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Author Topic: Prosper workaround to allow lenders in all states  (Read 136802 times)

Urbi_et_Orbi

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Re: Prosper workaround to allow lenders in all states
« Reply #15 on: July 12, 2011, 10:34:31 pm »

He sounds like a perfect match with Prosper.  :ninja:
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Mothandrust: "Why's he off the ballot in Colorado but it's OK for the other 48 states and Hawaii to vote for him"
https://www.prospers.org/forum/index.php?topic=37264.msg807090#msg807090

wftrust

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Re: Prosper workaround to allow lenders in all states
« Reply #16 on: July 22, 2011, 03:01:36 pm »

I think I would get more pleasure setting fire to my money. And I would be helping in controlling inflation. Question is would burning US dollars help the national debt?

Probably a retorical question. But look at a dollar, it is already debt. It is a Federal Reserve NOTE big words a the top. What do they promise to pay that debt back in? Why of course more dollars. So burning it does NOT reduce US Treasury debt, but it does reduce the debt of the Federal Reserve. So who were you trying to help?

EDT: NOT at an important spot  ;)
« Last Edit: July 25, 2011, 04:44:38 pm by wftrust »
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Urbi_et_Orbi

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Mothandrust: "Why's he off the ballot in Colorado but it's OK for the other 48 states and Hawaii to vote for him"
https://www.prospers.org/forum/index.php?topic=37264.msg807090#msg807090

ira01

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Re: Prosper workaround to allow lenders in all states
« Reply #18 on: October 29, 2011, 05:26:22 pm »

This guy is now a guest-blogger for Prosper:

http://blog.prosper.com/2011/10/28/using-consumer-debt-to-increase-income-while-reducing-risk-guest-blog/

What an unbelievable moron this guy is.  Let's look at one of his especially moronic comparisons in that blog post:

Quote
US Government bonds +13.32% (VFITX)

Prosper notes -3.36% (all notes issued in 2008)

High yield bonds -21.29% (VWEHX)


Preferred stocks -29.79% (VCVSX)

REITs -36.98% (VNQ)

S&P 500 -38.49%

Prosper’s losses, when looked at in the context of what was happening in 2008, are frankly excellent. At first, the normal assumption about high risk and defaults in this type of a loan are the main concern, and rightly so. Notes issued during 2008 had a charge off rate of 22.65%! What everyone forgets to look at though is the actual interest earned which came in at 19.29%.  Still a loss, but nowhere near the loss rates I have heard some people talk about.

While no one likes to lose money, losing a net of 3.36% in one of the worst financial years in living memory is nothing less than impressive. In fact my average wealth management client lost 14% in 2008 and I was justifiably proud because most planners saw losses from 20% to 40% that year.

So for 2008, he compares Prosper (-3.36%) to (among other things) Vanguard's High-Yield Corporate fund [VWEHX] (-21.29%), and (using a common Prosper error in analysis) concludes that Prosper's performance was "frankly excellent."  Here's the rest of the story:  2008 was VWEHX's worst year ever.  But guess what happened in 2009?  It was VWEHX's BEST year ever, with a return of 39.09%.  VWEHX Performance  So someone who invested $100 on 1/1/08 lost 21.29% in 2008, giving him $78.71 on 12/31/08.  And then he made 39.09% on that money in 2009, giving him $109.48 on 12/31/09.  That is an annualized two year return of more than 4.5%.  And in 2010 VWEHX returned another 12.4%.  So that VWEHX's investor's $100 investment is now worth $123.06 on 12/31/10, a 3-year gain of 23.06%.  That is an annualized return of 7.2%.  

So how did those 2008 Prosper loans fare over time?  As anyone giving the matter a second of thought would realize, terribly.  And why is that?  Because unlike VWEHX (or any mutual fund of bonds or stocks), once a Prosper loan defaults, it is basically worthless forever (sure, there are a smidgeon of "recovery" payments, but those don't amount to much).  So a bad Prosper investment NEVER bounces back -- unlike "real" investments, such as VWEHX (which followed its worst year of 2008 with its best year of 2009).  So what was the actual, annualized ROI for Prosper's 2008 loans?  -2.61%.  

So let's recap, shall we?  The person who invested in VWEHX on 1/1/08 and left his money there for 3 years wound up with an annualized return of +7.2%.  The person who instead invested in Prosper's 2008 loan portfolio and left his money there for 3 years wound up with an annualized return of -2.61%.  Now unlike Mr. Jordan, I have never "been featured with Maria Bartiromo on CNBC and on many other financial broadcasts as well as being quoted in the Wall Street Journal, Forbes and other top financial publications."  But I'm pretty sure that +7.2% handily beats -2.61%.  Furthermore, I'm quite sure that comparing an investment losing 2.61% annualized for three years with one gaining 7.2% annualized over the same 3-year period, and calling the performance of the former "frankly excellent" compared to the performance of the latter is "frankly idiotic."  

ETA:  So what are the chances that Prosper will approve a comment to the blog post asking how VWEHX fared in 2009, and how that compares to Prosper?  

It is this kind of misleading claptrap that the SEC ought to severely punish Prosper for disseminating.
« Last Edit: October 29, 2011, 05:34:18 pm by ira01 »
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pioneer11

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Re: Prosper workaround to allow lenders in all states
« Reply #19 on: October 29, 2011, 07:29:31 pm »

This kind of thinking makes keeping your money under the mattress also frankly excellent.
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havastat

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Re: Prosper workaround to allow lenders in all states
« Reply #20 on: December 13, 2011, 07:23:04 pm »

Doesn't seem to be much of a serious around. The fees, for example.
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