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[bookwyrm]

From that report  . . . .

“The Ebay of Loans.”
- Forbes (March 2007)

Maybe, with the news about the possible lawsuit, lenders have decided that "Ebay of Loans" meant that sometimes that thing they bought was just an empty box,  they've lost hundreds of dollars on a seller that was "top rated," and there's nothing they can do about it?

I can't see why that would drop off participation, unless, say, a third of the product is empty boxes.  Like Fred93's lovely graphs show.

[NewHorizon]

BTW, speaking of...

it's the result of direct advertisement and much more targeted marketing.

Is it me, or has Prosper been a lot quieter, marketing-wise, in 2008 than prior years?

[bamalucky]

Previous years relied mostly on free fluff.Now they are having to pay for it.

[big-al]

BTW, speaking of...

it's the result of direct advertisement and much more targeted marketing.

Is it me, or has Prosper been a lot quieter, marketing-wise, in 2008 than prior years?

I've gotten a lot more email spam from them this year than previous years.  If they think that's all it's going to take to woo me back, they're sadly mistaken.

[112233]

BTW, speaking of...

it's the result of direct advertisement and much more targeted marketing.

Is it me, or has Prosper been a lot quieter, marketing-wise, in 2008 than prior years?

they started TV ads and seem to be focused on institutional lenders. perhaps they are going after different markets.

[nonattender]

@ NA

I think the key observation to be made is that thousands of new registered lenders are signing up every month, yet, as you say, the number of active lenders has been relatively flat.   How should we interpret that?

Through this lens:

That the nature of investment in individual Prosper loans (at least, "purely by the numbers" ) is that new lenders get excited about the concept, invest initial funds, learn/deploy those funds - and then realize that they won't "know how they're doing" for 30 some months.

(In fact, HollowOak did some great work early on documenting "generations" of lenders, by month, and showing this behavior explicitly.)
(Yes, I am sure that there are some who take an early late and get scared - and those who realize their early 25% gain is not certain.)

So, as far as lenders go, I definitely think that there's a "fresh crop" of newbie lenders each month, and I think that will continue, until
there are meaningful statistics for not only the marketplace, but for many of the lender-targetable borrower loan criteria tranches, too.

Aggregate market statistics only "matter" to the degree that any one lender "buys the market", rather than investing in individual loans.
Some people seem to be laboring (in the forums anyway) under the notion that Prosper is a mutual fund, rather than a lending platform.

This is kind of broader in scope than what you asked exactly, but I think IDF provided a very nice, very readable explanation for that...
"If you can make the same sales with half the customers, you are doing fine."  I'd imagine there's a considerable cost-savings to it too.

-t

[bamalucky]

There's plenty of meaningful statistics already

and then realize that they won't "know how they're doing" for 30 some months.

This is just a stupid statement.It' doesn't take nowhere near 30 months.The average lender quit time is around 6 months.

[112233]

for some reason, "same store sales" popped into my mind

.. anyway, carry on as you were

[nonattender]

and then realize that they won't "know how they're doing" for 30 some months.

This is just a stupid statement.It' doesn't take nowhere near 30 months.The average lender quit time is around 6 months.

What is thirty-six minus six?
This is a rhetorical question.

-t

[ira01]

So, as far as lenders go, I definitely think that there's a "fresh crop" of newbie lenders each month, and I think that will continue, until there are meaningful statistics for not only the marketplace, but for many of the lender-targetable borrower loan criteria tranches, too.[/quote

There are plenty of "meaningful statistics" already.  That is not the problem.  The problem is that the "fresh crops of newbie lenders" get sucked in by a combination of greed (wow, why should I leave my money in 4% CD's, when I can earn 35% at Prosper?) and Prosper's false advertising, helped out by a stream of newspaper/magazine/blog fluff pieces spouting the Prosper party line ("Prosper's net default rate is only 3.86%, as you can see on the performance page" -- neglecting to mention that Prosper stopped defaulting loans more than 7 months ago).  Then by the time they discover .org (or see for themselves how things really work), they're already well on the way to Prosper's median lender performance of 2.5% (or worse).  That's why it is so important to do what we can to publicize the truth about Prosper (unless you take the position, as you apparently do, that its every man for himself, and to hell with the newbies as long as enough suckers keep signing up to keep Prosper afloat long enough for you to get your money out). 

[DakotahFury]

That the nature of investment in individual Prosper loans (at least, "purely by the numbers" ) is that new lenders get excited about the concept, invest initial funds, learn/deploy those funds - and then realize that they won't "know how they're doing" for 30 some months.

(In fact, HollowOak did some great work early on documenting "generations" of lenders, by month, and showing this behavior explicitly.)
(Yes, I am sure that there are some who take an early late and get scared - and those who realize their early 25% gain is not certain.)

Help me out here...if the natural cycle is for people to deploy funds (for 6 months as you indicate to bama) and then monitor for 30 months...will they then begin lending again if they are satisfied at that 30-36 month point? Do you have examples of it happening where people begin to lend again after such a prolonged dormancy?

Considering that Prosper didn't begin to generate any number of significant loans until Feb/Mar of 06...the marketplace itself only has an age of just over 30 months. How can you come to the conclusion that is the "natural cycle" for Prosper investments when the market place isn't even old enough to demonstrate such a cycle?

Aggregate market statistics only "matter" to the degree that any one lender "buys the market", rather than investing in individual loans.
Some people seem to be laboring (in the forums anyway) under the notion that Prosper is a mutual fund, rather than a lending platform.

This is some of the goofier analysis I have seen in awhile...
Of course aggregate market statistics matter. If it didn't, the entire business model bases itself on people's belief that they can beat the odds...do better than the average. The wobegon effect. Is that what PMI is going to hang its hat on? I certainly hope not. Experienced investors often realize that it's foolish to try to beat the average...especially when you'll have to (at least) double the market average in order to make it a rational investment, which is the case with prosper.

Prosper simply MUST find a way to increase aggregate market-level returns. They simply won't survive as an investment vehicle if they don't. You won't attract a significant number of sophisticated investors with deep pockets unless they have reason to believe that they can achieve good results.

This of course, is assuming that prosper is going to continue to sell itself as an investment to lenders. If you want to label it as something else, then fine...

[xraider]

DF, I like to take advantage of the income tax deduction when I make charitable donations.....

[loanauctions]

It doesn't help much that of Prosper's 844,000 members, only 18,000 are active bidders.

It also probably doesn't help much that of Prosper's $164M in loans, $7.5M have officially defaulted, $10M are 4+(++++++) Late, and $5M are 1-3 months late.  That's $22.5M 1 month late or worse, or 13.7% of every dollar originated.  And that percentage is really even worse, since I didn't bother to back out the loans that originated too recently to have gone late yet.

[idf]

Prosper simply MUST find a way to increase aggregate market-level returns. They simply won't survive as an investment vehicle if they don't. You won't attract a significant number of sophisticated investors with deep pockets unless they have reason to believe that they can achieve good results.

I'm not sure I agree.  What market level returns are you talking about?  Beating Propser's average?  Bank CD's?  The stock market?

I think you are talking about a return which will create dimimishing returns.  If a really good borrower (market savvy and aware) comes to Prosper and tries for a loan and gets a bad rate, for example AA for $2k @ 15%, then they are going to cancel the listing and go somewhere else.  They could even do better with a credit card!  So you are left with false-positive AA's in trouble willing to take anything, might as well lend to an HR in that case because a mortgage default is around the corner.

Are you going to go after the riskier loans @ higher rates to beat the average?  That has proven not to work so well unless you are lucky.  People dont often pay the $$ back which causes lots of lenders to quit.

In both cases, there is diminishing return... as the rate a borrower is willing to pay goes up, so does the risk no matter what credit grade.  So for me it would be logical to go after the most savvy borrower... but that means a lower return.  I guess it does!  And you know what, I can live with it as long as my money comes back.  And I am doing well compared to other markets in the process.

...And I would bet that would be true for many more lenders.  There would be fewer disgruntled and bitter folks here that swung for the fences, and in general fewer quitters, more money cycling back, attracting more savvy borrowers to the marketplace getting good value on their need for a loan.

In the end, its our own greed to blame, imo.  All of us had the delusion of grandeur at some point but the reality is that the best way to make a good return is to lend to the smartest, safest people.  So what if that means a 2k loan at 7%, a 10k loan at 11%?

I've fallen into the greed trap.  Early on it was big returns or bust, but I have modified my thinking.  I've switched to less risk and a higher likelihood of return.  I might occasionally take a risk on an E or HR but only when I really think they will pay.  Otherwise, I think I do myself and Prosper a favor investing in those that deserve it.

If we all funded those that deserved it instead of swinging for the fences, we'd have a fraction of those complaining because while there are collections issues, etc, they were not created by Prosper, they were created by our own greed and wish to beat the market or other lenders. 

[AndyAtlanta]

In the end, its our own greed to blame, imo.  All of us had the delusion of grandeur at some point but the reality is that the best way to make a good return is to lend to the smartest, safest people.  So what if that means a 2k loan at 7%, a 10k loan at 11%?
...
If we all funded those that deserved it instead of swinging for the fences, we'd have a fraction of those complaining because while there are collections issues, etc, they were not created by Prosper, they were created by our own greed and wish to beat the market or other lenders. 

I have found a lot of B/C/D borrowers who are willing and able to pay 18-20% for a loan that will allow them to retire 30% credit card debt.  The overwhelming majority of my loans are current.  I can generally find attractive borrowers at 15% or higher.