tag:blogger.com,1999:blog-8640124200738341323.post1098175225604181278..comments2022-12-03T11:06:58.347-08:00Comments on Pinch That Penny!: Does Lending Club Advocate the Martingale System?Bryanhttp://www.blogger.com/profile/00342626581389843861noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-8640124200738341323.post-525448758659716232012-06-14T17:12:56.001-07:002012-06-14T17:12:56.001-07:00Lending Club should be a long term investment in m...Lending Club should be a long term investment in my opinion. Put $20k in to start. If you don't have that much, forget about it. Then, as monthly payments are paid, take the payments and reinvest... over and over and over again. Go way beyond the 800 notes that $20k provides and TRUELY diversify. Do this year after year after year.<br /><br />If you look at it from that perspective then you will most likely see amazing returns. But if you have little money, find a more stable investment. Like you said, just one default can screw over a $500 investment... it's just too risky if that's all the money you have to invest.<br /><br />In my opinion, Lending Club investments benefits the rich the most because it allows for vast diversification that counters the defaults. Like a bank.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8640124200738341323.post-40653510946768492952012-03-03T02:51:42.255-08:002012-03-03T02:51:42.255-08:00Martingale system involves doubling your bets to b...Martingale system involves doubling your bets to break even. Not making more bets to reduce variance. The proof that Lending Club has a positive return is that the more notes invested insures positive return. You can not find a single game like this in a casino with standard house advantage over 800+ bets and ensure 0% loss rate. <br /><br />If you understand gambling then you will understand the concept "risk of ruin" which is the odds you lose all your money. By investing in $25 notes over 5,000 the risk of ruin is 0.0000090%. What Lending Club did was extend this out to risk of making no return. The point that happens is approximately 800 notes or 20k of $25 notes. The approach of having hundreds of notes to reduce risk yet have a constant high is a strategy used with junk bond investing as well as index funds like the S&P500.Michaelhttp://socialbanker.tumblr.com/post/14233773046/risk-reduction-strategynoreply@blogger.comtag:blogger.com,1999:blog-8640124200738341323.post-8510159623088206582012-03-02T11:41:31.522-08:002012-03-02T11:41:31.522-08:00Also, Lending Club is for patient, careful people ...Also, Lending Club is for patient, careful people who will spend the time to consider even a $25 investment a 'big deal'.<br /><br />You need to have a set of criteria that means something to you, identify loans which mean that criteria, and only invest at $25 or $50 at a time, to limit your exposure. [at least, limit it to small investments like that while you are building up a portfolio].<br /><br />$5k invested with $25 individual notes is pretty diversified. I think if you do your homework, and come up with reasonable strategies for investing, you can expect to not lose money. 200 different individuals to invest in spreads out the risk among many people.<br /><br />If you are going to get frustrated and just invest all your money in one person because you have a good feeling about them, I would say that lending club is not for you then. :)Timhttps://www.blogger.com/profile/04331585253756411520noreply@blogger.comtag:blogger.com,1999:blog-8640124200738341323.post-13736888818443848482012-02-25T09:35:50.981-08:002012-02-25T09:35:50.981-08:00Here is the link to that post. It's a ways dow...Here is the link to that post. It's a ways down by me "credit crunch."<br /><br />http://www.fatwallet.com/forums/finance/1166363/Captain Credit Crunchhttps://www.blogger.com/profile/14853217009496404014noreply@blogger.comtag:blogger.com,1999:blog-8640124200738341323.post-31882960833574008072012-02-25T09:32:42.855-08:002012-02-25T09:32:42.855-08:00The parallel is just superficial but not mathemati...The parallel is just superficial but not mathematically equivalent. In the Martingale example, you have an equally likely chance of winning with each hand you play, but the stakes continue to increase. When building a portfolio, adding another loan makes the entire portfolio MORE likely to achieve the average charge off rate (i.e. profitable) because the variance of the portfolio is reduced as its size increases. Plus, your additional capital is the same as it ever was, $25. I made a nice post on fatwallet.com that outlined the math behind the 100, 200, 400 thing.Captain Credit Crunchhttps://www.blogger.com/profile/14853217009496404014noreply@blogger.comtag:blogger.com,1999:blog-8640124200738341323.post-11721930804146861792012-02-24T21:36:47.406-08:002012-02-24T21:36:47.406-08:00If you equate Lending Club to gambling then I can ...If you equate Lending Club to gambling then I can certainly see the parallel. But let's be clear here - Lending Club are making no promise of assured positive returns - they are merely pointing to historical returns something that most asset classes do.<br /><br />I have never seen the argument that people should double down if they are losing money. But if you are investing in 10 notes and have had two defaults that is hardly indicative of the success of p2p lending. You really are gambling if you invest in so few notes.<br /><br />I always tell people if you really want to give p2p lending a serious try you need $5,000 - this will give you 200 notes and with a common sense investment strategy you should generate positive returns. But of course, there is no guarantee with that and people who are concerned they may lose principal should stick with FDIC insured investments.Peter Rentonhttp://www.sociallending.netnoreply@blogger.comtag:blogger.com,1999:blog-8640124200738341323.post-78037097103305783472012-02-24T09:35:25.079-08:002012-02-24T09:35:25.079-08:00Yeah, Lending Club is an interesting idea. I'...Yeah, Lending Club is an interesting idea. I've been spending a good amount of time looking into it to see if I can make money with it, and I've been tentatively investing small amounts. Others have had success with it though, so I'm hoping I can too.Bryanhttps://www.blogger.com/profile/00342626581389843861noreply@blogger.comtag:blogger.com,1999:blog-8640124200738341323.post-66349265392914879572012-02-24T06:22:05.651-08:002012-02-24T06:22:05.651-08:00Interesting! I've never even heard of the lend...Interesting! I've never even heard of the lending club.Daisyhttp://add-vodka.comnoreply@blogger.com