Simon Cunningham is the publisher at LendingMemo.com one of the few sites like Lend Academy that is 100% devoted to p2p lending education and analysis. Simon and I have complementary approaches to the industry and we both believe in collaboration rather than competition, so I am delighted he agreed to come on the podcast for the first show of 2014.
In this podcast you will learn:
- What Simon is looking for with p2p lending as an investment.
- How much every investor should put in p2p lending.
- How his investing approach has changed over time.
- The states that Simon avoids.
- What he thinks of the available investor tools today.
- Why average investor returns have been dropping.
- The results of his Foliofn experiment that he called the liquidity project.
- Why he gave up on the Prosper secondary market.
- What he believes the future holds for p2p lending.
- The main thing he is excited about for 2014.
You can subscribe to the Lend Academy Podcast via iTunes or Stitcher. There is an audio player directly below or you can download the MP3 file here.
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Here to answer any questions people might have.
Who is this Michael you were referring to and what is his API? You fellas were talking mighty fast in a lingo I’m not 100% fluent in yet 🙂 I’m pretty sure is Nickel Steamroller but just want to verify.
Thanks for all of the information! It was a really interesting conversation.
Hi Amy,
The Michael we were referring to is the founder of Nickel Steamroller (https://nickelsteamroller.com/) – the leading statistics and resource site in p2p lending.
Very informative. I now have LendingMemo on my browser favorites bar; just beside Lend Academy.
Peter/Simon,
Could you elaborate on the legal concerns you were discussing on this podcast with regard to third party tools/APIs? This was the first time I have heard of possible/potential legal issues with the use of technologies from third party p2p tools/websites.
Also, what is the “screen scraping” you briefly mentioned?
Thanks for clarifying,
Chris
Hi Chris,
I’ll do by best to answer this question, but there are people far better at this stuff than myself.
Charging for financial investment advice, without approval from the SEC, is against the law. Some third party tools, while run by sharp and personable people, charge fees for their loan selection. This could be (and, in my opinion, likely is) seen by the SEC as the kind of investment advice that requires the operators of these tools to be RIAs.
See here: https://en.wikipedia.org/wiki/Registered_Investment_Advisor
As peer to peer lending becomes more mainstream, and is concurrently more scrutinized by regulators, you can bet third party tools will be held more and more accountable to these legal regulations.
As for screen scraping, it is one of the three ways that people interact with Lending Club or Prosper’s website. First, people simply log into the website itself. Secondly, people use APIs, which allows investors to interact with the platforms over pure code, a method that is far quicker than doing it with a web browser, as well as a method that can be beautifully automated.
Screen scraping, in contrast, is the third option, and uses an automated computer program to simulate a person actually logging into Lending Club or Prosper’s website, allowing them to artificially move a mouse and click ‘Submit’ faster than any human being, allowing investors to get a jump over other investors. Since this method is using the website in a way it was not designed for, it can be rife with problems (as Peter and I alluded to in the podcast).
See this: https://en.wikipedia.org/wiki/Screen_scraping#Screen_scraping
Hope this helps,
Simon
Hi Chris, Simon has pointed out the legal issues quite eloquently here but I will just add one point. Despite the increased popularity of p2p lending we are still in the wild west somewhat. These third party platforms are providing investment advice, in the opinion of some legal experts, and so should be registered as an RIA. Now, I think this year we will see who is serious and who is not and the serious tools will gain the necessary credentials and become legitimate third party platforms.
Also: see Michael’s comment, the second comment down. https://peersociallending.com/interviews/nickel-steamroller-a-look-into-whats-to-come/
Great point Peter. Whatever third party tools *do get their legal status firmed up will gain a competitive advantage against the rest, so this is as much an opportunity as it is a point of contention.
Peter and Simon:
I just finished listening to your podcast and very much enjoyed it. It’s wonderful to listen to two intelligent people discuss P2P from an investor point of view. Simon, I bought my first notes also in September of 2011 and after listening to you I can say that we have a very similar thought process/journey.
Almost 3 years ago, Peter’s website here convinced me to give P2P a try. Armed with his advice, confidence,and optimism, and after a few months of studying everything I could on P2P, I took the plunge and I’m so glad I did. So thank you Peter, and I mean that from my heart – you are the undisputed guru of P2P. And thanks Simon for sharing your insights/outlook on P2P, I don’t know much about you yet but you really grabbed my attention today.
Peter, I agree with you that C notes at LC are worth consideration even for high yield investors. My combined weighted return between 3 P2P accounts is currently 14.72% and I buy a fair amount of C notes at LC. My cutoff is 15% though, exactly as you made reference to in the podcast. While I take heavy hits from defaults due to my high risk profile, at the almost 2 1/2 year mark (like you Simon) I’ve learned that defaults are just a part of the game and you can still do well in spite of them.
Anyway, this podcast has me excited again on P2P, I was feeling a little burned out lately but thanks to you guys I feel like my batteries just got recharged. Great, great job….
Hi Dennis, Great to hear from you again and thanks so much for your kind words. Glad to hear your batteries are recharged again for p2p lending. I have never been more excited than I am today about this asset class.
Hi Dennis. Thanks for sharing.