SubscribeWed 20 Jun 2007
Well not quite everyone, but it seems like a lot of personal finance bloggers just don’t like it. I’m not in that camp, nor am I in the other camp of die hard propser fans. I think it’s still to early to tell if prosper makes a good an investment. At this point, I’m going to amend my original verdict to “watch and follow” I realize my initial calculations from Earning Money Part 5: Prosper.com were not really reflective of true performance. I used the average default rate for the entire period. This is problematic for two reasons. 1) Loan volume is biased toward more current loans 2) It probably takes at least a few months for a loan to go into default. Coupled with reason one this would bias the default rates down.
Propser Haters:
- Pfoddyssey
- Blue Print For Financial Prosperity
- Miserly Bastard - He doesn’t like my take on taxes either, but that’s ok.
Prosper Lovers:
Prosper Likers:
I think it’s still early in the game before we can make a decisive judgement on if Prosper.com is a worthwhile investment. Early adopters reap greater rewards and greater risk. In the end I do feel a disciplined propser investor can achieve market returns that beat out a savings account and should provide returns that are less correlated with the stock market. How much work is involved to achieve that is unclear. Is it worthwhile? Who knows. Only time will tell. Once I have a little more personal experience with prosper, I will do a more thorough analysis. I’d love to get my hands on all the actual raw data - there’s a goldmine of data there. If anything that’s one problem I have with propser is the inability to properly query data.
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June 20th, 2007 at 11:34 am
I’m a Prosper Liker. I haven’t had as much of a problem as other people, but I don’t have very much money put into it. The two loans I have are on-time, but I don’t have a huge desire to fund a lot more loans. I might throw in another $200, but I have other priorities in my financial picture that investing with Prosper falls by the wayside. It’s more of $100 in entertainment/blog fodder than a serious investment tool for me.
June 20th, 2007 at 2:09 pm
Check out ProProsper.com if you want to query the database. It’s not an official database, but it’s 99.9% there. I’m using a lot of that goldmine in my lending strategy and I think it’s starting to pay off.
For those that are the haters, if you’ve check out the goldmine of data there and actually lent 100+ loans using that data, and you still hate it, that’s good enough for me. Otherwise, I’m not convinced that you have the necessary experience to pass judgement.
I think that many people look at the aggregation and pass judgement on that. By that measure I could look at the average household income in the US (isn’t it under 50K or so) and determine that is what the value of working in the US is. In reality, each individual has control of his/her outcome.
June 20th, 2007 at 3:05 pm
LazyMan, thanks for the tip. I’ll check out ProProsper.com.
July 3rd, 2007 at 6:59 am
Thanks. (Thanks Lazy as well as I also run ProProsper.)
The thing about default rates is that we are only in the first year of loans (I know they started in feb 06, but it was July before there was any volume…)
The default curves of year 2 and 3 will be less than the default curve of year 1. The published experian default rates are an average.
Find good loans at great rates. Ride out the first year of deadbeat defaulters. Make solid money through year 2 and 3.
I am tracking the default curves but intentionaly require at least 6 months of data in order to publish… Check them out: http://www.rateladder.com/2007/07/02/1-month-late-or-worse-curves-by-credit-grade-july-1-update/
Time will tell, but I think 10% is very attainable.