Social Networks: Not a Good Place for Financial Tips – Finance News

Wednesday, February 1, 2012

Bangalore: Advice from your financial experts or an online free investment message in your social network – which one would like to go for? Well the answer is obviously ‘No’, as you pay your financial expert for advising you, which is more dependable.

But there’s two recent studies done on whether these online tips and services about your financial decisions are beneficial for you or they are risky to opt. Both the study reached to a single conclusion that these online financial informations as risky as well as hard to pick up. Investors and traders should be very careful about the source while receiving the tips.

Now a day there are many websites like tradeking.com, didyouinvest.com and firsttrade.com which sells investing ideas, share stock tips and provides buying selling strategies. There are increasing numbers of consumers searching for financial advice in online communities but there is very little fact known about how participation in such sites effects their decision making process of their financial wealth. Bad investment always takes place but going through these online tips completely leads you to a critical risk of economic thrashing.

In the study conducted by Rice University of Houston, University of British Columbia, and University of Zurich, which was called “Does Online Community Participation Foster Risky Financial Behavior?”, one result revealed that participation in an online community leads consumers to seek out support from other members that is they believe they will be helped by other community members. This perception guides them to make unwise, foolish and reckless financial decisions than non-participants which ultimately deceives them and leads them to a critical situation. They observed the financial decisions of eBay and prosper.com users and concluded that this online community participation for seeking financial decisions leads to a greater threat. It is seen that non-participants remained safe while the participants lent their own money to riskier borrowers to a greater extent.

Yaniv Altshuler, who has been keenly studying the social networking trading site, eToro.com for the past one year, says, “There is good information and there is junk information (in the internet). The key is figuring out how to predict what kinds of networks allow the junk information to be filtered out”. Altshuler is a post-doctoral associate at MIT’s Human Dynamics Group and he shows the flip side of the fact by saying that “risky online behavior isn’t necessarily bad for a trader’s bottom line.

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Carlyle launches new financial firms buyout fund

(Reuters) – The Carlyle Group has started fundraising for a new global financial services buyout fund that is seeking to top its previous $1.1 billion fund, which is now almost fully invested, a person familiar with the matter said on Tuesday.
With about 90 percent of its first financials buyout fund spent, the private equity group is looking for more firepower as Europe’s financial crisis and higher capital requirements for banks offer new investment opportunities, the source said.
The new fund, Carlyle Global Financial Services Partners II, has a minimum commitment threshold for investors of $10 million and intends to fundraise for more than a year, according to a filing with the U.S. Securities and Exchange Commission.
Carlyle, which is preparing for an initial public offering in 2012, is one of the private equity industry’s most prolific fund managers, with more than $148 billion of assets under management in 89 active funds and 52 fund of fund vehicles.
Carlyle’s financial services group is headed by former UBS investment banker Olivier Sarkozy, half-brother of France’s President Nicolas Sarkozy and a flamboyant New York socialite with a masters in medieval history from St. Andrews University in Scotland.
The California Public Employees’ Retirement System, a major investor in Carlyle, had made 1.2 times its $94.1 million contribution to Carlyle Global Financial Services Partners I as of June 30, according to a performance report by the pension fund. The first fund launched in 2008.
The financial crisis which began in the summer of 2007 has weighed on private equity returns in the sector. The $7 billion financial firms fund raised in 2006 by the private equity firm founded by former Goldman Sachs banker J. Christopher Flowers is down about 60 percent, a source told Reuters in November.
However, J.C. Flowers’ latest fund, which raised $2.3 billion in 2009 and has invested about half the money, is doing much better and is currently up about 30 percent, according to the source.
Investments of Carlyle Global Financial Services Partners I include Bermuda-based Bank of N.T. Butterfield & Son, Florida bank BankUnited and Boston-based asset manager Boston Private Financial. BankUnited shares rose as much as 9.3 percent on the day of their debut when the bank floated in January.
Earlier this year, Carlyle participated in the $1.5 billion auction of Regions Financial Corp’s Morgan Keegan brokerage and investment banking unit, sources familiar with the matter told Reuters in October.
(Reporting by Greg Roumeliotis and Paritosh Bansal in New York; Editing by Tim Dobbyn)

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