Title: Do I have this right?
Post by: Dennis on August 28, 2013, 11:00:00 PM
Post by: Dennis on August 28, 2013, 11:00:00 PM
I know this has been talked about on these boards at length, but do I have it right:
- notes at LC are issued en masse 4 times a day.
- the second (and I mean the absolute second) those notes appear on the platform, large institution/s with endless amounts of cash immediately suck most of them into their LC cache for review, temporarily locking them out to most small investors (the peer investors).
- then, after a relaxed review of those notes, the undesirable ones get tossed back onto the platform again, but often into the clutches of yet another institutional player - and the notes quickly disappear again.
- this process, where notes get pitched back and forth, gets repeated over and over again (in what seems like milliseconds), until they finally get fully funded.
- the small investor (the peer investor) must be quick and/or lucky to get one maybe two notes a session unless he/she is not picky on note quality.
- so the small investor (the true peer investor) who generally has limited amounts of cash, and maybe limited software capability, has very little or no chance of competing with all this.
- the small investor then is at the mercy of the big investor/s for notes, or for leftovers deemed too risky by the big guys to invest in.
- so the small investor (the true "peer" investor) starves while the big guys feast.
- P2P lending then is now mostly institutional lending, and we seem to have come full circle again in the finance community, where the big guys call the shots. Nice concept, P2P - if it only worked.......
Now I know what I just wrote isn't always true or always happens, but I'm speaking in general terms where those things happen a lot or most of the time.
Did I get it right?
- notes at LC are issued en masse 4 times a day.
- the second (and I mean the absolute second) those notes appear on the platform, large institution/s with endless amounts of cash immediately suck most of them into their LC cache for review, temporarily locking them out to most small investors (the peer investors).
- then, after a relaxed review of those notes, the undesirable ones get tossed back onto the platform again, but often into the clutches of yet another institutional player - and the notes quickly disappear again.
- this process, where notes get pitched back and forth, gets repeated over and over again (in what seems like milliseconds), until they finally get fully funded.
- the small investor (the peer investor) must be quick and/or lucky to get one maybe two notes a session unless he/she is not picky on note quality.
- so the small investor (the true peer investor) who generally has limited amounts of cash, and maybe limited software capability, has very little or no chance of competing with all this.
- the small investor then is at the mercy of the big investor/s for notes, or for leftovers deemed too risky by the big guys to invest in.
- so the small investor (the true "peer" investor) starves while the big guys feast.
- P2P lending then is now mostly institutional lending, and we seem to have come full circle again in the finance community, where the big guys call the shots. Nice concept, P2P - if it only worked.......
Now I know what I just wrote isn't always true or always happens, but I'm speaking in general terms where those things happen a lot or most of the time.
Did I get it right?
Title: Do I have this right?
Post by: brycemason on August 28, 2013, 11:00:00 PM
Post by: brycemason on August 28, 2013, 11:00:00 PM
As things stand today, this is more or less correct. I am less sure about a few points:
* I have no evidence that the large loan fractions which get tossed back are immediately carted by another large investor, but it could be possible that their software is scouring well past the load time.
* There is little evidence that the institutional investors are being intelligent in their selectivity. It would take an analysis comparing the fill time vs. an independent credit model score (such as Rev's IR04 or my PMax) to see if there is any correlation. Fill time is difficult to measure, although some on this board have made some attempts. If LC set their rates absolutely perfectly such that the expected returns across any loan grade were precisely equal, then the speed game would be pointless. You could invest in As and get the same return as investing in Fs. Unfortunately, I think there are legal / structural reasons why they can't use certain factors in their approval process and rate setting.
* I have no evidence that the large loan fractions which get tossed back are immediately carted by another large investor, but it could be possible that their software is scouring well past the load time.
* There is little evidence that the institutional investors are being intelligent in their selectivity. It would take an analysis comparing the fill time vs. an independent credit model score (such as Rev's IR04 or my PMax) to see if there is any correlation. Fill time is difficult to measure, although some on this board have made some attempts. If LC set their rates absolutely perfectly such that the expected returns across any loan grade were precisely equal, then the speed game would be pointless. You could invest in As and get the same return as investing in Fs. Unfortunately, I think there are legal / structural reasons why they can't use certain factors in their approval process and rate setting.
Title: Do I have this right?
Post by: standby on August 28, 2013, 11:00:00 PM
Post by: standby on August 28, 2013, 11:00:00 PM
I was going to say the exact same thing today - we have come full circle. It can no longer be called peer-to-peer legitimately. I think the big boys like to refer to it as micro lending. I suppose that's because they were getting their foot in the door. I've been here since just April and unfortunately, this looks like what it has become. Why didn't they just go institutional in the first place I wonder? Anyway, I don't know the exact details but it looks like you got the gist of it.
Title: Do I have this right?
Post by: mo on August 28, 2013, 11:00:00 PM
Post by: mo on August 28, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: AnilG on August 29, 2013, 11:00:00 PM
Post by: AnilG on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: Fred on August 29, 2013, 11:00:00 PM
Post by: Fred on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Bots will work overtime if need be.
Title: Do I have this right?
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: core on August 29, 2013, 11:00:00 PM
Post by: core on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: Rob L on August 29, 2013, 11:00:00 PM
Post by: Rob L on August 29, 2013, 11:00:00 PM
Very interesting thread. I don't understand why a large investor would find it advantageous to lock up notes in a cart only to throw many back a short time later. Does this imply a human analyst in the middle? Why would their model / buy time be slower than Bryce's who said he often gets the first note?
Title: Do I have this right?
Post by: rawraw on August 29, 2013, 11:00:00 PM
Post by: rawraw on August 29, 2013, 11:00:00 PM
Quote"> from: Fred
Title: Do I have this right?
Post by: core on August 29, 2013, 11:00:00 PM
Post by: core on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: viking on August 29, 2013, 11:00:00 PM
Post by: viking on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: Dennis on August 29, 2013, 11:00:00 PM
Post by: Dennis on August 29, 2013, 11:00:00 PM
The interesting thing in all this is that institutions are not only swallowing all the whole loans, but now they seem to be invading and dominating the partial loan platform also. Of course I can't prove that, but there does seem to be evidence of that. So as institutions may now be dominating P2P, how on earth does Lending Club market their company for an IPO. What the company is/was founded on, P2P, seems to be a broken model now. And how do you market a broken model but still convince future stock holders that what the business was founded on is sound? I would think the SEC would also have something to say about full disclosure if LC tries to market themselves as a P2P company. It kind of puts LC in a confused bind, IMHO.
Title: Do I have this right?
Post by: yojoakak on August 29, 2013, 11:00:00 PM
Post by: yojoakak on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: Bilgefisher on August 29, 2013, 11:00:00 PM
Post by: Bilgefisher on August 29, 2013, 11:00:00 PM
One thing is for certain, reading each note prior to purchase is a thing of the past. Doesn't matter anyway since you can't ask the borrowers questions. With that in mind, why not use a quick invest type setup where all users get an equal shot at there preselected criteria. LC can still have their whole loan program, and all the retail investors get an equal opportunity to invest in the remainder loans without competing API's.
I suppose I'm missing a key big picture item, but it seems like fairly simple way to give folks equal shots a loan and the ability to invest without being a clock watching speed clicker. Just like prosper, I now have money piling up that is not being invested.
I suppose I'm missing a key big picture item, but it seems like fairly simple way to give folks equal shots a loan and the ability to invest without being a clock watching speed clicker. Just like prosper, I now have money piling up that is not being invested.
Title: Do I have this right?
Post by: Rob L on August 29, 2013, 11:00:00 PM
Post by: Rob L on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: AnilG on August 29, 2013, 11:00:00 PM
Post by: AnilG on August 29, 2013, 11:00:00 PM
The listed new loan added data will include all loans that were not present in last update. So it will include both loans that were released from shopping carts as well as released by Lending Club since the last update.
from: viking on August 30, 2013, 05:39:58 AM
from: viking on August 30, 2013, 05:39:58 AM
Title: Do I have this right?
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Purpose of browser bot will be to make transactions in a Lending Club account. It is very different problem from forum spam. In this case you can separate humans from browser bots by watching the activity within a Lending Club Account. Humans don't log into their account and make transactions every few minutes for hours. Put a threshold on attempted logins/transactions within a time frame for an account and time-delay the transactions/login for that account if threshold exceeded. Will make most browser bots irrelevant.
Quote"> from: core on August 30, 2013, 02:40:41 AM
Quote"> from: core on August 30, 2013, 02:40:41 AM
Title: Do I have this right?
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: mo on August 29, 2013, 11:00:00 PM
Post by: mo on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Post by: TravelingPennies on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: Dennis on August 29, 2013, 11:00:00 PM
Post by: Dennis on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: core on August 29, 2013, 11:00:00 PM
Post by: core on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: Fred on August 29, 2013, 11:00:00 PM
Post by: Fred on August 29, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: brycemason on August 29, 2013, 11:00:00 PM
Post by: brycemason on August 29, 2013, 11:00:00 PM
Interested in your valuation, Fred. In fact, it might be fun to have a LendAcademy Forum LC IPO Valuation / Offering Price Thread.
Title: Do I have this right?
Post by: TravelingPennies on August 30, 2013, 11:00:00 PM
Post by: TravelingPennies on August 30, 2013, 11:00:00 PM
So it's Saturday morning and it's the 9 AM (EST) feeding at LC. I've been watching a note that I was quick enough to grab, to monitor its progress to full funding. It's an E4, fits my criteria nearly perfect, and it being early Saturday morning on a holiday weekend, I feel lucky to have gotten this note before the whales devoured it. I was very quick to nab it, literally seconds after it hit the platform, and sure enough, it had completely disappeared from the platform the second I rechecked for it, after I had made my purchase though. I then went to my cache of purchased notes and of course saw that it hadn't been fully funded yet even though it's no longer listed on the platform. When I clicked on that note to see what progress it was making, I noticed that only 9 others besides me were lucky enough to get their hooks into it. Now this is a $14,600 note, so that seemed like very few investors for that size. Sure enough, it was only 4.28% funded, yet no longer available on the platform. I kept checking back on it to see its progress, 2 more had joined the ranks of ownership, now up to 5.14%, about 5 minutes after it disappeared from the public platform. So as I was jumping around to watch this note, it did resurface again on the platform - ah ha... it lasted about 1 minute there and I watched as a few more people jumped in, now up to 16.44% by 27 people. And then poof, the note was gone again. I checked my cache for that note again, 44 ppl on board, but now 52% funded. It then sat in my account for another 20 - 25 minutes, stuck at around that 52% mark until it finally fully funded with a total of 48 ppl. So exactly $7,000 (nearly half) of it sat unfunded from the very beginning until the end. I doubt there was a small investor grabbing that note, locking $7,000 of it out from the platform, and then finally funding it. To me it looks like there were 2 whales in this note and 46 small fish.
I've seen this same thing going on with $35,000 notes also, so its whales (institutions) in my opinion that are locking these notes out from the small investors. Only lucky (or maybe skilled) handfuls of small fish manage to get a bite of them. I have other notes in my cache waiting for issuance, large denomination notes, where only 20 ppl or so got their teeth into it. You have to be really fast these days when competing with these intuitions, especially when they seem to be playing dirty. So it seems the whales have not only been invading the pond, but they are dominating it and pooping in it. We need a new pond.
I've seen this same thing going on with $35,000 notes also, so its whales (institutions) in my opinion that are locking these notes out from the small investors. Only lucky (or maybe skilled) handfuls of small fish manage to get a bite of them. I have other notes in my cache waiting for issuance, large denomination notes, where only 20 ppl or so got their teeth into it. You have to be really fast these days when competing with these intuitions, especially when they seem to be playing dirty. So it seems the whales have not only been invading the pond, but they are dominating it and pooping in it. We need a new pond.
Title: Do I have this right?
Post by: rlv99 on August 30, 2013, 11:00:00 PM
Post by: rlv99 on August 30, 2013, 11:00:00 PM
So it seems the whales have not only been invading the pond, but they are dominating it and pooping in it. We need a new pond.
I'm for shooting the whales as we leave!!
I'm for shooting the whales as we leave!!
Title: Do I have this right?
Post by: TravelingPennies on August 30, 2013, 11:00:00 PM
Post by: TravelingPennies on August 30, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: TravelingPennies on August 30, 2013, 11:00:00 PM
Post by: TravelingPennies on August 30, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: rawraw on August 30, 2013, 11:00:00 PM
Post by: rawraw on August 30, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: Rob L on August 30, 2013, 11:00:00 PM
Post by: Rob L on August 30, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: TravelingPennies on August 30, 2013, 11:00:00 PM
Post by: TravelingPennies on August 30, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: cfb on August 30, 2013, 11:00:00 PM
Post by: cfb on August 30, 2013, 11:00:00 PM
This is actually simplifying note buying. Hit refresh from the drop time until you see the load of notes hit. Hit the filter, select all, add to order. Then look at the cart for 3 minutes and whatever doesn't go to 99%+ by then, remove because there's something wrong with it. Everything else that hits 99%/closing is usually a decent looking note.
Speed to the point of purchase is still a little bit of a problem, but all these nice autobuyers with heavy institutional money developing sophisticated filters really helps with the decision making.
Speed to the point of purchase is still a little bit of a problem, but all these nice autobuyers with heavy institutional money developing sophisticated filters really helps with the decision making.
Title: Do I have this right?
Post by: TravelingPennies on August 30, 2013, 11:00:00 PM
Post by: TravelingPennies on August 30, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: TravelingPennies on August 31, 2013, 11:00:00 PM
Post by: TravelingPennies on August 31, 2013, 11:00:00 PM
Sorry, but that hasn't been my experience lately. Most of the notes that fill or mostly fill within a minute or two look pretty good. Most of the ones that are still <65-70% after a minute or so have at least one wart on them. I still look at them, but I'm good with the vast majority of ones that go from release to closing in 90 seconds, and the ones that don't I usually don't care for either.
They're D-G notes, over 680 fico, no huge revolving debt (<35k), only credit card/debt consol/home improvement, working for 2+ years, no 'other' home ownership, no major derogs, no public records, make over 5k a month, payment close to 10% of the gross monthly income, 0 or 1 inquiry, credit line > 5 years, dti < 25 (preferably 20), no more than 2 delinquencies, and no 'spouse loans'.
Everything doesn't sell off right away either. I see ~40-75 notes that are all A or B with some issues or lower grades with lots of issues that are hanging around for a while. Interestingly, one note that was titled "Dallas Cowboys Rock!!!" filled halfway, then sat there for 2 days as non Cowboy fans were (I guess) turned off by the title, then the title changed and it did fill within the day. Wasn't a bad loan, but wasn't a great one either. I doubt the autobuys read and interpret the loan title, so it seems people are still well involved.
In fact (and I think I said this before), an analysis of what DOESN'T sell within 15 minutes is a good example of what not to buy. Low interest notes, lots of inquiries, high debt, lots of defaults, low fico's, no job length/employer, 10+ years of credit history with a low revolving balance and few lines of credit (spouse loan because the other spouse has crap credit), very low income, and small business loans.
They're D-G notes, over 680 fico, no huge revolving debt (<35k), only credit card/debt consol/home improvement, working for 2+ years, no 'other' home ownership, no major derogs, no public records, make over 5k a month, payment close to 10% of the gross monthly income, 0 or 1 inquiry, credit line > 5 years, dti < 25 (preferably 20), no more than 2 delinquencies, and no 'spouse loans'.
Everything doesn't sell off right away either. I see ~40-75 notes that are all A or B with some issues or lower grades with lots of issues that are hanging around for a while. Interestingly, one note that was titled "Dallas Cowboys Rock!!!" filled halfway, then sat there for 2 days as non Cowboy fans were (I guess) turned off by the title, then the title changed and it did fill within the day. Wasn't a bad loan, but wasn't a great one either. I doubt the autobuys read and interpret the loan title, so it seems people are still well involved.
In fact (and I think I said this before), an analysis of what DOESN'T sell within 15 minutes is a good example of what not to buy. Low interest notes, lots of inquiries, high debt, lots of defaults, low fico's, no job length/employer, 10+ years of credit history with a low revolving balance and few lines of credit (spouse loan because the other spouse has crap credit), very low income, and small business loans.
Title: Do I have this right?
Post by: TravelingPennies on August 31, 2013, 11:00:00 PM
Post by: TravelingPennies on August 31, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: Dennis on August 31, 2013, 11:00:00 PM
Post by: Dennis on August 31, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: cfb on September 02, 2013, 11:00:00 PM
Post by: cfb on September 02, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: Rob L on September 13, 2013, 11:00:00 PM
Post by: Rob L on September 13, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: TravelingPennies on September 18, 2013, 11:00:00 PM
Post by: TravelingPennies on September 18, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: core on September 18, 2013, 11:00:00 PM
Post by: core on September 18, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: Joleran on September 18, 2013, 11:00:00 PM
Post by: Joleran on September 18, 2013, 11:00:00 PM
Title: Do I have this right?
Post by: TravelingPennies on September 18, 2013, 11:00:00 PM
Post by: TravelingPennies on September 18, 2013, 11:00:00 PM
One more experiment this morning. I successfully added a $4,200 purchase of a $5,000 loan to my shopping cart (84% of the total loan amount). Did another; $3,000 on a $3,800 loan (79% of the loan). It appears there is no 75% rule enforcement when adding loans to the shopping cart via the web interface (or the max allowed % is > 84%). If you have enough money you can put whatever you want in there. Obviously I didn't buy the things and the 75% rule may be enforced later at purchase time; don't know about that (and don't intend to find out). Purchases using the API may enforce the 75% rule; I don't know.
Title: Do I have this right?
Post by: TravelingPennies on September 18, 2013, 11:00:00 PM
Post by: TravelingPennies on September 18, 2013, 11:00:00 PM