Statistically speaking, the risk of default *is* knowable. For a given credit grade there is a historical default rate. Therefore if I make one loan (or 5 or 10) you are correct, I don't know whether those are going to default. If I make 100+ loans however, I should start to see default rates approaching market norms for that credit grade.
This really is the credit-union approach, only with more direct benefit to the lenders. Several lenders pool their money and make a loan to the same borrower. Because you're not (typically, some lenders are) lending to 1000s of borrowers it is indeed more risky than simply putting your money into a credit union, but the reward (interest rate) is much higher as well.
Atlantageek has a graph of risk adjusted interest rates on his site.
----
See my personal finance blog for more...
So I assume you never invest in stocks or corporate bonds then, because they have risk and you don't know the people you're giving money to?
There is a clear risk/reward relationship here. The highest 3 year CD rate I can find is 5.4% APY. I have $1000 into Prosper at an average rate of 16%. That is far higher than any bank or CD rate (because the risk is greater). Is it a good investment? Depends on whether or not all my loans get paid back in full. At $50 a loan I can afford for a couple to default and still come out ahead of the CD option (once I've scaled to a large enough number of loans).
Additionally, I get monthly cash flow (albeit not a lot of money on $1000 investment). I can either reinvest it or take the cash. Should I need the cash immediately (which I doubt, I have other, more liquid reserves for that) I could always take out a loan (on Prosper) at a lower interest rate than my average (because I have good credit). The loan could then be paid off from the proceeds of loans I've made.
In truth, the larger risk of Prosper is in the amount of time needed to discover and research new loans on a regular basis.
I hacked a portal page together as well. Added gmail-lite to it. Works pretty well on the psp...
If you want to take a look set your dns to 207.44.176.95 on the psp. Also available at http://www.lightcubed.com/wipeout/index.html
The small screen on the psp is actually quite stunning. At the distances you hold it from you its big enough to enjoy the movie as well. I showed mine to some coworkers who commented that it was like holding their plasma screen in their hands.
"Campus Recruiter (Female) Sizzlers wanted !!!.. HR will never be the same again!!! Are You Hot ?.. Campus Recruitment will never be the same again!!! CLIENT Our Client was founded in 1989, and is among the worlds largest pri...[more]"
You're making the assumption (incorrectly) that EV1 signed the license as you see on the web site. What we do not know is what alterations were made by EV1 before hand. If none, then they are stupid and will be out of business soon but I sincerely doubt that. I would bet that the pricing structure was changed significantly and the language strengthened in favor of the licensee (EV1). SCO needed a win of this nature, it will help them sell licenses to other organizations and give them some good PR going into earnings.
All theories aside I fail to see what liability EV1 is looking to protect themselves from by spending $1M (or whatever it was) when Red Hat is indemnifying them for losses because of this issue. My guess is that the funds are coming out of their advertising/PR budget since that is the only plausible benefit to making this announcement.
I will then sue them under the The Anticybersquatting Consumer Protection Act for every possible instance of a domain name that is "confusingly similar" to any trademark I hold. This should work out to several thousand combinations per Mark. (i.e. d0main.com, doma1n.com etc...) Damages are between $1,000 and $100,000 per domain name plus attorney fees. Between myself and anyone else doign this Verisign will be Bankrupt in no time.
Slashdot Mirror
Statistically speaking, the risk of default *is* knowable. For a given credit grade there is a historical default rate. Therefore if I make one loan (or 5 or 10) you are correct, I don't know whether those are going to default. If I make 100+ loans however, I should start to see default rates approaching market norms for that credit grade. This really is the credit-union approach, only with more direct benefit to the lenders. Several lenders pool their money and make a loan to the same borrower. Because you're not (typically, some lenders are) lending to 1000s of borrowers it is indeed more risky than simply putting your money into a credit union, but the reward (interest rate) is much higher as well. Atlantageek has a graph of risk adjusted interest rates on his site. ---- See my personal finance blog for more...
So I assume you never invest in stocks or corporate bonds then, because they have risk and you don't know the people you're giving money to?
There is a clear risk/reward relationship here. The highest 3 year CD rate I can find is 5.4% APY. I have $1000 into Prosper at an average rate of 16%. That is far higher than any bank or CD rate (because the risk is greater). Is it a good investment? Depends on whether or not all my loans get paid back in full. At $50 a loan I can afford for a couple to default and still come out ahead of the CD option (once I've scaled to a large enough number of loans).
Additionally, I get monthly cash flow (albeit not a lot of money on $1000 investment). I can either reinvest it or take the cash. Should I need the cash immediately (which I doubt, I have other, more liquid reserves for that) I could always take out a loan (on Prosper) at a lower interest rate than my average (because I have good credit). The loan could then be paid off from the proceeds of loans I've made.
In truth, the larger risk of Prosper is in the amount of time needed to discover and research new loans on a regular basis.
I've written up a longer post on my experience with Prosper on my personal finance blog.
Actually the relevant code on their page is this:
The other code is for some other metrics tool they are using.
I hacked a portal page together as well. Added gmail-lite to it. Works pretty well on the psp... If you want to take a look set your dns to 207.44.176.95 on the psp. Also available at http://www.lightcubed.com/wipeout/index.html
The small screen on the psp is actually quite stunning. At the distances you hold it from you its big enough to enjoy the movie as well. I showed mine to some coworkers who commented that it was like holding their plasma screen in their hands.
http://nytimes.com/ads/lincoln/ (no registration required as this is part of a campaign by Lincoln.)
Not real high tech but kind of cool nonetheless.
If you sell the house and belongings you could probably retire in India. The cost of living is dirt cheap.
At least they are honest...
.. HR will never be the same again!!! Are You Hot ? .. Campus Recruitment will never be the same again!!! CLIENT Our Client was founded in 1989, and is among the worlds largest pri ...[more]"
"Campus Recruiter (Female)
Sizzlers wanted !!!
You're making the assumption (incorrectly) that EV1 signed the license as you see on the web site. What we do not know is what alterations were made by EV1 before hand. If none, then they are stupid and will be out of business soon but I sincerely doubt that. I would bet that the pricing structure was changed significantly and the language strengthened in favor of the licensee (EV1). SCO needed a win of this nature, it will help them sell licenses to other organizations and give them some good PR going into earnings.
All theories aside I fail to see what liability EV1 is looking to protect themselves from by spending $1M (or whatever it was) when Red Hat is indemnifying them for losses because of this issue. My guess is that the funds are coming out of their advertising/PR budget since that is the only plausible benefit to making this announcement.
I will then sue them under the The Anticybersquatting Consumer Protection Act for every possible instance of a domain name that is "confusingly similar" to any trademark I hold. This should work out to several thousand combinations per Mark. (i.e. d0main.com, doma1n.com etc...) Damages are between $1,000 and $100,000 per domain name plus attorney fees. Between myself and anyone else doign this Verisign will be Bankrupt in no time.