banks move this, and given the large changes going on in banking, many of which are happening anyway, and some caused by Brexit, I think it seems likely we will lose more than just clearing. I also think that it will be hard to hang on to banking passports whilst also achieving anything close to what most voters for Brexit expect, namely no free movement of people, control over our laws and a reduced contribution to the EU budget. Assuming we lose the banking passports the drift away from the City will be more significant, taking law firms and accountancy firms with them as they leave; not all of them, not even most of them, but enough to have an impact. The country as a whole might be better off, hopefully with the cheaper £ manufacturing will be doing well, as will high tech, computer graphics, advertising, film making and so on - all of these labour intensive highly paid jobs just got a great boost compared to overseas competition. I think that even London will do well, eventually. But I like to get paid for the risks I take, and at the moment holding more cash than I have for the last five years seems to make sense to me.
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