As per my follow-along discipline, I have examined the facts of the matter for the 4th Quarter and year 2009 and compared my portfolio to yours. Our portfolios are roughly equal in size and age. Our portfolios are both static, I can't bid, you are not bidding. So we have a relevant set of results for two bidding styles that were pretty much at odds with each other.
Research ole' buddy, you can crow XIRR 2.46% all ya want but the sad facts are, you have a
LOSS of —6.49% for the year. Meanwhile my portfolio that is way too concentrated and sorely lacking the quantity of loans you insist are needed for proper diversification…. turned a
PROFIT of 14.24%.
We both saw our dollars invested decline by about $1,700 during the year. I experienced a surprising number of pay-offs. You endured a surprising number of charge-offs. I had $1,559 return of capital, lost $162 to charge-offs (better than 9/1 ratio). You had $946 return of capital and lost $783 to charge-offs (didn't quite manage a 6/4 ratio). I enjoyed $186 income in excess of losses. You had a $140 loss in excess of income. This disparity is despite you set up your portfolio to demand 31% interest from many borrowers weighted "C" on average. Mine only asked 27% from a few borrowers who rated little better than "E" on average.
I feel obligated to do a little crowing about who's approach to P2P lending has worked. The facts here certainly vindicate my argument in the lively discussion we had in
DIVERSIFY FOR SAFETY .. but .. AVOID OVER–DIVERSIFICATION.
Here's wishing us all good success in 2010, lenders and borrowers alike!
Unfortunately, your performance with that number of loans you have is pure luck. Which is good in your case, but which is terrible in a number of other cases. Just take a look at bama's portfolio:
http://www.ericscc.com/lenders/Bamalucky/loans?sort=7&p=1 .
So I wish you to have no more defaults at all, but I'll warn anyone against following your example of non-diversification.
Take this guy for example:
http://www.ericscc.com/lenders/personmostknowledgable/loans?sort=7&p=1He is #1 by ROI. But it's all about a bet on 2 high amount loans. Maybe they will pay and he will be ok. But if not, he will go red right away.
So this is still possible when playing with a couple of thousand bucks, but is never good with a serious investment.
