Post by twoheads on Nov 24, 2016 23:04:20 GMT
@nirish, back to your original question.
I am also currently in your situation: my SS portfolio is over-invested in the DFLs.
Like you, I have been trying to both diversify and move into longer term loans using the SM.
The long term DFLs (200+ days) turn up for sale on the SM regularly. I am notified of these and have fought the recaptchas and bought those I want in roughly equal proportions. Now I have invested my SS 'pot' and I'm trying to increase the diversity of my SS investments. Having removed from my notifications those DFLs in which I am over-invested, I see almost no long term PBLs turning up.
I make these observations:
- By using the SM to invest and move loans from short to long term, one is presented with many more opportunities to buy DFLs over PBLs.
- This has led to my portfolio being over-invested in long term DFLs.
- Now I'm trying to diversify away from the long term DFLs to good looking, fairly long term PBLs I'm finding it very difficult!
In the near future, I am not too worried about holding these long term DFLs because these (in the current SM environment) will quickly sell providing I sell before the term reduces too far. On the other hand: some catastrophic news could completely change any loan at any time but I cannot predict that. To mitigate that caveat: I've seen really dodgy looking loans, even with negative days remaining, still sell quickly when the SM is sparse. On the other hand of course, the very buoyant SM cannot be depended upon forever: SS seems popular at present but that could also change very quickly.
...three hands already...
Why is the SM so much more volatile in long term DFLs than in long term PBLs?
Two reasons I think:
- A larger proportion of the SS long term (+200 days) loan value is in DFLs when compared with the shorter term loans.
- The DFLs are seen as less desirable by investors and so come up for sale more often on the SM.
Why are the DFLs less desirable? Well there's a load of good advice on that within this forum. It largely boils down to the difficulty in valuing development projects over existing bricks and mortar. I also feel that, in general, when the loan is secured against a person's abode, there is a much greater chance of the loan being repaid by the borrower.
I will continue to diversify. And in doing so I will make even more use the very good DD information in this forum.
