I received an email last night from Prosper claiming that “Prosper Beat the S&P 500″

Did you know that the average loan on Prosper is outperforming the 2-year return on the S&P 500? Smart lenders like you have already discovered that lending on Prosper is a great way to earn a market-beating return!

I am OK with the 9.2% average returns for AA with 0 current delinquencies and 0-2 inquiries int he last 6 months.  BUT, this is the funny part…. 

Prosper loans haven’t been in existence for 2 years, let alone 2 years of loans that have completed their 3 year notes…  How does one project the default rates into the future.  So I read the fine print…  Look at all these qualifications…

[1] Rate of return shown is the average net annual return on Prosper loans originated between 7/22/06 and 7/22/07 to borrowers with AA credit grades who have 0 delinquencies and 0 to 2 credit inquiries on the their credit record, as of 8/23/07. For more information, go to [Marketplace Performance Page].
[2] Avg. annual return of the Standard & Poors 500 Stock Index from 8/16/05 to 8/16/07.
[3] APY on FDIC-insured Citibank, N.A. 1-year Certificates of Deposit as of 7/23/07.
[4] Annual Percentage Yield (APY) on FDIC-insured E*TRADE Money Market accounts as of 7/23/07.  In the long run, the comparison is valid and Prosper return might be born out.  In general, one should be able to compare average returns across investment vehicles, but if you ask me this comparison is precarious.  Prosper loans need more time to age.  And the S&P 500 data range was very specifically chosen.

In the long run, the comparison is valid and Prosper return might be born out.  In general, one should be able to compare average returns across investment vehicles, but if you ask me this comparison is precarious.  Prosper loans need more time to age.  And the S&P 500 data range was very specifically chosen. 

Related Posts

• New Loan Funded — Consolidate Personal Credit — $20,000 at 18.00% — C Credit — DTI 22% A new loan funded (Consolidate Personal Credit — $20,000 at 18.00%).  I participated via my standing order: Mid DTI — NAF.  Which is this loan was funded as a medium debt to income ratio and was an auto-funding loan.  The borrow had C credit and 22% DTI.  As a reminder......
• Prosper Standing Order Lending Strategy Updated Post Prosper Days 2007 In the large lender panel pensioner state that he focuses exclusively on 20%+ loans and C, D, and E credit grades.  While I don't have the risk tolerance for those default rates  I thought I should impose a rate floor.  I have chosen 15%.  I have adjusted all my standing......
• Prosper IRR Lender “Game” July 07 Update It is time for the July 2007 update of the IRR Lender “Game.” This is going to be more about accomplishments during the last month rather than pure calculations.  The actual numbers are at Prosper.com IRR Lender “Game” Tracking Page So without further ado: Highest IRR Model: leporello 2.61% Largest IRR......
• What is my Internal Rate Of Return on Prosper? Why do I want to calculate my Internal Rate of Return (IRR)?  To make sure it is higher than my cost of money - ergo a good investment.  I claim that my cost of money is 5% which I can earn in an Internet savings account.  So my IRR needs......
• Prosper.com Lender Game — Retireme99 Initial Update — 10.16% to 14.88% Retireme99 wrote his own intro: I started lending in May 2006... let the money sit for awhile to see how it worked... then got back into it more actively recently.  Looking at my results I have been happy that only two loans have gone 1+ months late.  I have another......

Related Websites

• How Many Books Do You Need to Read for an Amazon Kindle to Pay For It Self? After hearing some fairly positive reviews of the new version of the Amazon Kindle, I decided to "bite the bullet" and pay the $359.00 fee for the Amazon Kindle 2. The new version of the Kindle doesn't come with a protective case, so that will easily add $29.99 to your......
• Full Q&A With Prosper Marketplace CEO Chris Larsen We recently did a question and answer session with Prosper Marketplace CEO, Chris Larsen. Here’s the full text: 1)  Tell us about your two recent affiliate partnerships with Zero Motorcycles and People Capital. How were these two partnerships made? What sort of lending volume does Prosper Marketplace expect to garner......
• What’s Yours Is Mine: Consolidating Your Debts After Marriage The phrase "What's yours is mine" is especially true when you get married. Not only are you joining together two separate lives, merging two households and sharing one another's hopes and dreams, you're also becoming the proud co-owners of each other's debts. From here on in, your spouse's debt is......
• Overlooked Tax Dedutions [/caption] 1. State sales taxes. Although all taxpayers have a shot at this write-off, it makes sense primarily for those who live in states that do not impose an income tax. You must choose between deducting state and local income taxes or state and local sales taxes. For most citizens......
• Manufacturers should issue 98-cent-off coupons I'm very glad that Wegmans has come to our neck of the woods, and that they've continued to double manufacturers' coupons.  It's been quite a while since a grocer local to me has offered this. Growing up, I remember that there used to be a limit on which coupons they'd......

Online Stores

• New Year Holidays Postcards Collectibles
• 2000-2005 Ornaments: by Year Hallmark Decorative Collectible Brands Decorative Collectibles Collectibles
• New Year Holiday, Seasonal Collectibles
• Unknown Date Ornaments: by Year Hallmark Decorative Collectible Brands Decorative Collectibles Collectibles
• Annual Ornamental Grasses Plants, Seeds & Bulbs Gardening & Plants Yard, Garden & Outdoor Living Nursery

If you liked this article, vote for it on del.icio.us and stumbleupon.


Categories:

Prosper.com

Tags:

azerbaijan, mozambique