Nervous?

Recent weeks have been a bit of a downer haven't they?

We investors have seen a steady fall in the values of many investments.

I personally have seen my investments drop by about $2,000 since July. It does seem a bit scary when you think in dollar terms, though I tell myself that I only had that $2,000 on paper it is still a psychological loss.

But on the other hand I am still well up on the year sofar, by about $2,300.

As investors it just goes with the territory. You should be in for the good times and accept the bad for what they are. Imposters.

At work the other day, a colleague was saying how glad they are they were that they hadn't invested in stocks back after the upturn in March 2009. That the stock market is about to crash aagin and this summer's fall is a sign of things to come.

Well from someone who was invested throughout the crash, this is nowhere near a crash. Nervous investors like my colleague are right to stay away from the markets, for a nervous investor a crash does make. For themselves alone if not for everyone else. Putting money in and pulling it out at the first sign of a stock price drop. No not another panic.

Ooops as an investor I should rejoice and encourage a mini panic.  How else do bottom feeders like me get to sweep up the bargains?

Lending to Invest

Over recent weeks I have been working on a new investment.

Micro-lending and crowd funding have been around for a while but often the high risk and high minimum entry level of investment has put people including me off.

Recently I heard of a company named Lending Club,  based in San Francisco . Lending Club has been in business for several years and specializes in small loans, mostly to individuals at low interest rates 6% upwards and an investor can lend from just $25 to any single loan. You can even open your account with just $25, though this is very risky indeed if your one loan fails to pay back. Lending Club therefore ask that you increase your minimum investment to $2,500 by the first anniversary of opening the account.

How it Works.

A borrower asks for a loan from Lending Club. who procede to do credit checks and also advertise the purpose and assessed interest rate to lenders.

If you are a lender you can choose to buy a share of this borrowing note  for $25 or even buy all the outstanding value of the note which could be several thousand dollars.

Lending Club then after all checks are made, funding has been received and notes prepared send the borrower the money less a fee for finding the lenders.

At monthly intervals the borrower repays the loan over 36 or 60 months to Lending Club who pay back the lenders in proportion to their ownership of the particular note. This includes a portion of interest plus the original principal.

How Are Notes Assessed?

Notes are given an assessment by Lending Club assigned by factors such as previous payment records, debt to income ratios etc.  Note nates  go from G5 returning about 30% interest (but at very high risk of default) tio  A1 with an interest rate of 6.03%.

Diversify

In order to increase your chances of having a good return on your money it is neccessary to diversify across several hundred notes and varying the grades of note. Bearing in mind that there is no guarantee that any note will not go into default.

What Can You Do to Reduce Your Risk?

When you are choosing your notes you can add in a variety of filters, you can ask for loans to home owners, renters, set length of employment times, have only notes offered where a borrower is in little debt to income percentages or deselect borrowers who have had recent records for collection against them.

So if you set filters for borrowers with only A grade notes, with high credit scores above 700, home owners with zero defaults in the past five years that is all Lending Club will show you.

You can read the borrowers details, occupation, State of residence, default history, length of time since last default , their debt to income ratio and also their current revolving debt as well as if they have a mortgage, rent or own their own home.

What does it Cost?

Lending Club take 1% of your return as a fee, plus for accounts valued under $10,000 on each anniversary there is a current $100 fee to you.

Lending Club suggest a minimum of $2,500 to open the account but at the moment you can open the account with just $25. At the end of the first year however you must have a minimum of $2,500 in the account to keep it open.

Funding Your Account

Funding your account is simple all you need is to send a check to Lending Club or set up an electronic transfer from your bank.

Funding your account takes four business days, then you can invest in your choice of notes.

Funds received from borrowers are paid back into your lending club account throughout the month depending on the borrowers repayment schedule and you may choose to reinvest the receipts or withdraw them allowing a four business day window for funds to pay to your bank.

Find out more

 The Lending Club Homepage

Disclaimer

This post is not suggesting that Lending Club is an investment for everyone. 

You should make enquiries of your financial advisor or Public Accountant before investing.

The author does have an account with Lending Club but is not paid by Lending Club or any of its officers or affiliates to introduce new clients.

This post is merely to inform you of a possible source of investment and you should remember investing in any credit notes to the public is very risky and that you can lose some or all of your invested capital.

Union Pacific (UNP) NYSE

On May 16, 2014 tthe Union Pacific (UNP) board announced a stock split of 2 for1, the split to take place on June 6, 2014.

This will double the stock of the company available and also double the holdings of current stock holders.

I am a long term holder of UNP, it is the largest railroad owner in the US West of the Mississippi, controlling a wide range of transport route into and out of the U.S.A. and being a major player in international trade routes.

Union Pacific 2014 Stock Split.

This Year's Plan is Going Well

At the end of a successful year, I had achieved good growth in my portfolio and have stocks that I more want to Hold rather than Sell.

So for the next year my plan is to round off my best stocks.

What is rounding off?

Rounding off is making stocks up to hundreds rather than holding 95 shares one buys the remainder to put over the one hundred mark.

Rounding off is another form of re-balancing and will let me t see where to adjust more easily in the future.

One of my best investments of last year was to bBuy EIS (the Israel ETF) I bought it at $42 and it grew steadily over the Fall and Winter and has added quite a bit over the Spring too. That stock is a definite hold and round for me. The one downside is that this ETF does only pay semi-annual dividdends, but the dividends were strong when paid in July and December. Just one sees little growth from that sector for a long time when compared to my quarterly and monthly dividend stocks.

Happ investing and may you always run with the bulls.

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Where Will I Be Looking to Invest in 2014

I am still very Bullish on the U.S. economy and am also increasingly looking for an economic boost for Europe too.

With almost six years of an economic downturn behind us, since the collapse of the financial markets in 2008-9.

My theory is that people are innately positive creatures, we cannot remain negative for an extended period. So it seems to me that Europe will pull up more strongly during 2014, and as it does the people of Europe and the United States will slowly increase spending and overall consumption will rise.

As a result of this I am looking to move some of my reserves to consumer goods manufacturing stocks, with a small back-up in European financials.

This is a risky move, but I am only backing my hunch with my "Silly Money" fund. About 5% of my portfolio.

All the rest of my funds are staying in broad market stocks and bond funds with a strong position in rail road companies, I own Union Pacific and CSX stock, these are needed for getting goods across the US to ports for import and export and I also look to consumer staples to hold strong support for the year.

Can We Beat the Market?

As investors we often  hear talk about "beating the market." It has almost become a holy grail for many, but can we really beat the market?

Do I as an investor even want to beat the market?

It would be nice to earn consecutively high amounts of interest on my money, don't get me wrong, but beating the market is not one of my goals. I aim to earn more on my investments than the rate of inflation. So I am generally happy most of the time.

Also to be contrarian, I also love stock prices to fall. A falling stock price in a falling market can mean a bargain price. A falling stock price in a stable or rising market can mean you just need to get away from that stock pretty darn quickly.

Beating the market means I win,. For me to win someone has to lose. That someone has to be you.

We are all the market. You make as important a contribution to my beating the market as everyone else. In the long run I cannot beat all of you often enough to claim that I consistently beat the market. I do however, come in the upper return levels often enough so as to make me happy. Returns this year for me are above inflation andmy cash balance is nicely placed for the coming year.

Can we Beat the Market, yes, I have done it a couple of times in the past thirty years. My method then was mainly to stick all my money in one hot stock. Scarey, especially when the hot stock turns colder than an iceberg in deep space, and falls to nothing meaning that I beat the market at losing too.

As the Year Comes to an End

As this year of 2013 comes to an end, I am very happy with my investments and life in general.

In October I received my first Guide dog from Guide Dogs for the Blind. Yes folks, in the interest of full disclosure I am a blind investor.

A walk down the street for me was once a genuine random walk, now I just put my dog in harness and let his nose sniff out the good stocks.

No, not really. I am blind and do have a new guide dog named Leif. But he does not help me with my investments.

I am however very happy about the situation as it stands in my financial life. With additions of cash and increases in the market my financial base this end of year looks to have improved about 320% over the same time last year.

All in all a nice end of year report from my brokers leaves me very happy and hopeful for a prosperous year for us all next year.

Merry Christmas and a Prosperous New Year.