Peer to peer lending is a unique for many reasons, but one that is often overlooked in my opinion is the cash flow both LendingClub and Prosper accounts provide. As I touched in a recent post about the complaints of peer to peer lending, liquidity is one of the biggest complaints. I offered a counterpoint that the short duration of peer to peer lending investments make them relatively liquid. If you’re wanting to be able to cash out your entire account instantly, peer to peer lending probably isn’t for you – at least for now. I imagine we will see some improvements in liquidity in 2015, but for now – it is slow in, slow out.
Yesterday was an incredible day for the peer to peer lending industry as LendingClub went public. It surely has brought attention to a new way of investing that I have been involved with for a year and a half. There has been a substantial increase in articles about LendingClub which will only expand the investor and borrower base. The most exciting article for me is below, where I was mentioned in the Wall Street Journal:
In this post, I’ll outline how I handled the shares of LendingClub stock I was allocated. Please feel free to share how you fared in the comments.
Filter investing is great, but it also takes time and has some downsides. It used to be that simply filtering out loans that didn’t have 0 inquiries in the last 6 months yielded much higher returns. This still may be true to an extent, but filtering on any one criteria is like chasing a moving target. Lending Club and Prosper have the data just like we do and they do their best to set rates appropriately. There is no doubt that they will continue to do better over time. So what if you could invest based on machine learning which adjusts over time? Enter PeerToPeerQuant. [Read more…]
If you’re an investor in Lending Club, you likely recently received an email about Lending Club’s new REST API. If you aren’t familiar with the term API, it basically allows third parties to create a computer program that connects to your Lending Club account. The most important function is the ability to submit investment orders on your behalf, but the new API will allow these third parties to access additional data. Regular readers know that I’m a big proponent of automated investing – in particular those services offered by third parties. The changes to the new API will have a positive effect on the third party tools as well as your user experience. Below, I provide some additional thoughts as well as those from a developer at LendingRobot. [Read more…]
Q3 of 2014 continued the trend of returns over 10% in both Prosper and Lending Club. I now have nearly $22,000 invested between Lending Club and Prosper. I recently stopped adding to my Lending Club account, which means I’m continuing to increase my average age a lot faster. (It’s currently at 7.8 months even though I’ve been investing for more than a year.) Besides small deposits to my Prosper account, I’m not making anymore substantial additions to my allocation to this asset class. This is simply due to the fact that I want to keep my allocations reasonable across all of my investments. Now to the fun part… [Read more…]
The Lending Club collection log is full of standardized updates to let you know the status of the note you purchased. Below you will find a list of all the entries that I have seen. If I am missing any, please feel free to leave them in the comments and I will add them to my list. Additionally, you can read about how Lending Club deals with delinquent borrowers and the regulatory guidelines for dealing with borrowers. [Read more…]
In mid September, Lending Club added a returns section titled ‘Traded Notes’ for investors. This feature gave all but the most serious traders an accurate number of what their returns are with FOLIOfn (Returns aren’t calculated over 100%). This is a welcome change as up until this point, you were on your own calculating returns – which is no small task. Since both traded notes and notes bought at issue are combined in your account value, tracking every note was necessary to calculate returns. Back in June, I featured a guest post from New Jersey Guy and his Penny Note Strategy. (You can see all of the content he has contributed to PSL here) I have purchased over 200 notes using this strategy and although all notes aren’t completed, I have a more accurate idea of my returns and whether I should continue buying notes using this strategy.
I apologize for the delay in my second quarter 2014 returns as the summer has changed some of my priorities. When you live in Wisconsin, it is important to take advantage of the nice weather while it lasts. My returns have slipped .85% from the last time I checked in April 2014. Since I have used FOLIOfn to buy notes for the penny note strategy, I rely on XIRR in order to calculate my returns. My strategy has remained about the same except for the small hiccup which affected P2P-Picks. Instead of letting my cash sit idle, I simply created a higher volume filter in Nickel Steamroller. I still keep an eye out for notes on FOLIOfn, but it is time consuming and I already have about $2500 worth of notes purchased. [Read more…]
There has been quite the discussion brewing over on the Lend Academy Forum about a recent change from Lending Club. I think it’s important to point out this recent change as they affect some of the third party tools that I feature on the blog. In a nutshell, the change is that instead of tools being able to constantly get up-to-date data from the CSV file right at release time, it is now only updated once every minute. For those that don’t know what a CSV file is, it is simply a text file which includes organized data – in this case all of the available loans. You can read other forum member’s thoughts here. What does this mean for third party tools? In the case of P2P-Picks – a lot.
Note: This is a guest post from New Jersey Guy, who currently only invests through FOLIOfn – the secondary market for Lending Club. He implements several FOLIOfn strategies, some of which he outlined in his last posts (4 part series) on Peer & Social Lending. This is a continuation of the post from Lend Academy about his penny note strategy. Below New Jersey Guy gives a little more detail into this particular strategy. Please keep in mind that this information is not investment advice, just the opinion and perspective of one investor. Thanks to New Jersey Guy for another fantastic guest post!