In every field of investing, there are certain leaders that the intelligent investor keeps a close eye on. These are investors that have had a consistent track record of great returns and are widely known for their knowledge of the market and their ability to separate the good from the bad. In the stock market, you have legendary investors such as Warren Buffet or Peter Lynch. For bonds, Bill Gross, and for real estate you have the likes of Donald Trump.
Although peer-to-peer lending is a relatively new investment vehicle, there are leaders emerging in this new field as well and you would do well to watch what they are doing. In order to help you do just that, I’ve created several new features on my Prosper community site, http://www.ericscc.com, that allow you to identify the most successful lenders and follow their lead using personal watch lists and automated e-mail alerts. In case you aren’t familiar with ericscc.com, I’ve been tracking overall market, lender and group performance on Prosper almost since the beginning. In addition to lender tracking, you’ll find a wealth of other information and market statistics to help you better understand the Prosper marketplace.
In addition to watching what other Prosper lenders are doing, there can also be some value in watching Prosper groups as well. The group concept on Prosper offers an interesting twist to peer-to-peer lending. Although it isn’t a perfect comparison, I like to think of groups as being a bit like mutual funds. You have a manager (group leader) who uses his experience or social connections to try to bring in above-average borrowers for his group’s investors. However, just as most mutual funds do not beat the S&P over the long haul; most groups will not outperform the overall Prosper loan market either. The trick is to find those few gems out there that are able to consistently bring in quality borrowers, and keep an eye out for new listings from those groups. So, similar to our lender tracking tools, we also offer tools to help you evaluate the groups on Prosper and receive notifications when a group you are watching posts a new listing.
If you are having trouble picking good loans, using these tools to follow the market leaders is certainly a good place to start!