the Alpha John wonders… | P2P Lending, Peer to Peer Lending, People to People Lending

I received an email from a reader (Alpha John) that I would like to share and then answer his question…


As you can tell from my blog, I’ve been following yours for a couple weeks. I’m at IT guy by trade (was a DBA for several years) and I’m in school now part time to finish my undergrad in business. I’ve taken some econ and stats classes, and I’m fascinated by your take on prosper listing (where I think most people probably bid based on emotion or gut, you have quite the eye for the statistics).

In short, I’m not really looking to get into investing through prosper, but the whole notion intrigues me. If I did start investing it would just be to say I did it.

I’m curious about your latest post regarding 3 sigma listings. The first one for example (house flip/A paper/21% rate) — why wouldn’t *you* bid on a loan like that.

Your blog is the most interesting feed I have in Google Reader right now — keep up the good work. =)



Thanks for the support… I started this blog to force myself to be more rigorous. I thought I was one of those guys that was bidding on emotion and gut. I didn’t like my Prosper self (I know how hard that is to believe). I figured if I had to tell the world what I was doing I would be a little more careful.

I am not allowed, due to my terms of service with Prosper, to disclose the extended credit data of a listing, so you have to sign up as a lender on Prosper (click the big banner at the top right) in order to see the exact extended credit. BUT… As a reminder my standing orders (and manual bids) only find listings with 0 current delinquencies, 10 or less delinquencies in the last 7 years, and 2 or less public records in the last 10.

Let’s just say that this listing does not fulfill those requirements and it isn’t even close. I am a big fan of any clean (extended credit) auto funding loan greater than 1 sigma of the weighted average for like loans (+/-5% DTI, +/-$5,000 amount). And my standing orders are on the lookout for just those sorts of loans…

That being said it is an A Credit and a great interest rate, do you have the stomach for the extended credit of this listing?

Here is the listing again.

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