INVESTING NOTABLE! Lending Club Investing: Good Passive Income Source? (Answer: NO)

[ljean]

I'd rather sell options and make 100X as much.

This can generate decent returns until vol skyrockets and you lose all your money. There is no way a retail investor can compete in this space against the quants & PhDs with billions of dollars in research and pricing models behind them.

 

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[G-Man]

This can generate decent returns until vol skyrockets and you lose all your money. There is no way a retail investor can compete in this space against the quants & PhDs with billions of dollars in research and pricing models behind them.

https://www.thefastlaneforum.com/co...-option-mega-thread.66398/page-24#post-585359

 

[ljean]

https://www.thefastlaneforum.com/co...-option-mega-thread.66398/page-24#post-585359

That link isnt working for me.

 

[fandeuler]

I was recently reading this experiment about lending club and decided to share it because I saw this thread and thought it might help people that may be trying lending club themselves. The Lending Club Experiment

 

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[MJ DeMarco]

This can generate decent returns until vol skyrockets and you lose all your money. There is no way a retail investor can compete in this space against the quants & PhDs with billions of dollars in research and pricing models behind them.

(INSIDERS will get the joke.)

 

[jon.a]

That link isnt working for me.

It won't it's on the inside.
You have to be sponsored by 2 legends.
Have 10k rep points.
And 2k likes to join.
Well, I can wish

 

[G-Man]

It won't it's on the inside.
You have to be sponsored by 2 legends.
Have 10k rep points.
And 2k likes to join.
Well, I can wish

Stop trying to toss me out, bro.

 

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[jon.a]

Stop trying to toss me out, bro.

I'd sponsor you then petition an ally for a waver.

 

[ljean]

(INSIDERS will get the joke.)

Ok, i'm confused.

 

[G-Man]

Ok, i'm confused.

MJ and a couple other members of the forum consistently make money selling options. There's a crazy long thread where they've all shared their progress. You'd have to get an INSIDERS sub to see it, which I forgot when I copied the link.

That's the joke.

You guys are all the laughing at that one kid on the playground kinda bastards, btw.... I was that kid

 

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[jon.a]

Ok, i'm confused.

There are a couple of lengthy detailed threads on the inside about options trading.

 

[ljean]

Like I said in another thread, "selling options is the other side of the coin. You make money almost every day for 10 years until volatility explodes and then you are bankrupt."

If you sold options thru the 2007-2008 financial crisis and 2010 flash crash and survived my hat is off to you. If you have only been at it a few years you are in for a rude awakening when SHTF.

 

[MJ DeMarco]

There is no way a retail investor can compete in this space against the quants & PhDs with billions of dollars in research and pricing models behind them.

Darn it, guess I've gotten lucky. (Again.) I should get Goldman Sachs on the line and tell them I have a lot of money I need to give back to them because I didn't fall in line with the quants or PhDs.

You make money almost every day for 10 years until volatility explodes and then you are bankrupt."

If you are in danger of going bankrupt in a vol expansion, you're trading wrong, or too large. Or, you shouldn't be trading at all.

Of course, a big market drop or a black-swan event will be vulnerable to drawdowns and losses as will any regular retail investor who thinks "buy and hold" is any less risky.

I've successfully managed volatility expansions (a VIX move from 12 to 50+ where liquidity dries up) and had no issues that even tickle into the realm of bankruptcy. (And I've traded the mini-crash and the last correction).

 

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[ljean]

You dont have to take my word for it and you shouldnt. Here is an exercise:

This link lists 119 option writing mutual funds tracked by Morningstar
Morningstar.com - Fund Returns

Count how many of these have a track record greater than 5 years. Take a look at the funds with track records > 5 yrs, a small fraction of those have a track record > 10 yrs. Calculate the average 10yr returns of those funds and you will have an idea of the level of returns you can expect if you keep your leverage low enough to be able to survive in the long term.

 

[ljean]

Check out the website of ljmparters.com for some really good data on options writing performance over a long stretch of time.

 

[MJ DeMarco]

This will be my last comment on the topic since it has nothing to do with Lending Club, however...

Check out the website of ljmparters.com for some really good data on options writing performance over a long stretch of time.

I've been writing options for 3 years, and I've beaten their best fund all 3 years. Granted, I'm not writing hundreds of millions, but tens of thousands, nor do I need to deal w/redemptions etc. And looking at their 2008 return is about what I'd expect to drawdown should that calamity repeat. Not even close to bankruptcy, but yes, significant pain.

 

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[Chazmania]

Check out the website of ljmparters.com for some really good data on options writing performance over a long stretch of time.

So you're basically saying that individual traders couldn't outperform a mutual fund? Mutual funds don't set the standard for retail traders.

 

[ljean]

So you're basically saying that individual traders couldn't outperform a mutual fund? Mutual funds don't set the standard for retail traders.

You would have to add back incentive & management fees to get a true picture of the returns possible. But no I dont think an individual investor is going to do better than an options fund in the long run. Stocks possibly, but not options. They have every advantage over you in this space.

 

[ljean]

I'm probably close to getting accused of trolling by now so I'm done with this thread, thanks.

 

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[Chazmania]

I'm probably close to getting accused of trolling by now so I'm done with this thread, thanks.

No....I doubt that. Just having a conversation and expressing points of view - it keeps things more interesting.

 

[jon.a]

I'm probably close to getting accused of trolling by now so I'm done with this thread, thanks.

Not even close. I can't remember the last time some one was called a troll here.

 

[MJ DeMarco]

I move to rename Lending Club to "Loans to Sidewalkers."

Geez.

I can't wait to get every dime of mine out of this turd pile.

Also see this thread:

*UNSCRIPTED* - What's your focus? Making pennies? Or Millions?

 

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[G-Man]

I move to rename Lending Club to "Loans to Sidewalkers."

Geez.

I can't wait to get every dime of mine out of this turd pile.

Also see this thread:

*UNSCRIPTED* - What's your focus? Making pennies? Or Millions?

I've had a bunch of chargebacks, too, and with all the promos they've been sending to my inbox offering money for referrals, I'm guessing they've got lots of money heading for the hills.

2 years max before it turns into a straight ponzi scheme.

 

[MTF]

I move to rename Lending Club to "Loans to Sidewalkers."

Geez.

I can't wait to get every dime of mine out of this turd pile.

Also see this thread:

*UNSCRIPTED* - What's your focus? Making pennies? Or Millions?

Just curious: what are your thoughts about real estate crowdfunding websites where your loans are secured by real estate?

I'm also pulling out of unsecured P2P loans as I don't feel comfortable without collateral (where I invest there's this thing called "buyback guarantee" but it's just someone's promise; if they go bankrupt it won't mean much).

 

[MJ DeMarco]

what are your thoughts about real estate crowdfunding websites where your loans are secured by real estate?

No opinion as I haven't investigated it. However having the loan secured could make the world of a difference. I much rather loan cash to commercial RE investments than Sidewalkers buying more home they can afford.

 

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[MidwestLandlord]

I move to rename Lending Club to "Loans to Sidewalkers."

Geez.

I can't wait to get every dime of mine out of this turd pile.

But I'm making SO MUCH MONEY off those sidewalkers!



Edit:

 

[ljean]

I was around 7% on my account but then I had a good opportunity to buy a piece of property with IRA money so I needed to sell notes at a discount to raise cash. Now I'm at around 4.5%. When I first opened the account a few years ago I was hoping to get 10-12%. But I guess 4.5% is better than nothing.

 

[MidwestLandlord]

I was around 7% on my account but then I had a good opportunity to buy a piece of property with IRA money so I needed to sell notes at a discount to raise cash. Now I'm at around 4.5%. When I first opened the account a few years ago I was hoping to get 10-12%. But I guess 4.5% is better than nothing.

I was running about that too, until I went full-retard and switched to automated investing with a split of:

60% 'A' grades
20% 'B' grades
10% 'C' grades
10% 'D' grades

Then my default rate sky-rocketed.

 

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[ljean]

Mine are all C, D, E

 

[MJ DeMarco]

I'm starting think their business model is for people in pre-bankrtupcy ...

Gonna file bankrupt? WAIT! Take a loan out FIRST at Lending Club and live large one last time!!!

Thread title changed.

View attachment 14848

But I'm making SO MUCH MONEY off those sidewalkers!



Edit:

View attachment 14850

Damn! And here I thought my account was a shit-show.