[RetroDuck]

I have been spending a lot of time on Prosper.com lately. I haven't signed up for an account yet, but I spend a lot of time there just reading about all of the reasons people need to borrow money.

There are quite a few business realted postings. I wonder if as time goes by, a lot of people will default on their obligations. That type of problem would strip the site of all of its credibility. On the other hand though, people may feel more obligated to stay current on payments because they are borrowing from a group of individual lenders, and not a faceless corporation.

Any thoughts?

[akula]

Originally Posted by RetroDuck

I have been spending a lot of time on Prosper.com lately. I haven't signed up for an account yet, but I spend a lot of time there just reading about all of the reasons people need to borrow money.

There are quite a few business realted postings. I wonder if as time goes by, a lot of people will default on their obligations. That type of problem would strip the site of all of its credibility. On the other hand though, people may feel more obligated to stay current on payments because they are borrowing from a group of individual lenders, and not a faceless corporation.

Any thoughts?

yes, the prevailing trend in banking is disintermediation, so what's happening at prosper is unstoppable.

but....and it's a big but....disintermediation stops where transactions become more complicated....so something like a convertible note strip - with a call, isn't gonna work on prosper because the terms of the transaction will be complicated.

the only thing prosper is doing is disrupting the loan sharks...and that's good news.

in other words; you don't need intermediaries up to a point where you need intermediaries.

[jdoc]

I haven't looked at how much info you get on the person borrowing, but the arbitrage opportunity here for people with good credit is immense once the application has gone through it's growing pains and the default rate on various types of credit risks is established.

Once default rates and distributions are known it is reltatively easy to create an optimal portfolio (amount per loan and to whom) based on the amount you wish to borrow (and then lend to others). I suspect someone will make a program to do this on prosper and other sites in short order. You make money for doing nearly nothing (buy program, do some due diligence on your loaners, and watch for defaults). Sounds like a good proposition to me.

[akula]

Originally Posted by jdoc

I haven't looked at how much info you get on the person borrowing, but the arbitrage opportunity here for people with good credit is immense once the application has gone through it's growing pains and the default rate on various types of credit risks is established.

Once default rates and distributions are known it is reltatively easy to create an optimal portfolio (amount per loan and to whom) based on the amount you wish to borrow (and then lend to others). I suspect someone will make a program to do this on prosper and other sites in short order. You make money for doing nearly nothing (buy program, do some due diligence on your loaners, and watch for defaults). Sounds like a good proposition to me.

jdoc, you sound like my long lost brother

where's the interest in portfolio management coming from?

[jdoc]

Originally Posted by akula

jdoc, you sound like my long lost brother

where's the interest in portfolio management coming from?

I did it in University - I co-managed the PRIME fund (http://www.bus.ualberta.ca/prime/), which had about $350K (Cdn) in assets when I was around. I pitched to the University's endowment fund and got us another $250K. Now they're over $1M in assets. I was all set to become a professional portfolio manager, until I realized I'd have to move to a) Toronto b) New York c) London, etc. But I didn't appreciate that fully (nor was I able to convince my significant other to move) before I fell into startup euphoria (damn internship).

[shyr_15]

I think Prosper is a good place to borrow money. The interest rates are fairer compared to those offered by banks and other financial institutions.

Also, if you are a lender, you earn money and the same time help others.

[NeeJam]

i think prosper is a good place to lend and borrow money, they have ratings to show how good a person is to show if they are risky or not, which is excellent because it shows if lenders are taking a large risk or small

[NerdByte]

I Love Prosper. It's a great investment opportunity.