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Post by smrutib on Dec 18, 2015 10:31:23 GMT
Hi, I am new to FC. I have gone through several posts on this forum and I gather that people here don't hold Autobid in very high esteem - to put it mildly. Theoretically it kind of makes sense as the ponderous way in which Autobid works makes it susceptible to only get unwanted leftovers.
However, has anyone had any real experience with Autobid for anything greater that 6 months? If so have you noticed a significant difference between loss rates of Autobid loans and the platform average?
Thanks
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SteveT
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Post by SteveT on Dec 18, 2015 10:40:33 GMT
Hi, I am new to FC. I have gone through several posts on this forum and I gather that people here don't hold Autobid in very high esteem - to put it mildly. Theoretically it kind of makes sense as the ponderous way in which Autobid works makes it susceptible to only get unwanted leftovers. However, has anyone had any real experience with Autobid for anything greater that 6 months? If so have you noticed a significant difference between loss rates of Autobid loans and the platform average? Thanks No real reason to think your default / bad debt / recovery rates should be much different to the platform average if you switch on Autobid. After all, the average pretty much is Autobid although early figures suggest that the effect of Whole Loans (with rejected WLs being returned to the PL market) may depress the PL average somewhat. It's just that most on here do rather better than the platform average by picking & choosing what to lend to, farming cashback on property / large SME loans and (critically in my opinion) selling out of most / all SME loans at or around the 6 months point.
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Post by GSV3MIaC on Dec 18, 2015 10:46:20 GMT
Of course you can do the latter (6 month sell) with autobodged loans, as long as it didn't buy them on the SM at 5.9 months of age. The fact you can't stop it buying on the SM is really its biggest issue, but you can now set a pretty high rate and hope nobody dumps rubbish on you at that rate or above, which is better than it used to be.
The other issue is that, when it does buy on the SM, it doesn't buy the best deal on offer, just anything at par or better which meets the goal. Humans buying would tend to buy the best. Not sure FCs stats are good down to that level of detail anyway.
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blender
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Post by blender on Dec 18, 2015 11:12:14 GMT
I am sure that Autobid does what it says on the tin and provides a good return for no effort for the consumer lender. It is just that people who do not wish to actively manage their lending (have other things to do) also have, in general, no need to engage with forums - especially off-site ones.
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SteveT
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Post by SteveT on Dec 18, 2015 11:16:56 GMT
Worth emphasising that we do like Autobiddies a lot; we'd make significantly less money without them standing ready to purchase our pre-loved loanparts from us (after we've deftly removed any associated cashback and the first few months of interest)  |
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bigfoot12
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Post by bigfoot12 on Dec 18, 2015 12:54:08 GMT
has anyone had any real experience with Autobid for anything greater that 6 months? No, no-one has. FC changed the way it auctions new loans about 3 months ago. This has had at least two significant changes to Autobid:- i) Autobid now gets the same price on a given loan as everyone else; and ii) As GSV3MIaC says it is now possible to avoid buying most loans on the secondary market if you want to. (It is hard to avoid 'D's.) Also on another thread many active investors claim that the excess they can make since the change has reduced. As this largely came from the difference between autobid and the platform average that might be good news for auto bidders.
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jayjay
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Post by jayjay on Dec 18, 2015 14:06:25 GMT
I know Autobid cannot distinguish between A+ property and A+ SME, which is a weakness, but can it understand the implied return of different levels of cash back? Does it just ignore cash back? I have never seen an answer to this.
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blender
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Post by blender on Dec 18, 2015 14:09:40 GMT
Worth emphasising that we do like Autobiddies a lot; we'd make significantly less money without them standing ready to purchase our pre-loved loanparts from us (after we've deftly removed any associated cashback and the first few months of interest) True but you make it sound a bit mercenary and rather sordid. Personally I love my loan parts while I have care of them and am very sad when I have to part with them. Rather in the same way as a farmer loves his animals. I give my loan parts names and I can say that no young loan parts are better nurtured than mine until it becomes time for them to be adopted by new investors. As I see it we help by funding those loans for which there are, temporarily, insufficient investors, and we help FC and the borrowers by helping new loans to be born, and the new investors by helping them to diversify into a safe portfolio, while we take an initial high risk with the young stock. Our rewards are very modest.
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sl75
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Post by sl75 on Dec 18, 2015 14:11:22 GMT
I know Autobid cannot distinguish between A+ property and A+ SME, which is a weakness, but can it understand the implied return of different levels of cash back? Does it just ignore cash back? I have never seen an answer to this. Pretty sure that autobid ignores cashback. What I don't know is whether or not it ignores discounts on the SM. As I understand it, cashback is not considered part of the investment return but an entirely separate "inducement to enter into a transaction".
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SteveT
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Post by SteveT on Dec 18, 2015 14:27:28 GMT
Pretty sure that autobid ignores cashback. What I don't know is whether or not it ignores discounts on the SM. Yes, Autobid sees not whether the part it has chosen is at par or at a discount, nor whether there are better priced parts available in the same loan. Only that it is "eligible" for that lender's portfolio (ie. in a loan not already held, at a buyer rate that meets / exceeds the lender's set minimum, part is of the right size and listed at par or lower)
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blender
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Post by blender on Dec 18, 2015 14:32:05 GMT
As I understand it Autobid ignores cash back, but it will take parts on the SM with a discount. However, I assume it does not consider the value of the discount as such, rather that parts with a discount now qualify for consideration and the decision is made on the basis of buyer rate - which is of course improved by a discount.
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sl75
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Post by sl75 on Dec 18, 2015 15:00:30 GMT
As I understand it Autobid ignores cash back, but it will take parts on the SM with a discount. However, I assume it does not consider the value of the discount as such, rather that parts with a discount now qualify for consideration and the decision is made on the basis of buyer rate - which is of course improved by a discount. Certainly that seemed to be the intended design specification when enabling purchasing at a discount... but I don't know whether it's ACTUALLY looking at the calculated "buyer rate" or at the basic interest rate ignoring discount when deciding if the parts qualify.
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blender
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Post by blender on Dec 18, 2015 15:19:04 GMT
As I understand it Autobid ignores cash back, but it will take parts on the SM with a discount. However, I assume it does not consider the value of the discount as such, rather that parts with a discount now qualify for consideration and the decision is made on the basis of buyer rate - which is of course improved by a discount. Certainly that seemed to be the intended design specification when enabling purchasing at a discount... but I don't know whether it's ACTUALLY looking at the calculated "buyer rate" or at the basic interest rate ignoring discount when deciding if the parts qualify. An interesting point and it would be hard to test. I do not think FC have actually said that it looks at buyer rate, but you would think that is it was buying on the SM that it would only see the buyer rate - which is all manual bidders see. It would seem odd that Autobid as a proxy buyer would have access to additional information. However, when Autobid is set on the SM, you set the 'minimum gross interest rate' which is not the same thing as buyer rate. A valid question for FC.
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Post by GSV3MIaC on Dec 18, 2015 16:13:45 GMT
It must surely be buyer rate, since the 'sell at 20% discount' is supposed to be there purely to allow people to get otherwise unsaleable parts up to the threshold where bidders (I assume that includes autobodge) will bite.
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blender
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Post by blender on Dec 18, 2015 17:19:50 GMT
It must surely be buyer rate, since the 'sell at 20% discount' is supposed to be there purely to allow people to get otherwise unsaleable parts up to the threshold where bidders (I assume that includes autobodge) will bite. You would think so, but maybe it is 20% because it has to be a manual bidder. And of course there is the fact that if a discount did not improve the chances of an Autobid purchase then the discount would be almost pointless. I would have thought the principle of Autobid having the same info as a manual bidder should resolve it, but sl75 would not raise the doubt without good reason. After the change I found I could sell parts by raising the buyer rate to 8.5% with a small discount, whereas before I think it was more the size of the discount which was important. But this may be self-delusion.
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