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Thread: Harmoney

  1. #3181
    yeah, nah
    Join Date
    Mar 2017
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    Quote Originally Posted by beacon View Post
    Individual performance is as much a matter of luck as it is of an individual's loan picking nous, especially if loan numbers are small in the portfolio, which they are for most retail customers.
    I don't see the correlation with luck. Is it luck when you pick shares from one company over another? There is known risk of failure, that's not luck in my thinking.

    If you go back away in this thread you'll find a list of loan types to select and avoid based on info from overseas - I can only say that it significantly improves my return by taking those into consideration at both a filter level and at an individual loan level.

  2. #3182
    Member
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    Quote Originally Posted by myles View Post
    I don't see the correlation with luck. Is it luck when you pick shares from one company over another? There is known risk of failure, that's not luck in my thinking.


    If you go back away in this thread you'll find a list of loan types to select and avoid based on info from overseas - I can only say that it significantly improves my return by taking those into consideration at both a filter level and at an individual loan level.

    And good on you myles - for doing that.


    I have been slowly reading through this thread when I get the time, but 213 pages is still a lot to go through. Still, it has been time well spent generally, and I have learnt a few things here from posters' (including you) insights as well as from their experiences. Thank you all.


    In business, including stockpicking and loan selection, you can reduce risk by thoughtful action, but never eliminate it fully. The 'known risk of failure' is a probability generated from history, but it is best used with the knowledge that it cannot guarantee any future outcome. We need back view mirrors in cars, but we drive looking out through the windshield. Humans have limited vision. The rest is luck, in my book, as it can not be pre-quantified. So, there is an element of luck when you pick shares from one company over another (without discounting that you may have picked based on your research, but research itself is limited in the number of variables that can be researched etc...)

  3. #3183
    Senior Member
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    Aug 2012
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    Quote Originally Posted by beacon View Post
    Also, even at (the still declining) 12.4% retail RAR of the pick n choose segment, HM offering is only second best now, since it reduced the reward for carrying unsecured loans 2 years ago (by raising its fees to 20%, 17.5% etc.) and the non tax-deductibility of its (comparatively much higher) defaults for the 'real/retail' peer. Watching this space with interest.
    Harmoney has said that charge-offs are running at about 22% of gross interest.

    The 12.4% retail RAR is net of the 20% fee, for a smaller retail investor, and charge-offs.

    So that must mean the average investor must earn approx 21% gross interest with tax at 33% comprising 6.6%.

    Approximate figures for retail investors paying the maximum fee rate:
    Gross interest = 21%
    less:
    Charge-offs =4.4%
    Fees=4.2%
    RWT @33% of gross interest= 6.9

    So 5.4% is my back of the envelope guestimate of the after tax return for an average smaller investor who can tax deduct neither fees nor charge-offs and 6.7% for someone who can tax deduct the lender fee.

    Harmoney has not definitively stated that fees are tax-deductible for everyone. Harmoney points out, each taxpayer should seek advice on the status of fees and charge-offs. So small investors should also factor in the cost of that independent researched advice on the deductibility of both fees and charge-offs. Does Harmoney anticipate that fees cannot be deducted by some of its lenders/investors? If that is the case, I think it is most likely to be small retail investors who would not be able to make the tax deductions. If everyone could deduct fees, why doesn't RWT take into account the fees that are automatically levied by Harmoney on gross interest? Definitely DYOR.

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