Why I Don't "Invest" In P2P???
One simple financial reasoning in Rule of Investment: Yield Focus or Return On Invested Capital?
Read? Yield Focus Or Return On Invested Capital Focus??? (3)
Asymmetrical return on "invested" capital
One day, somehow we will make terribly and horribly mistakes and lose 100% of the invested capital. so P2P is no different!
Return on "invested" capital for P2P is from -100% to 0%
There is no such thing as a few P2P large winners in your life time of "investing" in P2P to cover all your P2P losses!
I think the focus for such subprime loans should be return OF capital! Hahaha!!
ReplyDeleteFrom the stats on Funding Societies, defaults are around 1.6% to 2.1% and late payments are about 12.6%. This is for a relatively good economy.
If economy slows down or turns bad, you'll see the stats getting worse.
Hmmm, maybe can use those stats as leading indicator --- they're reflection of weaker SME's & startup entrepreneur wannabe's --- dime a dozen during boom times, but drop like flies during recession.