You can fully automate investment 'filters' i.e. filter the notes you're willing to invest or not.
138 karma · joined April 23, 2012
Happy to hear/talk about methodology if you want to write/talk about it.
Let me address your methodology comments nonetheless, which are for the most part unfounded.
* I don't have any finding about annual income. I don't think it is mentionned anywhere in my conclusions.
* "delinquencies and public records has a big impact on returns as newer loans are not aged enough": because I average across vintage, and because I don't average based on volume on the platform, I account for the aging biais.
* "Time is not risk [..] kurtosis etc.": I don't say that time is risk. I suggest the reader to look at the return series through time. Essentially to look at the volatility of the returns ( without pronouncing the word volatility to keep the content accessible to a novice reader). I essentially encourage the reader to visually assess his Sharpe ratio. Which is a good universal risk measure.
* "reconsider average across vintage": averaging across vintage is a first approximation. I acknowledge the fact that a better methodology would be to take a weighted average that matches the amortization profile of a loan.
* I maintain that any statistics you compute in 2006, 2007 or 2008 is less reliable (statistically). Yes it is an important period to have because of the crisis. And this is why I put on the chart. However, you can't compute very reliable returns when you have a dozen of loans to average across.
Anyway, I happy to exchange with you in PM on methodology if you would like to continue the discussion
I think it does beat a C.D. from a risk/return perspective. It's probably higher risk than a C.D. but returns largely compensate for it I believe.
To me this is possible because the Lending Club is desintermediating a business that was traditionnally 'high margin'.
But I'd say that for starter, anything in the 8%-9% range is a very good deal these days in this environment
https://en.wikipedia.org/wiki/Constant_weight_apnea
Tribute to people who go deep into things ;).
Plans will depend on feedbacks I receive. If it generates enough interest I will develop the project into something bigger.
They made it public at some point. Now they are a little less transparent about it.
But some details can be found in their SEC prospectus.
I can link that up as well if you guys want.
Look at the 'A' grade. They're nice and safe intuitively, but in my opinion they're not a really good investment.
For the viz', yes I used DC.js, I can open source the .js if you guys want it.
Your job vulnerability, I think, is not only a matter of automation. It also a question of "commoditization". If you become a commodity, meaning that, if * what you do can be well described * your workflow can be well described * the tools you use are becoming standard * there is no real barrier for entering your field. Then, you'll lose very quickly any bargaining power and your 'salary' or 'margin' will decrease.
Technology, as it progresses, tends to commoditize 'producers', whereas usually 'distributors' are less vulnerable.
Could there be a bias in the data due to the fact that all the countries don't have the same usage rate of social medias ? Or just population density ? Or official statistics are the ones that are biaised...
Anyway, great work. Loved it.