P2P Forum

Lending Club Discussion => Investors - LC => Topic started by: Zach on August 20, 2013, 11:00:00 PM

Title: Why not use an auto-invest service?
Post by: Zach on August 20, 2013, 11:00:00 PM
I know many members of the forum have had extreme difficulty in getting the loans/notes that you want. Throughout this whole constricted supply period, I've been able to aggressively get my capital to work using Interest Radar's auto-invest.

I'm curious to know why any investors who don't use an automated solution don't do so?
Title: Why not use an auto-invest service?
Post by: thezinfan on August 20, 2013, 11:00:00 PM
As I just posted in Bryce's thread, I haven't had much problem manually buying loans, so I haven't looked into the IR auto invest (I am an IR member though and use other features of the web site). I buy 100 dollar notes, so i don't need as many loans to get my money in. But i have over 100k so there's constantly paid-off/new payments coming in, so i re-invest a few times a week.

I have my filters set and i buy whatever matches my filter. I do a quick review in the cart since there still is no filter i know of native to LC.com that will check current debt vs requested loan amount.

Title: Why not use an auto-invest service?
Post by: SeanMcD on August 20, 2013, 11:00:00 PM
I use IR's auto-invest, but I've still had trouble keeping up.  The last few days have seen very few successful purchases - lots of "Loan fully funded" emails. 
Title: Why not use an auto-invest service?
Post by: TravelingPennies on August 20, 2013, 11:00:00 PM
from: SeanMcD on August 21, 2013, 05:54:47 PM
Title: Why not use an auto-invest service?
Post by: TravelingPennies on August 20, 2013, 11:00:00 PM
Similar, but I don't have Unknown on auto-invest.  I still check those manually, since there's no information to indicate which attributes are out of the norm or how far they wander.
Title: Why not use an auto-invest service?
Post by: Fred on August 21, 2013, 11:00:00 PM
from: SeanMcD on August 21, 2013, 05:54:47 PM
Title: Why not use an auto-invest service?
Post by: TonySaunders on August 21, 2013, 11:00:00 PM
from: Zach on August 21, 2013, 05:37:58 PM
Title: Why not use an auto-invest service?
Post by: DanB on August 21, 2013, 11:00:00 PM
from: Zach on August 21, 2013, 05:37:58 PM
Title: Why not use an auto-invest service?
Post by: rawraw on August 21, 2013, 11:00:00 PM
I'm amazed that DanB is the voice of reason during this period of forum chatter, given he doesn't really bite his tongue ha ha 

But I have to agree with him -- although he probably benefits from a large amount of legacy notes.  DanB, what average interest rate are you getting upon reinvestment?
Title: Why not use an auto-invest service?
Post by: TravelingPennies on August 21, 2013, 11:00:00 PM
from: rawraw on August 22, 2013, 07:28:25 AM
Title: Why not use an auto-invest service?
Post by: p2p2p2p2p on August 21, 2013, 11:00:00 PM
I refuse for securities sake to give my user name and password to an unknown individual who obviously has the technical capability to wipe out my account overnight through fictitious sales on Folio Fn and can probably withdraw most if not all of the money before he or she can be stopped. At that point my Lending Club Net Annualized return goes to a -100% instantly while Lending Clubs attorneys point to all 87 paragraphs in their operating agreements and terms of service that they are in no way responsible for my giving out my accounts access information to a "Stranger" I never met , over the internet. However if I am interested they represent a guy willing to sell me a bridge.
Besides I have a significant amount of money invested and as in all things in life, if the return is too good, it wont last. So I have stopped adding new money to my account and am attempting to keep the existing funds reinvested. Even LC Advisors is not accepting additional funds for at least another 3 months.
In the meantime there are now numerous opportunities available elsewhere as a result of rising rates. i.e. NY State tax exempts are now yielding over 5%. Its not 12% but it is tax free and I don't think NY State is defaulting soon
Title: Why not use an auto-invest service?
Post by: lender_john on August 21, 2013, 11:00:00 PM
from: Zach on August 21, 2013, 05:37:58 PM
Title: Why not use an auto-invest service?
Post by: AnilG on August 21, 2013, 11:00:00 PM
from: rawraw on August 22, 2013, 07:28:25 AM
Title: Why not use an auto-invest service?
Post by: LendingClubStatistics on August 21, 2013, 11:00:00 PM
I think one benefit of picking up the "popular" notes is at least they get funded relatively fast, but I guess that doesn't necessarily mean they get issued any faster.  For now, getting highly sought after notes could allow people to flip notes on Folio.  (Currently trying out this strategy) I'll hold off until LC has some sort of auto-invest.  I also don't have nearly enough balance in my account to justify it.  Being in IT, I also don't trust anyone direct access to a financial account. Scary  :o
Title: Why not use an auto-invest service?
Post by: TravelingPennies on August 21, 2013, 11:00:00 PM
Thanks everyone for your input.

For those who are concerned about security, what's really the worst thing that could happen?

Someone schedules an ACH withdrawal out of your account? LC automatically sends an e-mail when a withdrawal request is received, and they can usually cancel these requests for about 1 day.

Someone tries to sell all of your notes on Folio? That may be more tricky to deal with (in terms of getting LC to cancel the sale), but lets be real here...your login credentials could be compromised at any time

Title: Why not use an auto-invest service?
Post by: p2p2p2p2p on August 21, 2013, 11:00:00 PM
I am flabbergasted to hear you say:
Quote"> from: Zach on August 22, 2013, 12:20:41 PM
Title: Why not use an auto-invest service?
Post by: core on August 21, 2013, 11:00:00 PM
Quote"> from: Zach on August 22, 2013, 12:20:41 PM
Title: Why not use an auto-invest service?
Post by: rlv99 on August 21, 2013, 11:00:00 PM
Zach-  There is a more basic problem when using IR's auto-invest.  Some of those notes that are selected using your specific criteria are poor investments!  Income too low and DTI too high as an example.  While I use IR's auto-invest, my IR filters are set deliberately to be much tighter thereby yielding about 1 loan for every two that I can capture manually on the LC platform.  That way I can minimize, if not eliminate, the financially weak borrowers.  On an average day, I gross 15 loans @$25.each which is enough for me until LC corrects its way of doing business ( imo, its payment posting and collection practices suck).
Title: Why not use an auto-invest service?
Post by: AnilG on August 21, 2013, 11:00:00 PM
Wow, I never thought I will ever read such an statement from a forum moderator, supposedly savvier and unbiased than the rest. I hope Peter hasn't handed you all the keys to the hen house.

I agree with core and p2p2p2... just because credentials can be compromised doesn't mean you should freely share them.

There is no absolute guarantee that credentials will not be compromised that is why financial institutions spend millions and hire experts for fraud detection and security, regulations limit institution and account holder liability (for example credit cards), and institutions put back stop measures to remediate such situations (for example, credit card companies sending new credit card because they believe old one is compromised).

Quote"> from: Zach on August 22, 2013, 12:20:41 PM
Title: Why not use an auto-invest service?
Post by: rawraw on August 21, 2013, 11:00:00 PM
My account is tied to an email with 2-Factor authentication.  My password is unique, randomly generated and stored encrypted behind 2-Factor authentication.  My list of passwords is stored an encrypted jump drive.  My phone with the second factor is password protected, has no passwords stored on it, and can be remotely wiped/locked/etc if stolen.  Needless to say I try to ensure my credentials can't just be compromised at any time lol  I want them to work for it :)
Title: Why not use an auto-invest service?
Post by: cfb on August 21, 2013, 11:00:00 PM
I'm surprised by the folks who say they have no problems buying notes.  I've been able to get almost nothing the last 2 weeks and have pretty much given up.  Most of the time when I look, there are 30-50 notes, most A's and B's, which sure aren't getting anyone to 15%.

I don't use an autoinvest service because the ones I've seen don't let me filter at the level I want, or they don't check the data often enough, or stuff is just selling out too fast.  Plus I'm not excited about giving some random person control over my money.

Six months ago I had 10k to invest on top of the notes I already own (about 2300) and now I've got almost 17k.  Looks like I'd have to accept crap notes that aren't snapped up 2 minutes after they release, I'd have to take A and B notes, or give up until this clears up...if it does.  Looking like option C right now.
Title: Why not use an auto-invest service?
Post by: Zach on August 21, 2013, 11:00:00 PM
Quote"> from: AnilG on August 22, 2013, 02:33:48 PM
Title: Why not use an auto-invest service?
Post by: GS on August 21, 2013, 11:00:00 PM
from: cfb on August 22, 2013, 07:04:37 PM
Title: Why not use an auto-invest service?
Post by: thezfunk on August 21, 2013, 11:00:00 PM
The reason I don't is that $25 takes a big chunk out of my monthly earnings right now because I only have about 5K in with LC.  I can't get it all funded the way I want yet and I have been trying for two months.  So...very little incentive to put more in for it to only sit there.  That $25 needs to pay for itself and it can't quite yet.
Title: Why not use an auto-invest service?
Post by: TravelingPennies on August 22, 2013, 11:00:00 PM
from: thezfunk on August 22, 2013, 11:49:12 PM
Title: Why not use an auto-invest service?
Post by: DanB on August 22, 2013, 11:00:00 PM
from: cfb on August 22, 2013, 07:04:37 PM
Title: Why not use an auto-invest service?
Post by: TravelingPennies on August 22, 2013, 11:00:00 PM
Semantics?  While understanding other people you can't see with a few sentences leaves a lot of room for interpretation, what you said seemed to imply that you were finding notes that would enable high returns recently without jumping on the 'dump times', which with my limited experience would seem to require mostly E, F and G notes, and you said you don't use an automated service.  Over the last two weeks, using frequent random look-ins, I see generally 30-50 notes, most of which are A or B grade (which wouldn't support a 15% return), very few notes past a D, and the E-G notes I've seen had very low FICO, very low income, 3 or more inquiries, several recent deliquencies, numerous public records or some other serious defect that statistically would seem to indicate a high default rate, which would likely dip you well under 15%.

I think the gist of it is that I hardly see ANY notes in a range that would sustain a high rate of return, let alone finding them without 'extreme difficulty'.  I had good luck this morning in the 60 seconds some notes were available at the 9am drop time, but I'd actually term the ability to find E-G notes at all the last few weeks to be 'nearly impossible'.  Of the bunch I managed to buy this morning, only one was an E, one D, and the rest C and above.

So I'm guessing you're A) putting high 3, 4 or 5 figure amounts into each note, B) buying and selling on the secondary market and getting some great discounts, C) you're accidentally buying new notes in the one minute after the drop time when decent ones are still available on a persistent basis, D) you've developed your own automated system (which I've considered, although the last time I coded I was excited about PL/1 because it was so much better than Fortran), or E) you're a statistical anomaly.

There is also another option, which is one I weigh frequently.  In mutual funds, actively managed funds always trail index funds over the long haul, and the number of managed funds that do exceed their index for more than a few years is much lower than it should be, given even a random distribution.  As William Bernstein noted, monkeys throwing darts at the Wall Street Journal's stock page would give better results on a random basis than we see from 'investing professionals'.  Much like that, the % of LC investors with high rates of return is lower than it should be, indicating that like many investments, a person trying to employ strategies does worse than someone buying a big diversified bucket of a product and then doing nothing with it.  Some LC reps have implied that to me, saying that most large investors trust LC's vetting process and just buy on grade.  Given that my analysis of prior results as a predictor of future results tells me that most of the data people go on is at best a bit skimpy and was effected by situational influences unlikely to repeat, it seems there is a great analog between stock market performance and loan return performance in terms of guessing where a stock/loan is going to go.

With all that in mind, it seems the wisest choice would be to A) put your money to work, B) diversify, and C) buy every E and F note you see, as G's high default rate drag their end returns to below E's and F's, and D) don't bother looking at anything else and when something goes wrong with a note, just stand there and do nothing.  But historically, that wouldn't give you 15%, but closer to 12.5 to 13.5, which is exactly where my returns are with a couple of thousand notes over 18 months.  Although my results are dragged down from buying B's and C's to get a lot of capital deployed in a short time.  I expect my returns to move higher as the composition of my portfolio shifts from heavy B/C/D to D/E/F.

I think its also interesting to note that high return investors tend to do better with G's when holding fewer, higher amount notes, so I'll go out on a limb and guess that your strategy is to buy all and F notes, and put a lot of $$$ into them, and you've been slightly lucky or found one or two things to filter on that have been effective the last 3 years, but may not work for the next 3.

All this is very interesting and I'm really glad to have found people willing to talk about what they're doing.  My LC "experiment" has proven to be a very educational and very interesting endeavor.
Title: Why not use an auto-invest service?
Post by: TravelingPennies on August 22, 2013, 11:00:00 PM
Quote"> from: Zach on August 22, 2013, 12:20:41 PM
Title: Why not use an auto-invest service?
Post by: TravelingPennies on August 22, 2013, 11:00:00 PM
from: cfb on August 23, 2013, 12:16:17 PM
Title: Why not use an auto-invest service?
Post by: TravelingPennies on August 22, 2013, 11:00:00 PM
I guess I shouldn't be surprised at the risk tolerance of folks who make unsecured loans to strangers over the internet.  :D

Usually I'm considered the risky outlier that everyone thinks is nuts for doing this.  All this dialog is really cheering me up and making me feel like playing in traffic.  ;D
Title: Why not use an auto-invest service?
Post by: rawraw on August 22, 2013, 11:00:00 PM
Quote"> from: cfb on August 23, 2013, 12:27:48 PM
Title: Why not use an auto-invest service?
Post by: New Jersey Guy on August 22, 2013, 11:00:00 PM
Quote"> from: Zach on August 22, 2013, 12:20:41 PM
Title: Why not use an auto-invest service?
Post by: Zach on August 22, 2013, 11:00:00 PM
from: New Jersey Guy on August 23, 2013, 04:25:51 PM
Title: Why not use an auto-invest service?
Post by: cfb on August 22, 2013, 11:00:00 PM
from: New Jersey Guy on August 23, 2013, 04:25:51 PM
Title: Why not use an auto-invest service?
Post by: TravelingPennies on August 22, 2013, 11:00:00 PM
CFB.....I've found that most of the time somebody had their online account compromised is because of something else they did.  Someplace down the line, they did something they shouldn't have, and didn't realize it.  Most of it is because of phishing scams.

I had my Discover Card compromised a couple of years ago.  Somebody in Philly was having a hey-day ordering online.  Discover took care of it for me.  I have no idea what I did, but I'm sure I had to have screwed up someplace.  However, I didn't cancel my Discover Card because of it.

Title: Why not use an auto-invest service?
Post by: TravelingPennies on August 22, 2013, 11:00:00 PM
from: New Jersey Guy on August 23, 2013, 05:00:06 PM
Title: Why not use an auto-invest service?
Post by: TravelingPennies on August 22, 2013, 11:00:00 PM
from: New Jersey Guy on August 23, 2013, 05:00:06 PM
Title: Why not use an auto-invest service?
Post by: core on August 22, 2013, 11:00:00 PM
from: cfb on August 23, 2013, 06:02:37 PM
Title: Why not use an auto-invest service?
Post by: TravelingPennies on August 22, 2013, 11:00:00 PM
Kind of ironic that as we're talking about security/passwords, Aaron Vermut, the President of Prosper had his Twitter account hacked today.
Title: Why not use an auto-invest service?
Post by: TravelingPennies on August 22, 2013, 11:00:00 PM
from: core on August 23, 2013, 06:18:41 PM
Title: Why not use an auto-invest service?
Post by: dontvote on August 23, 2013, 11:00:00 PM

Quote"> from: Zach on August 23, 2013, 10:09:15 PM
Title: Why not use an auto-invest service?
Post by: TravelingPennies on August 23, 2013, 11:00:00 PM
from: dontvote on August 24, 2013, 09:49:17 AM
Title: Why not use an auto-invest service?
Post by: TravelingPennies on August 23, 2013, 11:00:00 PM
from: cfb on August 24, 2013, 09:55:31 AM
Title: Why not use an auto-invest service?
Post by: TravelingPennies on August 23, 2013, 11:00:00 PM
from: Zach on August 23, 2013, 04:34:04 PM
Title: Why not use an auto-invest service?
Post by: TravelingPennies on August 23, 2013, 11:00:00 PM

"Some websites can be made specifically to steal your information."

Rawraw....that's absolutely true!  Which, brings me back to my post from the 23rd.


from: New Jersey Guy on August 23, 2013, 05:00:06 PM
Title: Why not use an auto-invest service?
Post by: core on August 23, 2013, 11:00:00 PM
Quote"> from: Zach on August 24, 2013, 10:40:39 AM