bdonovan is right: something very strange is going on this week. At 6:30 AM PDT this morning, there were 751 loans available. All were A, B, and F, and there were plenty of each. There were no -- as in absolute zero -- C, D, or E loans. This is NOT the normal daily or hourly variation.
I don't use automated investing, either LC or third party. I won't criticize those who do, but I would not recommend it to a friend. You do not need a boatload of notes unless you are investing so much (like two million dollars or more) that you cannot invest it all in 200 loans. Look at the numbers: up to about 200 notes, your risk decreases with more notes. Above about 200, there's no noticeable decrease in risk. I think most investors will be better off studying each loan application carefully, aiming to get to 200 notes over a period of a few weeks, and then buying additional notes as payments come in or as they wish to invest more. They should take their intended investment, divide by 200, round down to the nearest $25, and buy notes in that amount. (Hence the "two million" above: there are few loans issued for less than $10,000.)
I started out allowing LC to invest for me. I stopped that real fast, after only 14 notes. Then I went through the lists, picking another 153 notes pretty quickly -- over a week or two IIRC. Then I started being more careful, and after about three months came up with my private criteria that I've been using for the past 11 months. I'm up to 319 notes -- more than 200, partly from using payments to buy more notes, but mainly because I decided to increase my investment.
Of those 319 notes, 12 are charged off, 7 are 31-120, and 2 are grace. Every one of those 21 notes are from those first 3 months, when I was less careful about what I accepted. A few of the later notes have gone grace or 16-30, but those caught up. Not a single one of my "private criteria" notes is currently in the slightest trouble. I'm sure of my "private criteria" notes will eventually sour, but the contrast has been fairly dramatic. (The class distribution is basically the same in the two sets.)
Hence my advice: don't be in a big hurry, and don't aim to buy more than 200 notes initially. You will likely feel that your money is lying idle too long while you are finding the right loans -- I know I did. (And then it lies idle several days between placing your order and the loan being issued.) Just keep reminding yourself that a single charge-off hurts your return a lot more than a couple more weeks of investment helps it.
Edward
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