P2P Lending / NFT Lending Forum

Even worse than Jan/Feb. I've stopped re-investing my cashflows

Looking at the most recent quarterly report, it is stated that individual investor capital actually increased by $30 million this past quarter. However, it seems everyone on here is slowly withdrawing their money. How are these two observations compatible?

from: apc3161 on June 18, 2017, 12:44:54 PM

Below is the fractional loans originated on LC platform from the latest historical loan files. There was slight drop off in fractional loan originations (can be considered indicative of interest from retail lenders) since Dec 2016. The increase in March 2017 was most probably driven by LC promotion as well as quarter-end increase in originations.  But numbers are still much better than same time last year. The LC portfolio is not quick to unwind so the decline may show up across longer time interval.

Fractional Loan Originations as of 2017 Q1 1 End, from loan history files

Month	Origination $ Volume
2017-03	138,193,625
2017-02	116,734,600
2017-01	122,044,275
2016-12	127,280,950
2016-11	121,435,975
2016-10	130,105,400
2016-09	128,213,525
2016-08	110,971,875
2016-07	123,194,600
2016-06	118,425,825
2016-05	105,480,150
2016-04	103,948,125
2016-03	107,819,675
2016-02	76,007,400
2016-01	119,958,325

Platform Loan Originations as of June, 2017, from SEC filings

from: apc3161 on June 18, 2017, 12:44:54 PM

Good God! so you are saying your investment thesis is "hope". lol

from: Tomp on June 24, 2017, 10:48:52 AM

from: rawraw on June 24, 2017, 06:16:30 PM

Cryptocurrencies are ponzi scheme! 

from: nonattender on June 24, 2017, 08:23:47 PM

from: AnilG on June 24, 2017, 09:35:15 PM

from: Tomp on June 24, 2017, 10:48:52 AM

Keep in mind the borrow default curve. If you stop reinvesting, then you stop getting interest from all of the new loans that probably haven't defaulted yet. The defaults keep rolling in though. June was also my worst month yet.

from: AnilG on June 24, 2017, 09:35:15 PM

I have had a number of bad months. I invested understanding that there were going to be defaults. But I also invested looking at the percentage of defaults I could expect. The current default rate is well over that and looks to get worse.

I have stopped investing and I'm slowly withdrawing my money. I wonder if borrowers look at Lending Club as an easy mark.

from: MichaelHollis on July 10, 2017, 07:28:47 AM

Yup June and July are sucking with over 1000 loans my return has dropped under 3%.  It just keeps falling.

I stopped reinvesting at the start of the year and started withdrawing all cash every few weeks from my 3 year old account that I'd grown to $274k. 

My June statement shows a monthly loss of $457 (-2.0% annualized rate). 
YTD I'm squeaking out a measly $1089 profit (+0.8% annualized rate). 
For 2016 I showed a +4.6% profit.
For 2015 I showed a +8.7% profit. 

That's in my after-tax LC account.  It's easier to phase that one out by simply xfering money every few weeks.  I also have an IRA account with LC with substantial money in it as well ($234k).  Got another year before I hit age 59 1/2 where it will be easier to start withdrawals from it, so I'll just keep it going and reinvesting.  It's too much trouble to processes rollover transfers from it over and over as proceeds roll in.

Fortunately, that account is doing better... 
June profit is $1600 (+8.2% annualized).
2017 YTD profit is $5340 (+4.5% annualized).
For 2016 I showed a +5.7% profit.
For 2015 I showed a +7.5% profit.

The only real difference in the 2 accounts is that I started the IRA in 2015 and the regular account a year earlier in 2014, so I have more "aged" notes in the regular account that's doing terrible.  All my notes are 36mo, so my regular account has already cycled fully through some of the notes by now.

$274k in a taxable account?  Seems like a terrible idea.  How much tax loss carryforwards did you create?  Or are you taking lots of losses elsewhere?

That's another of the reasons I'm phasing out the taxable account.  The first year I had less money in it and the tax implications were not an issue.  But as I liked the early returns, I added a lot more money the 2nd and 3rd years before realizing the way taxes are calculated on it produced more losses than I would be able to fully offset.  I'll readily admit to not fully understanding the rather confusing tax treatment.  Oops.  Fortunately I was already retired and had little income to claim (I guess you could say I'm savings rich but income poor) so the actual tax impact wasn't huge.  Still though, it did cost me a little. 

In fact, that was the real impetus toward phasing out my taxable account, but leaving my IRA account in place.  The increasingly poor returns on the taxable account just further sealed the deal.

Thanks for sharing your experience. I like to peer into the thoughts, actions, and rationale of individuals who have deployed significant funds in this asset class. Your experience largely mirrors mine. I stopped reinvesting because the more conservative end of the spectrum where defaults are (theoretically) lower isn't providing me with a high enough return relative to other risk-free assets (such as FDIC-insured CDs). The problem for me with notes in the B and C grade is that I am generating far too many losses that I can't offset with any other capital gains (largely because I have stayed out of the stock market rally for the past 2-3 years, and don't plan to step in with CAPE numbers at all-time highs).

from: SLCPaladin on July 19, 2017, 11:57:39 AM

I wonder if we are overreacting! Closing the barn door after horses already bolted. I know some of you were over-exposed to this asset class. In a way, these events of past year were good in making you act on reducing exposure. I still believe you benefit from some exposure to this asset class in your portfolio, may be not the extent of replacing most of your bond/fixed income portion of portfolio with Lending Club loans. The Lending Club has already back-tracked somewhat from credit expansion of 2015-2016. It is typical of lending industry to expand credit when credit demand is high and when credit starts going bad, pull back.  I expect (hope) that newer loans may perform better than those issued in last two years.

from: lascott on July 20, 2017, 11:01:49 PM

To quote John Maynard Keynes, "when the facts change, I change my mind." While it is true that I am currently drawing down and not reinvesting (my portfolio is about 1/2 of what it once was), if I see evidence that the more recent vintage curves default rates are more in line with what I am expecting, then I will consider wading back in. I like the charts over at Insikt to compare vintages. LC could make several changes that would make me feel better about wading in (e.g., raise interest rates, better align LC incentives with investors, fix the early pay-off problem that saps returns, etc.)

But right now I just feel like I'll count myself lucky if I can get all of my funds out before any downside surprise or correction on the overall US economy. The things that worry me from a macro front are frothy asset prices, increasingly unaffordable home prices in much of the US, auto loan defaults, high student loan debt, and commercial real estate being decimated by online retailers.

It is possible that new loans will perform better than the past two years, but I'm fine potentially missing out on some of those gains while other LC investors play guinea pig for a bit.

from: AnilG on July 21, 2017, 02:52:07 AM

from: lascott on July 20, 2017, 11:01:49 PM

You are not alone.
Last quarter I had a NEGATIVE return.
Defaults + Fees > Interest

If LC prepares Form 1099 as they did last year, I could be paying taxes on the "supposed" interest, when in reality I'm just incurring losses.

I'm currently liquidating my account by taking distribution of principle and interest.
The secondary market isn't an option for LC Separately Managed Accounts.

My main disappointment with LC/Prosper and other platforms is that they lost focus on p2p aspects of lending. Without p2p aspects, these platforms have no defensible moats. They will be wiped out by the likes of GS or other "traditional established " institutions that decide to enter the market. But Institutions are like "sheep-herd", once market conditions deteriorate, they all will head to exit at the same time. Then most of these platforms will come crawling back to retail investors.

But agree, wind is blowing against retail lenders.

from: Rob L on July 21, 2017, 11:10:27 AM

from: AnilG on July 21, 2017, 06:17:21 PM