SteveT
Member of DD Central
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Post by SteveT on Jul 26, 2017 10:25:41 GMT
I too used to make 15% IRR on FC, but that was back in the day when a bit of time spent chasing early-closers and stripping property cashback meant it was straightforward to beat the loan book average. I do not think it possible to achieve 15% in the current world of fixed rate auctions (unless equipped with a fast bot and plenty of capital to snap up 20% of new Es and flip them quickly) although a few lenders will doubtless manage it for a while, until the law of averages catches up with them. The core strategy advanced here of "pick loans that pay more than 15% but avoid the ones that will default in future" is hardly rocket-science. Undoubtedly you can avoid many of the real dogs by skimming the summary financials and looking at any past loans history, but FC's rating algorithms work off a whole lot more data than is disclosed in the loan summaries. If an otherwise sound-looking business (in terms of financial ratios) has been rated D or E as opposed to B or C then there's likely a reason for this; for example, the net assets behind the PG may be paper thin, or most recent trading may be heading south. I tried something along these lines for the first 6 months or so after fixed rate auctions were imposed and initially was hopeful it looked worthwhile. Then I was hit with a run of 5 or 6 very early defaults, most of them loans that would likely pass the screening process advocated here, and realised I was kidding myself. I exited FC entirely (bar my defaulted loans) and now invest instead only via the FCIF investment trust (held tax-free in an ISA) Henrik , please let me know what your Annualised Return % is running at once you've been going for a full 2 years (after any referral bonuses / offers are stripped out). If it's still above 15% then I will shell out for your book! |
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Henrik
P2P Blogger
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Post by Henrik on Jul 26, 2017 11:39:28 GMT
One thing I did notice on this guys blog was: Checking the court listing to see if the company is due for a Winding Up Order. Or in my opinion, and even better method is to check the gazette for a Winding Up Petition. (Which would happen in advance of the court) Is there merit in this? i.e. finding potential loan downgrades before FC gets a chance to mark them as such (and selling for par) Albeit this seems very unethical? The court listing page tends (not always) to be updated on Friday mornings for proceedings on the Monday. I'm not 100% certain but I think I was on the wrong end of this once. I bought loans on the Saturday which were then downgraded on the Monday. When I checked the site, it had been listed on the Friday. I don't think it happens very frequently but it might be a good idea to be careful when buying loans on the weekend.
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Post by spiker on Jul 26, 2017 11:42:56 GMT
i think there would be a notice in the gazette long before the court listing so thats maybe an even better method of getting early notice www.thegazette.co.uk/insolvency/notice?noticetypes=2450What is the process?Essentially, the WUP is issued, served, advertised seven working days later in The Gazette, and is then heard at court, where it is either dismissed or approved. Once advertised, other creditors may support the petition, and if the original petitioner is paid, or seeks to withdraw, may take over the petition. |
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markr
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Post by markr on Jul 26, 2017 14:13:25 GMT
I reckon that pretty much all FC strategies for beating the average fall in to two broad categories:
1. Invest more time in it (e.g. the time to do better DD, the time to sit waiting for C/D/Es to flip, or the time to write a bot to do it for you).
2. Significantly increase your risk profile, but not wait long enough for the sh*t to hit the fan.
If you have the time, following 1 can lead to that rarest of things, a "hobby" that is profitable ("Playing with your loans" my wife used to call it). Following 2 will end in tears, eventually.
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Post by spiker on Jul 26, 2017 14:28:43 GMT
I reckon that pretty much all FC strategies for beating the average fall in to two broad categories: 1. Invest more time in it (e.g. the time to do better DD, the time to sit waiting for C/D/Es to flip, or the time to write a bot to do it for you). 2. Significantly increase your risk profile, but not wait long enough for the sh*t to hit the fan. If you have the time, following 1 can lead to that rarest of things, a "hobby" that is profitable ("Playing with your loans" my wife used to call it). Following 2 will end in tears, eventually. Never a truer word spoken
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pa
Posts: 40
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Post by pa on Jul 26, 2017 16:00:07 GMT
Hi Henrik,
I'm pleased that you've had success with P2P and hope that you continue to do so.
As a bit of an aside about a decade a go I noticed the phenomenon of people writing books on how they'd had success (in this case on the stock market but you can extrapolate it to any market you want really).
If someone's done well for themselves fairplay to them. My interest is in how the brain handles success and rewards (My MSc was in neuroscience and I try and scan people in MRI scanners at any chance that I get). In short when we can get outsized returns from the environment we end up perseverating around an activity or pursuit.
This can lead us to trying to force the issue rather than getting out of Dodge when things change.
The people who wrote about their success in the stock market ten years ago found out that their success was due to beta and not alpha. That is a rising tide lifted all their (diversified) investments rather than each performing on their own merits.
I hope that I'm not raining on anyone's parade and hope that what works for you continues to work for you and others. I just get concerned when I see history rhyming with itself.
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macq
Member of DD Central
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Post by macq on Jul 26, 2017 16:24:39 GMT
Hi Henrik, I'm pleased that you've had success with P2P and hope that you continue to do so. As a bit of an aside about a decade a go I noticed the phenomenon of people writing books on how they'd had success (in this case on the stock market but you can extrapolate it to any market you want really). If someone's done well for themselves fairplay to them. My interest is in how the brain handles success and rewards (My MSc was in neuroscience and I try and scan people in MRI scanners at any chance that I get). In short when we can get outsized returns from the environment we end up perseverating around an activity or pursuit. This can lead us to trying to force the issue rather than getting out of Dodge when things change. The people who wrote about their success in the stock market ten years ago found out that their success was due to beta and not alpha. That is a rising tide lifted all their (diversified) investments rather than each performing on their own merits. I hope that I'm not raining on anyone's parade and hope that what works for you continues to work for you and others. I just get concerned when I see history rhyming with itself. Not saying one way or the other but it does assume the people writing the books have had success in the first place.
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daveb4
Member of DD Central
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Post by daveb4 on Jul 26, 2017 16:55:35 GMT
My simple contribution - FC are big, if P2P or FC gets a bad name or business starts to struggle (all very possible), investors will bail out quickly. This will leave this strategy holding onto high risk loans and potentially high losses.
Strategy may work as long as it is bailed out before the above happens and more specifically when standard losses start happening after a year or so. This is why a number of members have already bailed out here. CARE.
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Post by spiker on Jul 26, 2017 18:03:06 GMT
My simple contribution - FC are big, if P2P or FC gets a bad name or business starts to struggle (all very possible), investors will bail out quickly. This will leave this strategy holding onto high risk loans and potentially high losses. Strategy may work as long as it is bailed out before the above happens and more specifically when standard losses start happening after a year or so. This is why a number of members have already bailed out here. CARE. Same risk applies to any platform. In fact with FC there is a sizeable number of folks who have chucked money in and left autobid to do its thing (i doubt they check it regularly at all). If things go pear shaped its about having the discipline to bail out early, autobid will buy all. I remain cautiously optimistic regarding FC and am indeed making very healthy profits.
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adrian77
Member of DD Central
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Post by adrian77 on Jul 26, 2017 20:07:18 GMT
I too wondered if this site was "click-bait"
I accept 15% may have been possible but don't buy your overall argument. FC were very quick off the mark to their credit but I think they have grown far too fast, the directors are very young and don't understand the finance industry, the web site is appalling and looks as if it was knocked together by a 14 year old, defaults rates seem to be rising, rates are falling and the property investments seem to be a total disaster. There is also the problem with bots. Worse I don't understand the FC accounts and this worries me - think Nokia,Enron etc. Personally I think there will be a major "correction" in the P2P markets with FC leading the way but what do I know....
Here is an extract from your site
unfortunately they are cosed to new deposits at the moment)
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Post by dan1 on Jul 26, 2017 23:10:14 GMT
i think there would be a notice in the gazette long before the court listing so thats maybe an even better method of getting early notice www.thegazette.co.uk/insolvency/notice?noticetypes=2450What is the process?Essentially, the WUP is issued, served, advertised seven working days later in The Gazette, and is then heard at court, where it is either dismissed or approved. Once advertised, other creditors may support the petition, and if the original petitioner is paid, or seeks to withdraw, may take over the petition. Excellent resource, thanks spiker. Is there a way to receive email updates when notices are posted as per Companies House? I looked up a recent default and 2 weeks prior to the Resolution for Winding-up was a Meeting of Creditors, the first notice of an impending liquidation.
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Post by df on Jul 27, 2017 1:09:10 GMT
Congratulations on 15% return success with FC! No offense, but I would rather invest £10 in 19% Rebs loan than spending it on a book  |
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Post by spiker on Jul 27, 2017 6:22:52 GMT
i think there would be a notice in the gazette long before the court listing so thats maybe an even better method of getting early notice www.thegazette.co.uk/insolvency/notice?noticetypes=2450What is the process?Essentially, the WUP is issued, served, advertised seven working days later in The Gazette, and is then heard at court, where it is either dismissed or approved. Once advertised, other creditors may support the petition, and if the original petitioner is paid, or seeks to withdraw, may take over the petition. Excellent resource, thanks spiker. Is there a way to receive email updates when notices are posted as per Companies House? I looked up a recent default and 2 weeks prior to the Resolution for Winding-up was a Meeting of Creditors, the first notice of an impending liquidation. Dont think so, but i wrote some code yesterday to daily run a search in the gazette for all my currently held loans, and if any have a winding up petition then it emails me.
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Henrik
P2P Blogger
Posts: 12
Likes: 7
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Post by Henrik on Jul 27, 2017 8:43:09 GMT
As per my original post, I came here looking for feedback on my blog. I've been writing it for about a month now and over the last few weeks I've had a lot of feedback from different places. This was the place where I valued the feedback the most as people here actually have P2P experience.
Although some of the feedback has been positive, I'm definitely getting more of a negative vibe. My blog is intentionally different. There are a lot of other good blogs out there so I want to try to differentiate mine. The book was part of that. It's absolutely not intended as a scam and if anyone interpreted it that way, I apologise. For that reason, however, the book has to go.
Because of the way Amazon works, the book will still be there because Amazon allows people to sell used books but you can no longer buy a new copy.
I really enjoy writing the blog and I'm going to continue to try to make it different by dedicating it to one platform and trying to provide analysis for people. I'm going to keep investing the way that I do and you can continue to track my progress. If there's demand for my book one day then I can always re-publish but for now I've taken it down. I've made a few changes to the website already and will probably do some more over the coming days.
Thanks for all the feedback and I hope people start to follow the blog posts!
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Post by yorkshireman on Jul 27, 2017 9:23:53 GMT
This was the place where I valued the feedback the most as people here actually have P2P experience. Although some of the feedback has been positive, I'm definitely getting more of a negative vibe. There are plenty of self appointed experts on here who like to expound unnecessarily complex theories therefore don’t worry about the negative vibes. Good luck with the investing and the blog.
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