The time Pully was wrong about Lending Club's statements.

On the night of my last post in which I talk about the innaccuracies of Lending Club's statements, I received the following email.

Hi,     I work at Lending Club and would be happy to help you investigate your questions about your monthly statement if you like. You can either contact me directly at the email address above, or you can contact Investor Services, whichever you prefer.     By the way, I strongly suspect that the issue you noticed with March fees is a result of a change we made in how we round numbers. Until recently, we used to round all transactions to 2 digits. But since early March, we switched to an approach where we keep 10 digits on transactions, especially investor disbursements and servicing fees. We still round to 2 digits for display purposes, but internally we're keeping all those extra digits. You can see the extra digits on the Account Activity page (among others), either by floating your mouse over any number with a dotted line under it, or by downloading to Excel or CSV, which should have all 10 digits. You can read more about it here:http://kb.lendingclub.com/siteupdates/articles/Site_Updates/Changes-to-Lending-Club-s-rounding-method

I think that is exactly what happened here. When I look at my February account activity and hover my mouse over all the $0.01 fees I get nothing. March though is different and all the $0.01 fees are actually along the lines of $0.0067...
The monthly statement will add up the non rounded totals and give the total true amount.

So I owe Lending Club an apology. Here I thought it was they couldn't get a simple monthly statement correct when they were making a more accurate and improved reporting system.

Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Lending Club update Q1-2014

I had originally tested out Lending Club back in 2009. At that time, I didn't like their tax reporting and their software was lacking. However they were new so I did want to give them some time to improve and so in January of this year I came back to them. The first quarter is up so lets take a look at how its going.


Strategy: I previously discussed my strategy in what I would be picking.
High yield notes that have aged at least 10 months. The vast majority of defaults occur in that time.
I plan to run this account up to 100 notes.
Currently I have 23 but I placed an order today for 10 more and have funds coming for an additional 10. I am hoping by July that I will hit my 100 mark.

Fees: Fees were my #1 concern as that is taken out of profit. I had estimated 3% but admitted that it could well have been that high as I was buying and selling on the market frequently back in 2009. Currently, I am calculating it based upon the interest I received. I want to know how much net profit I make and how much its going to cost me to make that profit.

Results: I returned to my account in January and Lending Club estimating an 8.8% net yield.
I've already improved it and am now in the average yield range. I expect it to continue to rise over time assuming my screening strategy works out...

January: January was a scratch month so to speak as I was only transferring money.



February: My first month of payments.

Ok so I already see a problem with Lending Club's report. It shows I ended January at just over $100 yet I start February with $314. I had a deposit of $200 land on 1-30-14 but that should clearly be in January's total. Seeing as how it takes Lending Club a full week to generate this statement this error is pretty weak.

For fees I paid $0.13 for $4.86 in interest received. 2.67% fees is what I am paying here.



March:

Well they fixed January's bar chart total and all the account totals for all three month's starting and ending totals are matching up. The fees though are incorrect.
There is no way that I added more funds, bought more notes, and paid less fees then the previous month without having any late or delayed payments, which I didn't. I went through the account activity section and counted up $0.18 in fees from 3-1 through 3-31 which is to be expected as I had 18 notes worth of payments that month.
$0.18 paid on $7.02 of interest comes to 2.56% paid in fees which is pretty close to last month.

I have to admit that at this point I am rather concerned at the reliability of their reports.The yield is great but to have inaccurate financial reporting is inexcusable. As this is only a small portion of my portfolio though, I will continue to monitor.


Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

Monthly Update: March 2014

My work situation is getting better and improving with my stress level dropping and my time and energy to focus on my portfolio is returning. Management finally realized how they blew it and hurt the team. They are hiring a third new person which short term means more work in training but will obviously pay off later. I was approved for overtime and have been putting in a lot of extra hours which was stressful but will give me extra money to work with.
I am looking forward to a more frequent posting schedule...

Portfolio Activities
$1,000 deposits into Investing account
$50 deposits into Lending Club
Bought 16.9211 shares of JNK @ $41.14


Portfolio Income
Dividends
Total: $96.33
     AFL: $2.15
     IBM: $1.90
     MCD: $2.23
     ARCP: $6.35
     VTR: $12.06
     PSEC: $7.51
     TCPC: $22.42
     COP: $2.51
     NDRO: $3.13
     WHZ: $29.61
     BLV: $2.47
     JNK: $1.45
     PCY: $1.95
     Interest from Cash: $0.59
Lending Club
     Interest: $7.02
Rental Income
     Townhouse 1: $855

Vacancy: My tenant received orders that they are being sent to another military post, they are a military family, and had to move. When this occurs, my property manager keeps $300 of the last month's rent for costs. Mostly for advertising, listing costs, and cleaning. If they don't use it all then I get the left over sent to me. Its looking like I will have a vacancy for the month of April which will be rough. That's $855 less income I am getting yet my bills do not drop. Still have to pay the mortgage on it. With the overtime I am getting at work I don't think I'll see a drop in April's deposits. Hopefully it won't be vacant for two months.

Broke $100 income barrier: I had a great month income wise and broke the $100 level for the first time. Now technically I do have my rent of $855 coming in and I do record that. However, mentally I do not count it because my mortgage and other costs are greater then the rent I receive. Dividends and Lending Club interest though are a different matter. Its been a long road since I first started my blog back in April 2011 and I have a long ways to go, but its good to see the progress I've made. Its something I take pride in as most people are stuck in the "Yeah I really gotta get around to working on my finances someday." mentality.

Lending Club is going well: While I am annoyed at them taking so long to get their monthly statements to me, the fact that that is my only problem is pretty good. I'm currently have a 21% average yield. That won't last forever as sooner or later I will have a default. Until then, I'll enjoy it.

Cemig (CIG) woke up: CIG has risen 30% since March 14th. Nothing really changed but its a great example of what buying a deeply undervalued company gets you. It had dropped to a P/E of 3.5. Three point five. There is a lot of fear out there over the economy of Brazil but they aren't a luxury item or discretionary goods company. They are one of the biggest electrical companies in Brazil. People aren't going to stop using electricity. I should be getting news of the first dividend this month.



Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

How stress and life can encroach into your portfolio

Its no secret that I have been posting infrequently as of late. No the blog isn't dying. Yes I am still around. However, instead of leaving it just at that I thought that discussion of why I'm posting less recently would be a useful topic.

At work I was on a team of 5 people. We are down to 2 of us as 3 others have moved to different teams and management has been slow in rehiring. The workload has staid the same and the other guy has some chronic health problems and is often out 1 day of the week. We also merged with a team of 6 that is also understaffed. I applied for and got a promotion as the lead over it all. I have no idea what those other 6 does but am no responsible for them now.
I work in I.T. and have to renew a certification by the end of April or I lose my job. Even understaffed, its a requirement without exception. Additionally I am going to college and trying to work that into my time. To say my stress level is high is an understatement.

What does all that have to do with investing and trading? Psychology plays a big role in running a portfolio. More so than I think most people realize. You are taking your income from your day job and trying to grow it and that responsibility is yours alone. You can read blogs and get ideas from others but its your finger on that buy button on your broker's platform. If your mind is on other things can you really be sure that you fully researched this company? Perhaps you missed something during your research because your mind was on other things. Doubt can creep in and you start to second guess your existing positions on if you should stay long or switch to something else.

I've come to learn the hard way over the years to keep an eye on my mentality and psychology to make sure its not interfering with my portfolio. Its surprising sometimes how easy it is to screw up your portfolio when your focus is on something else. I've purchased call options when I wanted puts because I was mentally distracted while placing an order. So when I find myself overwhelmed I have to slow thins down portfolio wise. Cash is a valid position and times like this is a great time to just sit back and sit out a round or two of the markets. They'll always be there for when we are ready but we have to be sure that we and our portfolios will be there in the future and not blown up.

Now dividend investing seems pretty stress free. You buy a solid company and sit back and wait for the dividends to roll in so you can compound. Just look at the solid companies like Johnson & Johnson, Coca-Cola, and other stalwarts of the business world. It's easy to buy a company that will last for decades that will always increase their dividend right?
Well take a look at the historic listing of the Dow Jones. Just 10 years ago it held such solid companies as GM, Eastman Kodak, AIG, and International Paper Company. We have to be aware of survivorship bias where we look at which companies survived and ignore the ones that struggled or went out of business. Dividend investing takes a lot of time to compound in those 2%-3% yields and you may not notice you have a problem right away. Think back to 2008 and ask a person invested in Citigroup or Bank of America how many years (or decades) of dividends will be needed to make up their losses. They might well have been worried about their job and their focus was distracted on other things in their lives.

We are all human and far more than just an investor...
We are mothers with sick children in the hospital.
We are employees stuck in a crappy job thinking about how our last interview went and why won't they call to tell us how we did.
We are husbands and boyfriends going through a rough patch in a relationship.
And yes, we are investors with our finger on the mouse deciding if we should click "buy" or not.

How we deal with stress in our lives can make or break a portfolio quicker then picking the right stock.


Disclaimer: The investments and trades discussed are not recommendations for others. I am not a financial planner, financial adviser, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.