Print

[onthefence]

A tactic I have considered is to identify the bid rate of a portfolio swath, identify an additional criteria or two that has a relatively high impact on the default rate of that portfolio swath & only bid on those... but underbid the portfolio swath bid rate by a fraction.

In theory that should give me a better ROI than the prosper portfolios sticking the portfolio bidders with a higher percentage of losers & me with a higher percentage of winners for the given subset.

Of course that would all be based on the assumption that Prosper's ROI & default calculations are any where near accurate.  Personally, I suspect their ROI estimates are too high (& default assumptions are too low).  But I have yet to run through the complexity of their calcs to see where they might be off.  My gut says they are using data on loan sets that have not fully matured & are thus underestimating the default loss.

[RateLadder_com]

The data is thin and young...  I have said before that heisenberg is at work (here and here incase you don't belive me)...  But the calculations being made are the best you can do with the thin and young data....  I think they have to continually remeasure and adjust. 

[HollowOak]

The data is thin and young...  I have said before that heisenberg is at work (here and here incase you don't belive me)...  But the calculations being made are the best you can do with the thin and young data....  I think they have to continually remeasure and adjust. 

I'm not disbelievingly you. I'm just becoming more concerned with what Prosper is doing.

It's like trying to steer down a road that you've never been down before by looking in the rear view mirror.  We tend to believe the data that Prosper is presenting to us, but the fact of the matter is that the data are not concrete data but observations on a rapidly evolving portfolio.

It's open, it's transparent and it's dangerous to those who believe in the numbers that Prosper is touting.

[RateLadder_com]

The data is thin and young...  I have said before that heisenberg is at work (here and here incase you don't belive me)...  But the calculations being made are the best you can do with the thin and young data....  I think they have to continually remeasure and adjust. 

I'm not disbelievingly you. I'm just becoming more concerned with what Prosper is doing.

It's like trying to steer down a road that you've never been down before by looking in the rear view mirror.  We tend to believe the data that Prosper is presenting to us, but the fact of the matter is that the data are not concrete data but observations on a rapidly evolving portfolio.

It's open, it's transparent and it's dangerous to those who believe in the numbers that Prosper is touting.

I think dangerous is a little strong, but clearly this is lender beware.  The adjustments have to come rapidly. 

In addition there are macro conditions at play in the market so even if the data was old and thick the savvy lender will still need to beware...

I have less concern becasue I see the worst case as a point or two in overall portfolio plan ROI.   

[nonattender]

In effect, I'm asking whether Heisenberg's principles of uncertainty applies to Prosper portfolios. Will their mere existence alter the marketplace to the extent where the Portfolios cannot deliver what they are said to deliver?

http://www.prosper.com/groups/group_home.aspx?group_short_name=paradox

in other news, you bought your wife the feynman lectures - and then stole them - right hollowoak?

-t

[HollowOak]

In effect, I'm asking whether Heisenberg's principles of uncertainty applies to Prosper portfolios. Will their mere existence alter the marketplace to the extent where the Portfolios cannot deliver what they are said to deliver?

http://www.prosper.com/groups/group_home.aspx?group_short_name=paradox

in other news, you bought your wife the feynman lectures - and then stole them - right hollowoak?

-t

With my memory? LOL.

[GLeaderAccountantsChoice]

Anyone using PMI's portfolio plan is probably being lazy.  It's PMI's lender friendly way of ensuring sales volume.  Design your own SO's if you give a damn.  Geez...

[mothandrust]

Lender guidance only helped those who weren't already using the performance utility.

It would be like the Nasdaq or NYSE showing investors an expected ROI before they bought a penny stock.  It would discourage some of them from buying them, and create more demand for stocks above $5/share, driving down their price for investors that already knew to avoid penny stocks.

Some lender who was going to bid on an E sees that his expected ROI is -1.05% and decides to bid on the 0/0/0 B that you were bidding on, driving down the interest rate.  Pro-lender my foot.

Prosper had quite a laundry list of items that many lenders were asking for, and they introduced a "feature" that no lender was asking for. 

If Prosper wanted to make a pro-lender change, they could have done a number of things.  Instead, John Witchel gave us "lender guidance" which lowers the ROI of experienced lenders.

[GLeaderAccountantsChoice]

Some lender who was going to bid on an E sees that his expected ROI is -1.05% and decides to bid on the 0/0/0 B that you were bidding on, driving down the interest rate.  Pro-lender my foot.

Prosper had quite a laundry list of items that many lenders were asking for, and they introduced a "feature" that no lender was asking for.

If Prosper wanted to make a pro-lender change, they could have done a number of things.  Instead, John Witchel gave us "lender guidance" which lowers the ROI of experienced lenders.

Don't worry monthandrust.  PMI also manages to somehow encourage experienced lenders to stop bidding through some of their other brilliant schemes, thus helping to keep the money pool down in other ways...

[Mark12547]

Lender guidance only helped those who weren't already using the performance utility.

The average funding interest rates have already gone up for some credit grades, which helps everyone who bid on those credit grades, not just those who were ignoring default rates until the bid advisory came about.

[patio11]

The rate on the clean Cs and clean Ds I generally look at has gone up, substantially, since lender guidance went into effect.  As a matter of fact, the bid I made (but not the APR I ended up walking away with) on my most recent loan had negative guidance and I had to repeatedly click through "Yeah, yeah, I get you, you think I'm stupid" to put $92 on a 0/0/0 D at 15%.

That being said, I'm now looking at the listing going "Oh, crikey, what was I thinking."

[mothandrust]

The average funding interest rates have already gone up for some credit grades, which helps everyone who bid on those credit grades, not just those who were ignoring default rates until the bid advisory came about.

In fact I have a poll about what the reason is for average, non-autofund A-E interest rates being at an all-time high on Prosper.

A large percentage of lenders here attribute this to the Lender Guidance (as you did), but the rates did not start ratcheting up until the old forums were deleted and replaced with the ubermoderated forums.

Eliminating the forums did reduce "turd polishing" and left new lenders with nothing useful to educate themselves (unless they stumbled across .org or prosperreport).  It also removed the ability for borrowers and lenders to discuss loans, which of course is going to drive up the rates.  You would think John Witchel would have figured that out before taking action.