P2P Lending / NFT Lending Forum

@Rob L

Let me take the heretical view that this new model and these new numbers are meaningless. In a couple of years, "The Next-Next Generation Credit Model" will lead us to the Promise Land. No thanks. You can only razzle-dazzle me once. This sheep has been fleeced by your previous model.

I started buying notes in April. My position is nominal, and I have made the decision buying notes is not for me. Although I have decades of investing experience, I don't know how to allocate these notes. Very early I had a note default from the start. The borrower never paid one penny from day one. This smells like a case of fraud to me. My returns were pummeled.

Also, these notes function more like a bond because my upside is capped. To be honest, I feel more comfortable buying stocks because if a stock goes down in value, at least it has the possibility of going up. With these notes I am lost. Why torture myself trying to make this work? So I have officially thrown in the towel, and I will concentrate on what I feel comfortable with and what I have been doing successfully. It is important to be honest about one's limitations.

A quote by Aristotle comes to mind: "The aim of the wise is not to secure pleasure, but to avoid pain."

To all of those who continue buying notes, I wish you the best. Buying notes is not for me.

This is another asset class for the non-traditional portion of my portfolio. The company is called American Home Preservation. They buy distressed loans and then renegotiate the mortgage for the homeowner. The current rate on your investment is 12%. Check it out.

Michael



 

Nice work. Like you, I am new to Lending Club. In fact, I bought my first note this morning. I intend to be methodical and patient when buying my notes.

What strikes me about investing in the stock market and investing in Lending Club are the similarities and differences. It is the differences that are most pronounced for me. I have some passive stock market investment strategies and I am comfortable with them. But I have one account that I actually trade. I would never let a stock go to zero. But I am not sure I could sell a note, so there is a possibility the note could go to zero. This is a big difference. Your returns at Lending Club are capped. Whatever the highest interest rate is, that is all you can make. In the stock market a stock can gain 100%, 200% or a 1000%. This really helps the performance of the portfolio and erases a lot of poor performers.

It seems to me that one will want to stay away from D, E, F and G notes because of the greater risk of the borrower defaulting and one having to take a charge off.

Also, not appreciated is, when you buy a lower grade note is the possibility of going on a losing streak. When I trade stocks in my active account, I am always aware (even with the greatest research) that I will pick losers and I may pick them in a row. Out of 30 trades there is almost a 100% certainty that 6 trades in a row will be unprofitable. And a 67% chance that 8 trades in a row will be unprofitable. When buying D, E, F and G notes, it is easy to go on a losing streak. Most investors don't factor the losing streaks into their investing equation. That is why most investors throw in the towel. To be successful, you have to have the mentality of a trader and factor in the losing streaks that will come and then how to survive them.

I remember reading an article in the Wall Street Journal in the late summer of 07. Matthew Rothman ran a quant fund (no emotions, just numbers). And this sentence stood out for me, "Events that models only predicted would happen once every 10,000 years happened every day for three days." Models are useful but models can never account for what people will do.

I'm looking for a 5% to 7% return from Lending Club. I think that is reasonable, so I don't have any illusions I can pick the profitable D, E, F and G notes with any regularity.

Good luck with Lending Club. 

 

My wife and I are investing in distressed mortgages. People tend to live longer than they think. This particular investing instrument pays 12% but you must tie your money up for 5 years. I understand if you make it to your 60s, the odds are good that you will make it to your 80s.

This is a small portion of our portfolio. Never bet the family farm.

Good luck on your search.

Well I have read a number of posts here, and do not know what to think. The reason I chose P2P Lending and Lending Club is I want to diversify outside of the stock market.

I have been a stock market investor since the early 90s and have seen bull and bear markets, euphoria and crashes like most of the members here. Human nature is part of the investing equation and for many years this was the part that stumped me-keeping my own emotions in check. Over the last 25 years, I have learned a lot about myself-investment wise.

I don't know if I will be successful investing in P2P Lending with the various notes of different quality. There is a segment of the market I have been successful in and that is Penny stock investing. I buy stocks $3 per share or less. To be honest, I follow the Bowser Report and have done quite well. There are a lot of similarities about Penny stock and P2P investing. You never know how you will do. Therefore, I have an open mind about what kind of returns I will get with P2P investing.

My portfolios have different strategies. A passive strategy is the one I prefer. One of my portfolios is a Dog of the Dow strategy, buying the 10 highest yielding Dow stocks and my other portfolio uses an Ivy Portfolio strategy with 5 ETFs and I rebalance the portfolio quarterly. This takes the emotion out for me and forces me to use discipline. That is the key for me-having discipline. Also I own DRIPs. Again, I never try to time the market. Right now I am adding to Exxon and some REITs because these are down.

I'm going to take the P2P Lending slow and not expect too much as far as what kind of returns I will get. There are some strategies I have thought about, but I am reading how others handle their P2P portfolio(s).

I am skeptical anyone can consistently time the market or predict the future. All investing is risky. All investments have cycles.