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Post by Wisealpha on Nov 26, 2019 19:03:44 GMT
... I hope that helps dem istify things a bit more. Why, were they foggy ? wee bit, glad its all sunshine at your end!
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Post by Wisealpha on Nov 26, 2019 19:09:10 GMT
Also, I’d like to know why the platform rep left the forum for 11 months and why they are back now. Got stuck for investors' funds? Forums are very efficient tools for advertising (doesn't cost anything and dense congregation of investors who might be interested). Giving the current p2p crisis it's a good opportunity to sway disgruntled p2p investors to a different field. Sure, a few more customers wouldn't hurt! But we set WiseAlpha up to sort out the severe market and regulatory failures that have prevented everyday investors accessing corporate bonds - I'll consider my job done when we've succeeded and corporate bonds are traded and invested in by more people than stocks and shares. Forums are a great place for people to exchange thoughts and learn so if I influence some people on here and they like what I'm saying that feels good.
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Post by Wisealpha on Nov 26, 2019 19:14:39 GMT
If it is a viable ALTERNATIVE to p2p, then I assume we all agree it ISN'T p2p, so why is it being touted on a p2p forum, rather than one of the general finance forums?? What next, a bitcoin board? Tulip bulbs? All probably better bets than LY or Collateral, but still not p2p. Well, if you think about it they are quite similar - one is lending to SMEs/individuals and one is lending to corporates. A loan and a bond are pretty much the same thing - an IOU but the docs, some of the terms and the way they are sold are different. Hopefully people value insights into other areas of the lending market - it can give them greater perspective on P2P and knowledge to help them choose which sectors to go into as well. In 2021 when we start originating loans and bonds directly with corporates we'll be called P2C or "Peer to Corporate". If you want to call us that now feel free.
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bigfoot12
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Post by bigfoot12 on Nov 26, 2019 19:31:20 GMT
The returns are an average per annum over the last 20 years. This statistic shows the resilience of returns over an extended period of time. But it has been a phenomenal 20+ years for fixed income. Look at any chart - most look like this from St Louis Fed This is high quality bonds. if you were brave enough to invest on WiseAlpha around Brexit nervousness at the end of 2018/Q1 2019 you could have made double digit returns demolishing returns this year in the P2P space). So picking up on market dips can also give people an opportunity to outperform the long-term average But if you are going to play those games most would have been much better off buying ETFs, or FX or much else. Re 1) The corporate bond market, particularly at the high yield end continues to price generously as it has done in the past. It's a totally different market to gilts ... The Average spread of BAA corporates looks pretty constant to me at about 190-220bps (to treasuries rather than gilts). (Again from St Louis Fed). I'm arguing that your offerings are higher risk than previous comparison. Re 3) Individuals can choose between investment grade (low risk) or high yield (higher risk but lower risk than P2P) The sellers call this stuff high yield, everyone else calls it Non-investment grade or Speculative or Junk bonds. No argument from me that much of P2P at the moment and for the last few years has offered the average investor a poor return for the risk.
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macq
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Post by macq on Nov 26, 2019 23:02:55 GMT
would also be relevant and of interest on the Fixed Income Investor forum
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macq
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Post by macq on Nov 27, 2019 8:53:48 GMT
i did have a punt on WA and to a certain extent it does seem a good idea and if it was to be offered by someone like HL i could see it taking off with people probably willing to invest larger sums and as long as you realise its a new platform and selling notes not bonds etc it could be a good product for a experienced investor. In the end i have held my small investment but for now have stuck with funds from RL & Baillie Gifford & ETFs as i realise i don't know enough to follow the market or beat it but its more the safety of a spread of assets in a fund that appeals.While it may be true to say big company bonds are safer and that you are at the head of the queue for payment in secured bonds,the likes of New Look and House of Fraser among others i believe(so could be wrong) from what i have read did not return much to investors so guess that was true on WA as well.So a fund would spread that across many but on WA it could be you only have 10 or less bonds and take a bigger hit To my mind anybody who does not have a bond fund should think very carefully before picking their own bonds on any platform not just WA as its easy to be sucked in by the yield before thinking about ytm,liquidity,default,term date etc but i realise that info can be read on the site and its not to say that the title of this thread is wrong
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Post by Deleted on Nov 27, 2019 10:03:29 GMT
These are not real corporate bonds that you are dealing in, is it?
Some sort of derivative or packaged debt that you sell on as a broker?
Higher credit spread risk? Likelihood of default? No market to sell on bonds?
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macq
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Post by macq on Nov 27, 2019 10:47:28 GMT
Was not really having a pop at WA too much and while i don't have much with them i have had no problems and found the customer service etc really good.It was more the fact that even with them you could pick some points out from their posts which need thinking about.One was their point on bonds having better recovery rates then SME p2p(but maybe not with property/mortgage backed?) which logic suggests is true with banks chasing their funds etc but from the financial press may not have been the case with a couple of bonds over the summer. Also while using New Day to compere the size of an established loan company v p2p platforms is valid, it could also apply in reverse in compering WA v a bond fund or alternative IT But as i said if you take into account the new platform,notes not bonds etc with this product then the title of the thread could possibly be true (and even funds etc had to start somewhere i guess)
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garfield
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Post by garfield on Nov 27, 2019 11:13:18 GMT
I liked Peter Temple's book "First Steps in Bonds". It's available on Amazon (2nd hand) for £3:
Bought it, thanks TTH!!
As a complete novice in the world of bonds, WA has been a bit of a life-saver for myself and my OH. We had to transfer a pension pot into a SIPP (long story...) and didn't fancy putting it back into equities.
It's fascinating stuff and I want to learn more, so cheers!
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Post by Wisealpha on Nov 27, 2019 12:24:40 GMT
The returns are an average per annum over the last 20 years. This statistic shows the resilience of returns over an extended period of time. But it has been a phenomenal 20+ years for fixed income. Look at any chart - most look like this from St Louis Fed This is high quality bonds. - Agreed US treasuries did well, especially those bought at the right time during the Oil crisis and the 2008 financial crisis, Bill Gross did well for a while until the market became tighter - that comes back to your original post Point 1 about government bond/gilts yields dropping to such low levels that you need to be super careful. Long dated bonds with low coupons can be a killer if macro events move against you - it's the long duration that can lead to big price swings. The high yield market in particular has maturities of between 5 and 10 years from new issue (obviously you can buy in well after issue as well if you are looking for shorter maturities) so macro changes are less important versus credit risk on the actual company when it comes to price movements. if you were brave enough to invest on WiseAlpha around Brexit nervousness at the end of 2018/Q1 2019 you could have made double digit returns demolishing returns this year in the P2P space). So picking up on market dips can also give people an opportunity to outperform the long-term average But if you are going to play those games most would have been much better off buying ETFs, or FX or much else. - Sure, there are other ways to take advantage of macro events - depends on your investment objectives. Robowise, in our view is an interesting alternative to an ETF. A lot of sophisticated investors would have trading lots of different things like FX and equity indices which have faster, sharper movements but on the bond side smart investors will have picked up bonds to lock in high income for the next few years. Re 1) The corporate bond market, particularly at the high yield end continues to price generously as it has done in the past. It's a totally different market to gilts ... The Average spread of BAA corporates looks pretty constant to me at about 190-220bps (to treasuries rather than gilts). (Again from St Louis Fed). I'm arguing that your offerings are higher risk than previous comparison. - The annualised returns in the report over the last 20 years were 10.4% for high yield and 6.1% for investment grade according to Barclays and Bank of America Merrill Lynch. We cover the full range - obviously people can see the details of each bond and their credit ratings so can choose their risk. I generally like high yield risk because it is still better than equity risk and P2P risk in my view and I think the debt structures for Sterling bonds have remained fairly reasonable over time. Perhaps these days there is a greater tolerance for more debt within a ratings category as companies have become more sophisticated in managing their liabilities and the debt market liquidity is a lot larger than 20 years ago - so that is a fair point you make. Re 3) Individuals can choose between investment grade (low risk) or high yield (higher risk but lower risk than P2P) The sellers call this stuff high yield, everyone else calls it Non-investment grade or Speculative or Junk bonds. No argument from me that much of P2P at the moment and for the last few years has offered the average investor a poor return for the risk. - Sure, people label things in different ways. Non-investment grade/high yield is common. The press and those who like to hyperbolise the risk call high yield speculative or junk - when high yield first came out in the 80's in the US, structuring was a bit wild west (similar to P2P now) and so 'junk' became a nice tagline when there were defaults. Since then over the last 20 years the debt markets have become bigger, more sophisticated and legal/structural considerations perfected so default rates in high yield have become more predictable (see here www.wisealpha.com/statistics - average default rates below 1%). There really there is a wide range risk/reward all the way from very low risk bonds to higher risk bonds and the yields to some extent provide an indicator of that risk. P2P is a bit like the high yield industry 30 years ago but at the more risky SME level - and its done well so far to avoid the tagline of 'junk' loans.
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Post by Wisealpha on Nov 27, 2019 12:28:49 GMT
Well, if you think about it they are quite similar - one is lending to SMEs/individuals and one is lending to corporates. A loan and a bond are pretty much the same thing - an IOU but the docs, some of the terms and the way they are sold are different. Hopefully people value insights into other areas of the lending market - it can give them greater perspective on P2P and knowledge to help them choose which sectors to go into as well. In 2021 when we start originating loans and bonds directly with corporates we'll be called P2C or "Peer to Corporate". If you want to call us that now feel free. It would be good if Wisealpha were to open an account on the lemon fool and post in the gilts & bonds board. www.lemonfool.co.uk/viewtopic.php?f=52&t=18555 There are some seriously big hitters and canny people over there. If WA could get some of them on board with the Wise Alpha platform then I would be greatly reassured... Good idea Paul, we'll look into it. Some forums want to maintain fully independent chat so not all will be suitable to engage on but we're definitely going to do a lot more educational writing and blogs.
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Post by Wisealpha on Nov 27, 2019 12:33:28 GMT
Hi Paul, Just as with any investment, education is a helpful tool for investors. There is a reason why this forum exists because people want to learn about lending. It just so happens that there is more education for equities rather than for corporate bonds which is a bigger asset class. (I consider corporate bonds to be the best risk-adjusted asset class, just one in which the biggest financial institutions hog the asset class for themselves). Since corporate bonds rank higher in terms of security and payback than equities they are a lower risk asset class which also just happens to have made bigger returns over 20 years than equities (see the report). You can invest in Ocado equity so why do you need £100k to buy into their much lower risk bonds? This is what we have solved with our fractional bond market - people can get exposure to a piece of a big bond. Therefore providing detailed education will help get a more informed view of corporate bonds so they can assess where the real value in a company's capital structure is - we always said we would give people greater knowledge and give them the greatest confidence in lending. And we are making good on what we said. Our fractional bond market is not classed as mini-bonds because these give single name exposure to specific bonds from FTSE 350 size listed corporates. And the preparation work has been done for all of our products to be listed in early Q1 2020 on a recognised EU stock exchange which will further set us apart from mini-bonds and P2P lending. We are a professional and serious investment platform with senior management who have worked at Goldmans, Deutsche Bank, IG group and Citigroup. The trustee for all of the bonds people have invested in is the fourth largest investor services firm in the world and all of our bonds are held with BNY Mellon the largest custodian in the world. In addition to this we have an independent board of seasoned debt fund professionals and so overall our corporate governance is similar to that of a large asset manager. WiseAlpha is fast becoming recognised as the superior lending alternative for everyday investors in the UK and we expect greater recognition in 2020. In the equity markets fractional stock ownership is becoming a big thing and WiseAlpha is years ahead in applying the same democratisation techniques so that everybody can get involved. I hope that helps. That's an interesting comment. Willing to expand on it? Can't say too much now but imagine a world where you can trade and hold both the bonds and equity of a particular company in a traditional stocks and shares ISA. You could go long the bonds, short the stock, or pick and choose which you think has more value. For example I think some equity investors in Aston Martin might have preferred to be in the bonds (which still made a small return YTD) rather than losing the majority of the value in their shares.
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Post by Wisealpha on Nov 27, 2019 12:38:37 GMT
These are not real corporate bonds that you are dealing in, is it?
Some sort of derivative or packaged debt that you sell on as a broker?
Higher credit spread risk? Likelihood of default? No market to sell on bonds?
Hi Jaybee, we sell fractional bonds (i.e. there is a real bond that you are getting a share of), so yes you can call it a packaging of kind but there is no additional credit risk other than the risk on the actual bond itself. We pass on all the economics and as we have said we have global trustees and custodians like any major professional platform. It's similar to the way people offer fractional shares in the stock market so they can get exposure to stocks which have a high stock price like Buffett's Berkshire Hathaway.
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Post by Wisealpha on Nov 27, 2019 13:16:52 GMT
Hi Treetophugger, so we currently have 115 listings across GBP and EUR so there is already a good selection to diversify across (especially if using Robowise) but we'll likely get to 300-500 over time and maybe more when we start branching into $'s and getting the likes of Tesla, Apple and some of the big global US names in there.
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Post by Wisealpha on Nov 27, 2019 13:34:55 GMT
Not sure I've heard of the Blackpool list or Taurus - might be before my time. Was that a US bond market thing?
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