4 ms·

Noooooooooo Past performance is not an indication of future.

by justicezyx 9y ago

solarkraft 9y ago
Remember Bernard Madoff? Edit: Ran a Ponzi scheme (promised 12% p.a.) from the 1970s til 2008. $64.8 billion of damage.
- kolpa 9y ago
  So you're saying that the key to success is to get in at the ground floor, and exit after a few years?
  - kjs3 9y ago
    Isn't it always?
deleted 9y ago
[deleted]
akvadrako 9y ago
It’s not speculation - it’s a continuous income stream. Of course loan rates may go down but there is no risk about “performance”.
- JumpCrisscross 9y ago
  > loan rates may go down but there is no risk about “performance” They can default. Twino is a Latvian LLC [1] that walks back its “guarantee” in section 7.4 of their User Agreement: “TWINO shall not be held liable neither by the Investor, nor by the Assignee, or their legal successors or heirs, or any Third Parties in the event that the Loan Agreement is not performed by the Borrower completely or in any part thereof and if the Claim is not repaid and settled.” If you think you have an investment with “no risk about performance,” you should not be investing your own money. [1] https://www.twino.eu/ws/public/user-agreement-stream?lang=en https://www.twino.eu/ws/public/user-agreement-stream?lang=en
  - akvadrako 9y ago
    Nobody is arguing they can't default; even banks can default. The point is 7% interest isn't absurd.
    - JumpCrisscross 9y ago
      > 7% interest isn't absurd It does require asking intelligent questions. Like what has been the historic default rate amongst TWINO’s borrowers? Is the borrower quality for recent cohorts higher or lower than for earlier cohorts? How might one enforce their claims in a Latvian court? Cryptocurrency gamblers don’t do this. If you’re earning 7% in U.S. dollars or Euros and not reading and thoroughly understanding the prospectus, you’re being a chump. (Not making specific claims regarding TWINO. Seven percent may be reasonable compensation for the risk involved. But claiming there is “no risk about performance” is absurd.)
      - akvadrako 9y ago
        It's not a "past performance isn't indicative of future performance" scenario in any reasonable sense. The loans you buy are already sold and it's fixed rate. You are calling the risk of the whole company defaulting "performance" and that's what I disagree with. Their highest rated loans (11-13%) are guaranteed by them; that's quite explicit. The end-borrower default-rate is pretty low which is why they can do it.
        JumpCrisscross 9y ago
        > The loans you buy are already sold and it's fixed rate Let's say you buy 100 $100 loans at 7%. You expect to earn back your $10,000 of principal plus $700 of interest. If 10% of your bonds default, you get back $9,000 of principal and $630 of interest. That's a 4% loss on principal. TWINO advertises it will buy back defaulting loans at face value; if they pay out, you earn $10,700 irrespectively. (I'll ignore that their Terms of Use appear to explicitly refute this guarantee [1].) But what if they don't pay? Do they have cash on hand to pay if 10% of loans issued through their platform default? What about 50%? (This happened in the financial crisis. People thought they had "no risk about performance" because someone guaranteed their bets.) This is why understanding the background default rate, whether the credit quality of new borrowers is worse than old borrowers, and TWINO's cash position are important. If the whole company defaults and borrowers default enough, you will underperform (a) expectations, (b) a risk-free security like a U.S. Treasury and (c) even straight cash. TL; DR TWINO is risky. Why do you think they're selling the loans to you, instead of banks or hedge funds or sophisticated investors? > You are calling the risk of the whole company defaulting "performance" and that's what I disagree with See the above. If the company defaults your guarantor vanishes. Now you're directly exposed to the credit of your borrowers. (You'll also have to enforce your claims under Latvian law. Be ready to find and pay a Latvian lawyer.) [1] https://www.twino.eu/ws/public/user-agreement-stream?lang=en https://www.twino.eu/ws/public/user-agreement-stream?lang=en

Noooooooooo Past performance is not an indication of future.

solarkraft 9y ago

Remember Bernard Madoff? Edit: Ran a Ponzi scheme (promised 12% p.a.) from the 1970s til 2008. $64.8 billion of damage.

kolpa 9y ago
So you're saying that the key to success is to get in at the ground floor, and exit after a few years?
- kjs3 9y ago
  Isn't it always?

deleted 9y ago

[deleted]

akvadrako 9y ago

It’s not speculation - it’s a continuous income stream. Of course loan rates may go down but there is no risk about “performance”.

JumpCrisscross 9y ago
> loan rates may go down but there is no risk about “performance” They can default. Twino is a Latvian LLC [1] that walks back its “guarantee” in section 7.4 of their User Agreement: “TWINO shall not be held liable neither by the Investor, nor by the Assignee, or their legal successors or heirs, or any Third Parties in the event that the Loan Agreement is not performed by the Borrower completely or in any part thereof and if the Claim is not repaid and settled.” If you think you have an investment with “no risk about performance,” you should not be investing your own money. [1] https://www.twino.eu/ws/public/user-agreement-stream?lang=en https://www.twino.eu/ws/public/user-agreement-stream?lang=en
- akvadrako 9y ago
  Nobody is arguing they can't default; even banks can default. The point is 7% interest isn't absurd.
  - JumpCrisscross 9y ago
    > 7% interest isn't absurd It does require asking intelligent questions. Like what has been the historic default rate amongst TWINO’s borrowers? Is the borrower quality for recent cohorts higher or lower than for earlier cohorts? How might one enforce their claims in a Latvian court? Cryptocurrency gamblers don’t do this. If you’re earning 7% in U.S. dollars or Euros and not reading and thoroughly understanding the prospectus, you’re being a chump. (Not making specific claims regarding TWINO. Seven percent may be reasonable compensation for the risk involved. But claiming there is “no risk about performance” is absurd.)
    - akvadrako 9y ago
      It's not a "past performance isn't indicative of future performance" scenario in any reasonable sense. The loans you buy are already sold and it's fixed rate. You are calling the risk of the whole company defaulting "performance" and that's what I disagree with. Their highest rated loans (11-13%) are guaranteed by them; that's quite explicit. The end-borrower default-rate is pretty low which is why they can do it.
      - JumpCrisscross 9y ago
        > The loans you buy are already sold and it's fixed rate Let's say you buy 100 $100 loans at 7%. You expect to earn back your $10,000 of principal plus $700 of interest. If 10% of your bonds default, you get back $9,000 of principal and $630 of interest. That's a 4% loss on principal. TWINO advertises it will buy back defaulting loans at face value; if they pay out, you earn $10,700 irrespectively. (I'll ignore that their Terms of Use appear to explicitly refute this guarantee [1].) But what if they don't pay? Do they have cash on hand to pay if 10% of loans issued through their platform default? What about 50%? (This happened in the financial crisis. People thought they had "no risk about performance" because someone guaranteed their bets.) This is why understanding the background default rate, whether the credit quality of new borrowers is worse than old borrowers, and TWINO's cash position are important. If the whole company defaults and borrowers default enough, you will underperform (a) expectations, (b) a risk-free security like a U.S. Treasury and (c) even straight cash. TL; DR TWINO is risky. Why do you think they're selling the loans to you, instead of banks or hedge funds or sophisticated investors? > You are calling the risk of the whole company defaulting "performance" and that's what I disagree with See the above. If the company defaults your guarantor vanishes. Now you're directly exposed to the credit of your borrowers. (You'll also have to enforce your claims under Latvian law. Be ready to find and pay a Latvian lawyer.) [1] https://www.twino.eu/ws/public/user-agreement-stream?lang=en https://www.twino.eu/ws/public/user-agreement-stream?lang=en