> Have you looked into Lending Club and Prosper Marketplace peer to peer lending platforms? 1. Lending Club and Prosper Marketplace have grown up in a period o

> Have you looked into Lending Club and Prosper Marketplace peer to peer lending platforms? 1. Lending Club and Prosper Marketplace have grown up in a period of historically low defaults. We will see how successful investors, retail and institutional, really are at assessing and managing risk when the current cycle ends and defaults rise. As Warren Buffett said, "Only when the tide goes out do you discover who's been swimming naked." 2. Marketplace lending activity is increasingly institutional[1]. Without institutional money seeking yield, you would not see nearly as much dollar volume in this market. 3. While I would not be surprised to find that some institutional investors aren't very diligent, you should also recognize that the notes they are purchasing typically make up just a portion of their investments. Unless you have a 360-view of a fund, it's not entirely fair to pass judgment on how well the fund manager is managing risk. 4. Assessing the risk of Lending Club and Prosper notes, which are debt obligations associated with consumer loans, is a very different exercise than assessing the risk of an equity investment in a company, especially when that company has little or no operating history. 5. The last time I checked, the notes on Lending Club and Prosper were actually obligations of Lending Club and Prosper and are not secured by the actual loans. In other words, if Lending Club or Prosper run into financial difficulty and can't meet their obligations, investors can lose even if a borrower is still making payments on his or her loan. I would venture a guess that many of the supposedly diligent retail investors you refer to don't actually know this. [1] http://qz.com/536573/one-thing-putin-and-kim-jong-un-both-get-right-changing-time-zones/ http://qz.com/536573/one-thing-putin-and-kim-jong-un-both-ge...