patrick.net

Several years ago I had a friend who wanted to raise $25k for a project. He could not get a traditional loan. So he asked some friends, one of which was me. He was a good friend. Yet, I wasn’t sure the “project” would work. That said, like lending money to your drunk brother-in-law, I decided to “lend” him $5k, knowing there was a good chance I’d never see the money again. But I was his only friend to do so. So, he decided to tray and raise the money via Prosper.com. He got on there and tried to raise the full $25k. After two weeks, he had raised about $500. At this time, I told him why don’t I just lend him my $5k via prosper, that way everything could be handled through there. He agreed that was fine. The next morning, I lent him the $5k at about 10am. By the end of the day, he had his $25k fully funded!!!

Moral of the story, all those people lending him money did so ONLY because they saw someone lend him $5k and figured surely if “this” guy would lend him that much money, then he must be good for it. THAT was their credit analysis.

In the end, he did pay all the money back on time.

But this demonstrates that there is VERY little true analysis that goes into crowd-funding like this. And sooner or later, back times will come, and there will be massive losses through all these various crowd funding mechanisms.

I think anyway.

Randy

Oh, man, I would not touch Lending Club stock (LC) with a 10-foot pole. Much too risky for my taste. Unsecured loans on the internet. What could go wrong?

Then again, it might double, but personally I will not play.

I think it's a gamble too, but I would be willing to risk 'beer money' on it, just to keep an eye on it.
Don't stocks typically rise in December, so the NY traders can get their bonuses?
If that's so, I might buy in January after a pull back.

I would not buy stock in this company. Quite frankly, SODA was a better bet, and it sucked.