david42
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Post by david42 on Jun 26, 2017 21:28:22 GMT
I agree that your analysis is correct against the hypothetical assumptions that you have defined. I also agree that the risk of default on a loan varies over time. So the fair value of a loan would vary over time if only we had enough information to calculate it.
But your analysis ignores the very real practical issues that dominate the value calculation in P2P, which explains why many people are very happy to trade loans on a fixed price market like Lendy. - We have far too little information to estimate the fair value. - The information is not uniformly distributed between lenders, so those lenders with better information will always win. Variable pricing makes that problem worse.
Given that I cannot determine the fair price of a loan, and given that the effort needed to estimate the fair price for every loan adds a signifcant time cost to investors like me, I will continue to prefer the platforms with fixed prices because they create fewer opportunities for a minority with better information to profit from the rest of us.
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david42
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MoneyThing (MT) in Administration
Renew All
Jun 25, 2017 13:21:00 GMT
Post by david42 on Jun 25, 2017 13:21:00 GMT
Could that be because the CSP loans have already renewed? The CSP loans renewed on 16 June. If you ticked the "renew all" box before 16 June, I don't know whether the tick rolls across to the new loan.Edit: My theory is wrong. See post from theshape below.
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david42
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Post by david42 on Jun 22, 2017 13:14:48 GMT
Ablrate is one of the few platforms that declares their fees. The figures are in the table on page 7 of the downloadable borrowing proposal. Ablrate fees are 4.5% pa + 2% on top of our 14% pa.
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david42
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Post by david42 on Jun 21, 2017 19:58:49 GMT
Dumb question probably, but what what does a browser extension do in this context? On Lendy, Orisk's browser extension provides customised filtering of the loan lists, against criteria we can define. The features are described here.
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david42
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Post by david42 on Jun 19, 2017 22:25:24 GMT
Jonah's charts also show a levelling off over the last 5 days - seen most clearly on the 2 month chart. Unless Lendy does something that upsets the market, I think we may have seen the peak.
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david42
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Post by david42 on Jun 19, 2017 22:00:34 GMT
Is there any reason you can't sell the debt as if it was any other debt? i.e off the official SM of the platform concerned *Edit: I remember FC used to send out emails asking if lenders wanted to take control of distressed loan parts themselves, which presumably would make those parts more easy to sell off the platform? Rebs refused to transfer my defaulted loans from my company account to my personal account so that I could close my company on retirement. I have yet to find a solution. My company is still open.
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david42
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Post by david42 on Jun 17, 2017 22:23:25 GMT
3) I once tried an approach of selling MT loans as they were approaching their end dates. I stopped because I found I was running out of loans! I decided that on MT the different risk/reward means I prefer to hang on to loans in the hope that they may get renewed.
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david42
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MoneyThing (MT) in Administration
IFISA
Jun 17, 2017 22:04:46 GMT
metoo likes this
Post by david42 on Jun 17, 2017 22:04:46 GMT
But the point of the SM isn't specifically to facilitate rebuying into your own ISA. You can of course do that, but only after having put it on the open market for however short a time, and at a risk of losing it, that risk minimised by using two devices. SM works fine IMHO, no need to change. I confirm that using two devices to buy your own loans works fine. I regularly buy my own loans to amalgamate multiple loan parts. I open the buy page for the same loan on a second PC before I sell my loan parts. Then after pressing sell on the first PC, I refresh the availability on the second PC, click invest, type £9999999 then buy because the screen automatically reduces it to the amount available. I expect to use an approach like this to keep my MT ISA fully invested, and leave any uninvested cash outside the ISA where it is easier to move between platforms as opportunities arise.
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david42
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Post by david42 on Jun 17, 2017 19:30:22 GMT
Some of my P2P cash came from replacing my FTSE100 tracker funds with bets on the FTSE100. This makes my FTSE100 investing tax free and the sale of the tracker funds released cash for investing in P2P. Complicated to manage and not for the faint hearted as each pound released for P2P is effectively being put at risk twice. Once in the stock market bet and once in P2P. Options? What strategy have you gone for? Approach I sold my FTSE100 exchange traded funds. I keep 20% of the cash released to cover margin calls and invest the remaining 80% in P2P. To get the equivalent FTSE100 exposure, every three months I place an up bet on the FTSE100 future for the next three months, and I place an up bet on a cheap put option to protect against market falls exceeding 20%. I use IG Index. Cost and benefit For example this June I placed an up bet on the September FTSE100 future at 7437 points. So for a £1 per point bet I would make or lose £1 for each point the FTSE is above or below 7437 points on 15 September 2017. The bookmaker charges a 4 point (£4) spread. To protect against crashes I placed an up bet on a September put option at 6200 points for a price of 11.3 points (£11.30). Total cost 11.3+4=15.3 points (£15.30) for this quarter =0.2% of 7437 repeated 4 times a year =0.8% pa. In return for that 0.8% pa cost I get the dividends tax free (reflected as a discount in the price of the future), there is no capital gains tax to pay, and 80% of the cash is available for investment in P2P. Complications I need to keep enough liquid cash to fund margin calls in case the market falls to 6200 before September. (Falls below 6200 would be funded by the PUT option). In September I will need to re-adjust the 20% cash reserve ready for the next quarter. I am assuming that I can release enough P2P cash to fund the quarterly cash re-adjustment should the FTSE fall. Following the flooding of the Lendy secondary market I am moving this cash reserve to other platforms as quickly as I can. Experience I have only been using this approach for about 18 months. The cash rebalancing got quite expensive in the Jan 2016 market falls, but it has not yet triggered the put option. Other markets I use the same approach for the US S&P500 index. But I still use exchange traded funds to get my exposure to other markets because the bid / offer spread on other instruments is nearer a prohibitive 1% every quarter.
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david42
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Post by david42 on Jun 17, 2017 2:00:11 GMT
Next Huddle loan up: a car dealership. No surprise there. If you factor in the cashback, it works out at 17% annual return over 4 years, which is probably about right for the risk. Secondary market exit could be sticky. But why do you average it over 4 years? That would be right for the pub loan but the car dealership loan is for only 12 months assuming the loan is repaid on time.
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david42
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Post by david42 on Jun 17, 2017 1:41:16 GMT
See Glossary for the list of platform abbreviations
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david42
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Post by david42 on Jun 17, 2017 1:34:57 GMT
Some of my P2P cash came from replacing my FTSE100 tracker funds with bets on the FTSE100. This makes my FTSE100 investing tax free and the sale of the tracker funds released cash for investing in P2P. Complicated to manage and not for the faint hearted as each pound released for P2P is effectively being put at risk twice. Once in the stock market bet and once in P2P.
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david42
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Post by david42 on Jun 15, 2017 15:54:09 GMT
Risks The 70% LTV is against the retail value of the cars, not the trade value. It might be difficult to recover our money if the car trader fails.
Exit Strategy Exit strategy is unclear to me. The loan is subject to a 12 month annual review, implying it is expected to roll on after 12 months. Presumably our exit is refinance of the facility elsewhere.
I will probably buy this loan anyway. The 20% discount for Huddle 100 members makes this loan worth the risk.
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david42
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Post by david42 on Jun 15, 2017 14:21:29 GMT
I have just received the 5.5% cashback, two weeks after funding my account. Thanks r00lish67 for posting this offer. I would never have noticed it otherwise.
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david42
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Post by david42 on Jun 14, 2017 0:08:09 GMT
The problem with a simple at par secondary market is it only really work when loan demand and supply are fairly balanced. As soon as there is an significant imbalance, liquidity fails (liquidity in the sense of gross volumes transacted rather than simply ease/speed of sale). I view the primary purpose of the SM is to provide liquidity, and to that end, anything that removes barriers and increases liquidity is welcome, even if it makes the market more complex......... Lenders seems to fall into two groups, those who prefer platforms with at par SM and those who prefer premiums/discounts. I believe this reflects those who view P2P as a high risk savings account or an investment akin to stocks and shares (or more similarly a bond). I came to P2P from stocks and shares, albeit passive investments, so I very much fall into the latter group. However, I suspect the majority fall into the former group - it's not uncommon to find those who leave stocks and shares to investment professionals but are quite happy to manage a complex P2P portfolio. Those who prefer their SM's at par implicitly accept that liquidity can be a fickle thing. But, I'm not sure most lenders understand this, which is why we see the soap opera (sorry, serial drama) style commentary on the Lendy board (please, please, please don't turn this forum into Digital Spy lite!). Ablrate (and now Huddle Capital) is perhaps the only example of a fully featured platform allowing bids/offers so that lenders can see the spread. I like the Ablrate platform despite its flaws and transaction accounting but I understand that a lot of lenders are put off by its complexity - if you don't believe me just download the yield calculator here. There are also a good many who don't like the ability to profit from discounts/premiums. I understand these concerns and agree with them to a certain extent but this comes at the expense of liquidity. Discounts/premiums are essential to find the true value, the price at which someone is prepared to take that loan from you. You can see this clearly on FS where premiums increase with scarcity (pawn loans, for example) and remaining days left. It's going to be very interesting to see what happens when the next crisis occurs. I assume that the platforms which have at par SM's will have no buyers and loan holders will effectively be locked into their loans until they resolve. On the other hand how low will prices drop on FC and Ablrate and will FS increase the allowable discount (1% will not be enough) - or will buyers dry up completely. P2P is a fast moving asset class and just as I want to see share prices plummet to allow me to purchase more at cheap prices I also want to see what a shock will do to P2P. Having come from the Equity markets I used to believe variable pricing was the most efficient solution for every market, until I saw the problems it caused in the low volume markets of the P2P world. Variable pricing works best in high volume markets, where smaller volume traders can usually assume the market has efficiently set a price that reflects the value, so they can trade when they want at a fair price. But in low volume markets like P2P, variable pricing does not produce a fair price and it does not enable trading on demand: 1. Price: In low volume markets, the variable price reflects short term supply and demand mismatches rather than the underlying value of the security. This makes it difficult to work out whether trading at today's price is the best thing to do. A lot of us already find the time taken managing P2P risk is a big drawback, without adding an extra layer of price speculation work. As evidence of inefficient pricing just look at how the flippers (arbitrageurs) are hated on FC for creaming off the profits on the best loans, leaving less attractive returns for the longer term investors. 2. Volume: In a low volume market you cannot sell a large holding just by reducing the price. That would only work if a lower price attracted more buyers. But where the information to correctly value the risk is scarce and unevenly shared, like in P2P, a price reduction is more likely to frighten buyers away. If my observations are correct then the self perpetuating increase in secondary market availability we are currently seeing would continue even if variable pricing was introduced because the mismatch of supply and demand indicates a confidence feedback effect where increasing availability (or reducing prices) frightens away buyers instead of attracting them.
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