|my prosper.com experiment is over
||[Oct. 29th, 2010|04:40 pm]
In the spring of 2007, while on a plane to LinuxTag and getting ready for the release of Fedora 7, I read this article about Prosper.com.
I thought it was a clever idea, and I took a little bit of money and tried it out from the lender perspective, winning bids on parts of sixteen different loans. Three and a half years later, all of the loans that I was a part of have been repaid or defaulted, and my return was -9.7%. Ten of sixteen loans were repaid in full, and the other six defaulted at some point in their three year period.
Given the Great Financial Beatdown that came in the middle of that time period, it doesn't surprise me that the experiment ended up being a loss. The Dow Jones Industrial Average was -18.6% over the same stretch.
That said, I'm not planning on using Prosper in the future. It was a one-off experiment, and I don't see the value in trying it again. The risk is too high, and the maximum upside can be similarly achieved via more traditional investment vehicles.