Investing

With all the recent Crypto Currency hype with BitCoin, Ethereum, Monero, etc, it got me thinking about the value of different assets in society and what ownership really means.

Ownership

What is the distinguishing factor that allows 1 person to own something and another person not to own it? One person can claim something is his, but if someone else claims they own it as well, who is right? In our society, assets of significant value like Real Estate have a document that is filed with the government that states that X person owns this piece of land and the improvements upon it. The entire position of ownership is based upon the fact the government, with all its legal force, will allow you to own the property and all rights that go with it. If the government was not present, someone could come in with some weapons and claim the property as their own if the landowner is unwilling to put up a fight.

The entire value of the property in this case comes from the fact that the government will enforce property ownership rights. This comes with its own set of problems. The government does not do this for free. They expect the land owner to pay a fee (taxes) to the government for this right as well as many other services that may not be of interest to the landowner. This can cause the property’s value to fluctuate significantly if there are changes in government policy. Let’s imagine that the local government decides to raise taxes from 1% of the property’s value to 5%, this will very likely cause property values to drop significantly.

If you go on and begin look at other types of assets such as physical currency, bonds, business equity, these assets also tend to have their ownership [...]

Since, I haven’t posted on here in a while, you probably didn’t even know that I was using Lending Club, but now you know!

What is Lending Club?

I’ll give  you a brief intro on Lending Club if you are unfamiliar. Lending Club is a site that facilitates peer to peer lending.  Here is a common loan story on lending club:

John has got himself into a situation where he owes a lot of money at high interest rates on his credit cards. He has decided that he wants to take control of his life and pay off his credit card debt, but a bank won’t give him a loan to pay it off. He goes online to Lending Club and requests a loan from his peers that is much lower than the interest rate on his credit cards. His online peers can choose to invest in his loan in increments as small as $25. He pays off all his credit cards and now only has 1 monthly payment to Lending Club at a lower interest rate than he previously had.

This is a very common situation on Lending Club, but people can actually get loans for all kinds of reasons such as home improvement, starting a business, etc.

So what is this bot for?

Anyway, Lending Club has grown in popularity over the past few years since I started investing. Large institutional investors have started dumping millions of dollars into these loans and have started acquiring the best loans as soon as they are available for investors to put money in. Since the loans were getting snatched up so quickly, I was left with all of the loans that historically performed the worst. (I will [...]