One of Prosper’s most recent changes was to add bidding guidance on the manual bid page. See the picture below.
I think this is a great feature in theory. It makes the estimated return obvious using Prosper’s own roll rates. I am sure this will be an incredibly valuable feature for all manual bidding lenders.
However, I would caution lender to think for themselves a little bit. Speaking as one who has analyzed a bunch of Prosper data if you sliced the current loan data into 54 equal segments (see graph at the bottom of the page) you start to get some mighty fine segments. There are currently 15,832 loans on Prosper. 15,832 / 54 = 293 per segment assuming equal size buckets. I haven’t looked but I am sure that not all buckets are of equal size. Even with even distribution this is cutting it close.
And then there is Heisenberg’s Uncertainty Principle (ie now that these segments are measured they a bound to change). I would imagine the Prosper updates the various adjustment fields on a regular interval, but even so the nature of the buckets themselves might change.
Overall, I think this feature is more good than harm. In fact, I am not sure there is any harm. I just think that lenders need to think for themselves. For example, I biggest hole in the segments is that they don’t adjust for loan amount. Then again 108 segments would cut the data even thinner.
Related Posts -
RateLadder Reaches 10K Milestone Near the end of last week my Prosper account value crossed the 10K milestone. This is an important milestone as well as signaling a change in funding patterns. Why is it important? With my bid laddering strategy the most I will ever put into a single loan is $200 (4...... - Prime Borrowing on Prosper Hits Record Levels -- Febuary Marketplace Survey SAN FRANCISCO--(BUSINESS WIRE)--March 11, 2008--Spurred by the credit crunch, attractive rates, and lender demand for conservative assets, Prosper (www.prosper.com), America's largest people-to-people lending marketplace with over 600,000 members and $120 million in funded loans, reported that the number of prime borrowers (720+ credit scores) creating listings and obtaining loans continues......
- pninen in Prosper forums -- Magnificent Writeup on the Lender Costs of Not Paying Interest Here is the post in it's entirety because it is that good: In the early days of Prosper, I estimated that the cost of my idle cash (cash balance waiting to be bid, cash tied up in bids, cash tied up in loan verification, cash tied up waiting for payments......
- Another Excellent Email from TB on IRR I saw your last comment and wanted to provide you with an Excel sheet showing the implications of not counting the principle payments as cash flows when they are received. In this sheet I have included a situation where there is a hypothetical Prosper account that is made up by......
- Prosper Upgrade Last Night 9/13/2007 From Prosper Andrew in the Forumns... Hi everyone, This release is going to be a little different than previous ones.... we have a few features/changes tonight, and then a few more dribbling in over the next couple of weeks. Changes include... Instant Transfers for Lenders After several months of beta......
Related Websites -
How to Easily Evaluate your Asset Allocation with Morningstar Instant X-Ray Tool Despite my licenses, I am not an not an investment expert, and I don’t begin to pretend to be one. That being said everyone should know their asset allocation, and have an elementary understanding of asset allocation. I repeat, everyone should have an idea as to what they are invested......
- Fandango waives ticket purchase fees for Android users Fandango released a beta version of their Android application last month and has steadily been improving it with recent updates. It now appears the app is ready for primetime because Fandango will be waiving all service fees for ticket purchases through March 7, 2010. The company normally has a convenience......
-
$0.002 vs. 0.002 cents Do you think there's a huge different between $0.002 and 0.002 cents? I think so, but Verizon wireless representatives didn't think so. Well, it's begin with that this guy was quoted a data charged rate at 0.002 cents. Instead, his bill was charged him $0.002. So he called up to...... - Oil Investing Update - 20% Return in 90 Days – Principal Guaranteed For those of you who've been following my blog, you know I've been working on some secretive deal regarding some oil deal. Well now its that time in the process when the rubber hits the road. The bank we've been dealing with has agreed to lend us $20 million. However,......
-
Outer Limits Sport Fishing Outer Limits Captain Jim Robertson 415-454-3191 Upto 32 anglers. Targeting all species. Based out of the Clipper Yacht Harbor — Sausalito, CA Captain Robertson has been fishing ever since he can remember. A licensed Captain for over 26 years, he skippered the original Ginnie C in 1976, and then the Ginnie......
- Ice Buckets Barware Collectibles
- Ice Buckets & Wine Coolers Bar Tools & Accessories Kitchen, Dining & Bar Home Store
Categories:
Features, Prosper.com, Statistics, Tools
Tags:
6 comments ↓
Rather than 293 buckets, shouldn’t that be 54 buckets of 293 loans each (assuming they are equal which they probably aren’t). Where are you getting 293 buckets ?
Some will be sparse and some will hide good/bad loans, such as there is only one segment of HR with autofunding that isn’t broken down further into # of DQs, so the 0 DQs and 6+DQs share a single combined expected loss rates, but guess who carries most of that, and who is the less risky of the two.
I haven’t checked the actual numbers, but as long as people don’t get scared off by the big estimated loss numbers, there may be possiblities there.
As you mention loan amounts will be a factor as well
What amazes me after all the fuss about DTI
There are no DTI buckets!!! Higher DTI is obviously worse. Prosper data does not show that because lenders would fund every junk loan under 20% DTI. So Prosper is using numbers that were biased by Prosper.
Chrisfs:
Rateladder is saying 54 buckets, not 293:
“There are currently 15,832 loans on Prosper. 15,832 / 54 = 293 per segment assuming equal size buckets.”
Correction. A’s do have a DTI bucket
But As do not have a DQ bucket!
A’s with DQs will now be funded by Prosper Portfolios!
[...] are based on the slices of data… Which brings me to the ugly. There are almost certainly thin data issues. Readjustments can help, but Heisenberg rules this [...]
[...] the ROI would be nice, but I have already pointed out what I consider to be the major flaws: thin data and large buckets of loan criteria. Related Articles Prosper Starting To Use the Developer Mailing [...]
Leave a Comment