Wednesday, May 24, 2006

Prosper is Now Easier To Use: Advanced Search Feature Introduced, New Loan Limits and Other Comments

Prosper has made major strides in improving its site. I discuss some of the improvements and provide recommendations on how Prosper can further improve the lending experience.

New advanced search options are now available. The advanced search includes ability/option for:

(1) Search by specific credit rating grade(s) and minimum interest rates you're willing to accept on loaned money.

(2) Setting lower and upper search values for debt-to-income ratios.

(3) Search by specific loan amounts For example, a search for loans greater than $1,000 but less than $10,001 (or other amounts) can be done.

(4) Search for only those loans that you've bid on.

(5) Setting lower and upper search boundaries for:
(a) no. of accounts now delinquent
(b) no. of delinquencies in last 7 yrs
(c) no. of public records in last 10 years
(d) no. of credit lines
(e) no. of credit inquiries in last 6 months
(f) credit history length

Don't want to fool w/ advanced search? Then you can now use the preset popular search tabs that include: loans ending soon, high-to-low interest rates, fully funded loans, high-to-low credit grades.

All of these advanced search options can also be applied to the creation of standing orders where Prosper will automatically bid for you.

Want better risk vs. reward options? Prosper has increased the interest rate caps. About 25% of the states now permit interest rates as high as 29%. Exact info can be found here.

Not sure how to manage your loan portfolio? Check out some of Prosper's webinars.

I think that has plenty of room for improvements:
(1) Add IRA account option. They already have an agreement with Wells Fargo, just extend it to include IRAs.

(2) Display lending groups current default rate on all loans sponsored. Default rate (%) = (number of loans in default/total no. loans sponsored)*100
- This way, lenders can better judge the quality of the vetting done by sponsoring groups.

(3) Display lending groups current percentage of loans that are > 15, 30, 60 days late in payment.

(4) ... More to follow... Getting back to bidding on some loans and watching some baseball.

Disclaimer: I'm not an employee of Prosper. Lending or borrowing on the Prosper site is at your own risk.

Sunday, May 21, 2006

Our Updated Prosper Strategy & Four Loans We're Considering Bidding On

You can read my latest posting on prosper lending here... You can always come back to the below posting.

I have made several changes to our lending strategy (Prosper is a peer-2-peer lending site).

(1) We have now started to loan money to those with "E" credit ratings (10% historical default risk likelihood). Before doing so, we only bid on those with no current delinquencies and positive debt-to-income ratios. Doing this will hopefully decrease the likelihood of default to something closer to 5% or better.

(2) I'm now emailing some of the prospective borrowers. This is quite effective in that a lender can get a sense from the tone of the reply as to the sincerity of the lender. Sometimes, you'll also get bonus information that you didn't even ask for.

(3) Lenders don't necessarily need to develop a spreadsheet to track their loan portfolio performance, has an easy interface that does it for you.

(4) Generally, I like to fund those loans that have a funding date on or after the 1st or 15th of the month (see original strategy post for definition of funding date and reason why). I now waive this requirement if the person divulges that they get paid on a weekly basis and also pass my other forms of screening.

I've funded 3 loans so far and have an open bid on another. Our first two loan payments are due on 2nd and 3rd of Jun, others due shortly thereafter. Current effective yield on loans is 18.62% (credit ratings of B, E, and E). I've found that knowing the effective yield on your portfolio influences me in the loans that I subsequently bid on. I find that an ounce of greed is involved and influences me to bid only on those loans that improve the effective yield (increases it). I must keep this emotion in check and diversify our loan portfolio risk by adding a few more loans of B and C quality.

Here's a couple of the loans that I'm watching and considering bidding on. All loans close in greater than 4 days so those of you with Prosper accounts may have chance to transfer funds and bid on them.

Loan, Current Yield, Debt Rating, Bidding Ends (note: 4 loans originally listed, I deleted two of them as they expired or were pulled by lenders)

(a) 14587, 19.50%, "C," 29 May
(b) 14419, 22.00%, "E," 28 May

Disclaimer: I don't know anything more about the borrowers than what is already available on the Prosper website. Bid at your own risk.

Tuesday, May 16, 2006

A Ton of Finance-Investment Tid-Bits (I've Returned from Blogging Sabbatical)

I'm back! Items discussed: My podcast interview,, discussion of commodity/oil strategy and new job

Over the last two weeks we've been settling into our new house, and I've also been getting familiar with my new job. Here's a run down of what's been going on:

(1) Completed a personal finance interview (podcast) with the "Money Blogger Podcast." In this interview I stated our net worth at $217k (first time disclosing).

(2) Bid on two more loans (loan 12594 and 12002). Loan 12002 is still open for bidding. Loan 12594 has closed and is awaiting funding. Ignoring these loans, my current loan portfolio (2 loans) has an effective yield of 16.68%. Once these loans close, I'll have a net yield of about 17%. Between all 4 loans I've essentially bid on two "B" and two "E" rated loan requests.
My last round of bidding was a bit more difficult bids because it appears that the quality of applicants has gone down (at least in the short term).

(3) I've liquidated some of our commodity positions, basically because they were all at or new all time highs (sell into strength, buy in to weakness philosophy).
(a) Sold all of our Gold ETF (GLD) at $70/share. Price was getting a bit lofty, have a limit order set for buying at a lower price if it gets to $65/share.
(b) Sold 35% of our position in Rio Tinto (RTP) at $252.92/share. Position was up 60% from our fall entry price of $157.86/share. Have limit order set to buy more shares if it drops substantially to low $200s.
(c) Sold 45% of our total BHP Billiton position (BHP) at $48.58/share. Shares sold represent a short term position established in wife's IRA at $43.85 on the 27th of April and sold on the 8th of May (up 10% in less than two weeks). Remaining 55% bought last August at substantially lower price. Have limit order set to buy more shares at $43.85.

(4) Started new job as an analyst in a Human Resources/Manpower shop.

(5) Made trip out of town to visit Mom for Mother's Day (drove 800 miles, got 30.5 mpg in old 6 cylinder car)

Our investment philosophy (sectors) is shaping up for a change. We haven't fully decided on the new sectors. However, I'm considering cashing out of the oil stocks/commodity ETFs a little earlier than previously planned, perhaps when oil hits something closer to $75. I was previously thinking about selling out of our these stocks when oil hits around $80. Reasons for lowering cash-out price on oil stocks/etfs are:

(A) Oil is no longer moving significantly higher when terrorist acts occur in Nigeria or even when weapons grade Uranium is found in Iran (both have been happened recently).

(B) While the US dollar is weakening, the Wall Street Journal sites marginal increases in worldwide demand for oil (1.5% year-over-year)

(C) We are moving up quickly on an election year and politicians are going to do respond to complaints about oil prices. Even if their actions have no teeth, they will affect market sentiment.

(D) Ethanol is gaining to much steam as a viable alternative and will therefore diminish growth in future oil demand

Sunday, May 07, 2006

Plugged-In-Finance's Top Nine Posts

My site is on its way to 100 unique posts (mid-nineties) now. Today, i'm presenting some of my best/most popular posts for your reading pleasure.

(1) Walmart's Disservice to Frugal America (My Trip to Walmart Today)

(2) Are You Wealthy Enough? Equation for Determining

(3) Free Money: My Opinion on 0% APR Credit Card Offers

(4) Getting Free Cable

(5) Our Household Savings Rate Taking a Hit
Since our move, our savings rate is roughly $1,000/month plus monthly equity gains in real estate. This is essentially a $4,000 cut from before our move. Reason, wife temporarily unemployed.

(6) Graphical Picture and Discussion of Our Household Investments
This graph is somewhat dated but still reasonably accurate

(7) Prosper Lending Strategy
We've done two loans so far, looking for a 3rd and 4th loan.

(8) Buying Real Estate: My Mortgage Lessons Learned

(9) Is an Education Worth the Expense


Saturday, May 06, 2006

Save $20 on Your Next Dell Order

I found a $20 Dell Coupon in an unmarked Life Cereal Box. The only thing on the outside was a curious George offer for his CD. The $20 coupon states:

A Special Offer From Dell. Take $20 off any Electronics and Accessories purchase of $150 or more!* at Enter coupon code QGM7T0C1C2TVVD at checkout.

*Pricing, specifications, availability and terms of offers may change without notice. Taxes, fees and shipping and handling charges are extra and vary. Offer does not apply to, and is not available with systems or items purchased through online systems configurator, refurbished or spare parts. Limit five same items per order. One coupon per customer. Dell cannot be responsible for pricing or other errors, and reserves the right to cancel orders arising from such errors.

Wednesday, May 03, 2006

Avian Flu: Summary of Stock Market Sectors That Stand to Gain or Lose

Here's a simple summary of those sectors that stand to gain or lose in the event an Avian Flu outbreak occurs:

(1) Drug companies that make antiviral medicines
(2) Drug companies that make vaccines
(3) Hospital health care
(4) Cleansing product-makers
(5) Home entertainment providers
(6) Telecommunications
(7) Internet technology companies

(1) Airlines
(2) Luxury goods
(3) Hotels
(4) Insurers
(5) Shopping malls
(6) Major oil firms
(7) Mining and metals
(8) Travel and hospitality
(9) Brewers

SOURCE: Citibank Report as Summarized in "Wall Street Placing Bets on Bird Flu Outcomes," Chicago Tribune, Bruce Japsen, April 30, 2006