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[Urbi_et_Orbi]

Nothing quite like projecting returns 3 years into the future...   

[HollowOak]

Nothing quite like projecting returns 3 years into the future...   

When the actual evidence of past performance would indicate otherwise.

Perhaps someone should use a cluebat to point out to Kyle what the initial Prosper projections weere and how that turned out for lenders.



Wait, wasn't that JZ's cluebat?

[DakotahFury]

I give credit where credit is due...Kyle has a wicked cool bowl haircut.   

[Urbi_et_Orbi]

DISCLOSURE OF MATERIAL CONNECTION: Based on personal use of the service and an interview with CEO Chris Larsen

So, will Chris Larsen do individual interviews with ANY community member with a blog?   

Also, in the interest of full disclosure, perhaps Kyle should share his Prosper user name?

[Beerbud1]

Kyle looks like he is 18 years old. I clicked on his name and he lives in Naperville, Il.

[Beerbud1]

Bio:
I am currently attending Indiana University in Bloomington majoring in accounting and business.

[Urbi_et_Orbi]

Kyle probably feels pretty cool getting to interview the head of Prosper.  Unfortunately, he's probably too star-struck, timid and inexperienced to be able to ask tough questions or critically evaluate the answers he is given in order to ask meaningful follow-ups.

Other than that, it's nice to see Larsen take the time to speak with 18 year old bloggers.  It's not like he has anything pressing going on at Prosper HQ.

Perhaps he will also do an interview with Fred93 for his blog?

[bamalucky]

I'm ready to do an interview at any time for my blog

http://www.prospers.org/blogs/bamalucky

[Mtnchick]

Perhaps he will also do an interview with Fred93 for his blog?

If we had a "thumbs up" smiley, this would earn it

[God-Father]

[God-Father]

[The_Cat]

Kyle defending his journalistic integrity in the comments section:

The 9.52% is an estimated return based on the lender yield and the estimated loss of notes issued from July 15 to September 30 of 2009. For additional information see: http://www.prosper.com/welcome/marketplace.aspx Prosper did run into some legal issues, but they are now SEC approved

The SEC doesn't "approve" any investment. They are now simply registered. Surely Larsen didn't say THAT! That claim alone would be enough for someone to take legal action.

[Urbi_et_Orbi]

Larsen has realized that the only way to get his message out unfiltered is to get help from timid 18 year old bloggers with no subject matter knowledge.

[mothandrust]

Prosper keeps advertising that "lenders" can earn 6-14% returns, but which lenders are these?

Eric's Credit Community has a nice utility that spits out a bell curve of actual lender returns, showing the mean to be at -2.33%:

http://www.ericscc.com/stats/lender-return-distribution

I like to screen for lenders that have 20+ loans, but that puts the mean at -2.52%, and for 70+ it's -2.65%, so that's what diversification gets you.

[God-Father]

If their ads said that negative ROI are likely, they probably wouldn't get much new business.  I am no longer a Prosper fan, but I am sure they are using statistics to be able to claim (and probably justify) that this is not fraud.  They clearly looked at some undisclosed set of past loans (based on Prosper 3.0 criteria) and extrapolating that data to come up with this "supported" ROI projection.  

I would bet strongly that the mean Prosper 3.0 ROI will be very near or below 0.  Since Prosper has changed their grading criteria and put in rate floors, the ROIs have likely changed (either up or down).  IMHO we won't be able to reasonably claim that we are we can predict the results 3.0 loans ROIs until we have a few months of default information to see how they compare to earlier loans.  If this data indictations the same miserable results, Prosper will use the same story as RP.  They will claim that you can't really know the final ROI until 3 years have passed.  If they are still around in 3 years, the strategy will have worked, bonuses will have been paid, and .org will likely have many new members.