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Thread: Harmoney

  1. #2991
    yeah, nah
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    How are you dollar cost averaging i.e. selection? (everything)

    One point that wasn't covered in previous discussion is that Payment Protect return varies with interest rate. [one reason why you can't generalise across portfolio's]

    Quote Originally Posted by leesal View Post
    Years 2 and 3 are on average much worse for defaults
    ? that doesn't match the Harmoney supplied Hazard Curve ?

  2. #2992
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    Quote Originally Posted by permutation View Post
    Here are some long term stats from my 34 months in the Harmoney "Universe";

    • E Grades taken 71- Charged off 11 = 15.49%
    • F Grades taken 30- Charged off 5 = 16.67%



    • Total E&F Grades to date 101- Charged off 16= 15.84%
    • Total A>D Grades to date 1560 - Charged off 14= 0.8974%
    • Note: This default rate is across 34 months. Harmoney's forecast defaults are p.a.


    Attachment 9423
    Impressive charge off stats. Better then Harmoney's default scorecard! Currently Grade F is maximising your return (even if a small sample size)?

  3. #2993
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    Quote Originally Posted by myles View Post
    ? that doesn't match the Harmoney supplied Hazard Curve ?
    Harmoney's Hazard curve is from origination of missed payment, not the date it gets charged.... They are 5 months ahead of where they should be.

    Capture.PNG


    Quote Originally Posted by myles View Post
    One point that wasn't covered in previous discussion is that Payment Protect return varies with interest rate. [one reason why you can't generalise across portfolio's]
    PP only forms 4% of the capital on a loan, the interest affect is a bonus but too significant. One could argue the moral hazard on higher risk grades of PP invoked makes it less attractive there.


    Quote Originally Posted by myles View Post
    How are you dollar cost averaging i.e. selection? (everything)
    I'm investing a few grand a month to a horizon of 3 or 4 years and spreading them through the middle grades. Am autofiltering on specific criteria (capture rate probably less then 10%).
    Last edited by leesal; 21-01-2018 at 04:13 PM.

  4. #2994
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    Quote Originally Posted by leesal View Post
    Harmoney's Hazard curve is from origination of missed payment, not the date it gets charged.... They are 5 months ahead of where they should be.
    Seems an odd way to look at it if you want to predict current value of portfolio - no money to be made from first missed payment point and principal inflated for that period? So pedantic about PP but ignoring the big things? That graph isn't representative of what Harmoney stats. show?

    Quote Originally Posted by leesal View Post
    One could argue the moral hazard on higher risk grades of PP invoked makes it less attractive there.
    I'd argue the opposite => more attractive i.e. bigger return. (? moral ? - not sure how PP is, the risk grade indicates exactly that, not PP?)

    Quote Originally Posted by leesal View Post
    I'm investing a few grand a month to a horizon of 3 or 4 years and spreading them through the middle grades. Am autofiltering on specific criteria (capture rate probably less then 10%).
    Okay, must have different definitions of dollar cost averaging.

  5. #2995
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    Quote Originally Posted by RMJH View Post
    I am sitting abut 1% lower than you after about 3 years/6000 loans . I am interested in gaining some understanding of the difference ie due to higher risk adopted or better selection of loans, or a combination. Do you read the stories or just rely on filters? I essentially rely on autolend and filter out all business loans, all loans above $35k and all A's, E's and F's and 25% income ratio. Until 1.5 I also invested in A's and had a roughly equal weighting in each major grade. Any insights would be most welcome.
    RMJH, it is very difficult to see what works and what does not. Last year, I started analysing my 2016 loans as a group. The idea is so that new loans do not affect the analysis. Also my investment criteria change as time goes by but did not for that year. Harmoney's interest rates also did not changed for those 12 months as well. The objective was to see what grades gave me the best returns. I started tracking that result as each month goes by in 2017. That analysis is now worthless with Harmoney version 1.5 as a borrower who qualify under say C3 previously may not be assigned the same grade under V1.5.

    Most of my loans now are via Autolend (B to E) so I do not get to read the stories before the loans are committed. With the manually done loans, I do glance at their stories (borrower's comments). However, income ratio and grades are still more important. I do loan to all grades A to F manually. With manual loans, marital status also affects my decision a bit as "divorce" and "separated" complicates life for the borrowers. I do not spend much time on deciding, most manual loans will take me about 2 to 3 seconds and at the very most 10 (very rarely).

  6. #2996
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    Quote Originally Posted by myles View Post
    Seems an odd way to look at it if you want to predict current value of portfolio - no money to be made from first missed payment point and principal inflated for that period?
    Hence as above applying 20% charge off against arrears 1-30 days... etc

    I'd be interested to hear what you are doing in this space?

    Quote Originally Posted by myles View Post
    ? moral ?
    Moral Hazard - its an insurance term. The more dubious the policyholders credentials, the higher the cost from moral hazard.

    Quote Originally Posted by myles View Post
    different definitions of dollar cost averaging.
    Its quite a basic investment concept. Just google. If you've are paying into kiwisaver you are already dollar-cost-averaging.

  7. #2997
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    Quote Originally Posted by leesal View Post
    I'd be interested to hear what you are doing in this space?
    I've covered what I do/have done a while back - the most basic was to write of any portion in arrears over 31 days - at the time I prefered to over estimate losses (still do). I still track that so I know if a big hit is likely to come through - but I'm not seeing this is really necessary, but nice to have. With over 100K, defaults, at the current rate I'm getting them, are looking stable. I'm expecting some growth in defaults but predict compounding will keep up with it at the very least. If that changes I'll see it coming.

    I'm in a unique situation that I've invested 100K quite quickly (3-4 months) and have not withdrawn, so I'm getting quite a good picture of what's going on without being tainted by deposits/withdrawals. I'm surprised at, what is currently, a rock steady straight line of growth. Perhaps I've just hit on a reasonable loan selection process and range? [I gave up trying to get an accurate figure when the new rates etc. came in - not worth the effort for me - started up another account to be a little more conservative, but have pretty much fallen back to the same as my original account as it's doing well and looks like the sweet spot I'm after and still fit's with the new rates].

    One thing I did in the lead up to Christmas was to tighten up my selection process as it's been shown that P2P is similar tos Credit Card default rates - this period being a higher default rate period. This has created a bit of a 'wobble' as I couldn't match enough loans and my available principle crept up to >10K (it comes back quickly!), working on getting most of it back in now. It is a finicky beast, with so many influences...

    Quote Originally Posted by leesal View Post
    Moral Hazard - its an insurance term. The more dubious the policyholders credentials, the higher the cost from moral hazard.
    Aware of what it means - not sure how PP at a lower rate, is different from PP at a higher rate, hence my query.

    Quote Originally Posted by leesal View Post
    Its quite a basic investment concept. Just google. If you've are paying into kiwisaver you are already dollar-cost-averaging.
    Aware of the term, doesn't seem to match what you are doing i.e. investing in whatever comes along vs what you've indicated - that you are quite selective...

  8. #2998
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    Quote Originally Posted by leesal View Post

    units paid unit arrears chargeoff % harm est chg%
    A 27 0 0.0% 0.1%
    B 220 0 0.0% 0.2%
    C 126 0 0.0% 0.6%
    D 134 1 1.7% 1.7%
    E 71 1 3.4% 4.4%
    F 15 3 47.2% 7.6%
    Tot 593 5 2.0% 1.3%
    Your "harm est chg%" figures differ from Harmoney stats a bit leesal, more than rounding down to 1 decimal place should. Eg., In Harmoney supplied stats, F charge-off averages out at 8.06% in v1.5, not at 7.6%. Where are you sourcing yours from?

  9. #2999
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    just did some number crunching on profitability by loan type for my portfolio.

    its all in the attached excel file, everything’s hard coded except the most recent date which is linked to a csv download, so people can critique the formulas / logic. (yep I could do it with pivot tables but i like sumifs)

    so profit and loss for me is pretty straight forward, I claim write offs and fees, so for me its gross interest less fess less writes offs = gross profit, less tax = net profit.
    So for each grade I have a net profit.

    The profitability is harder to work out. Obviously it’s the profit / investment for each grade.

    However I have chucked money in at different times and chosen loans at different times. So how I have done this is worked out an average length of loan, which you can get by taking for all the loans in status arrears or current, by taking their loan term less payments remaining. This should give the term the loan has been “active”. You get a total months figure for each loan grade, and then you divide by loan counts to get the average length of loan.

    Then to work out average investment, I have summed amount invested, and scaled it by average loan length, to annualise it. For example I have dropped $11,300 into A’s over the life of my portfolio, the average length of an active A is 8.62 months, so to annualise or weighted average the amount I have invested in A’s to get an annualised return, its $11,300 * (8.62/12) = $8,133

    A’s have made me a net profit of $464 (this is from the life of my portfolio) so the roi on A’s is $464 / $8,133 = 5.70%.

    I’m not sure of the logic. The profit and loss is reflective of the life of my portfolio, which is 16 months. When working out the average amount invested, I’m trying to annualise it.

    Not sure it matters too much, the results will be the same, D’s are best for me, followed by C’s.

    .Attachment 9431


    hmm it appears I can;t share my spreadsheet

  10. #3000
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    Quote Originally Posted by alistar_mid View Post
    so people can critique the formulas / logic.... hmm it appears I can;t share my spreadsheet
    Interesting concept Alistar. Segregating and analysing v1.5 only loans (rather than your to-date totals) might provide you purer insights by grade and be more useful.

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