Goldman and Bank of America Exiting China Bank Investments

I found it interesting to learn that Goldman Sachs has completely divested its investment in Industrial and Commercial Bank of China, the largest bank in China.  The divestment occurred earlier this year and was one of a series of stock sales by Goldman which now no longer holds any stock in the Bank, according to publicly available information.

Bank of America has also now exited its large position in another major Chinese bank, China Construction Bank.

The following article posits that this shows the lack of confidence large U.S. financial institutions have in the quality of Chinese banks and their loans.  This conclusion is among the factors cited in the article for a predicted major financial meltdown in China, which will affect the rest of the world. 

http://money.msn.com/top-stocks/7-signs-of-the-next-financial-crisis

I need to do a bit more digging on this one.  I could think of some regulatory reasons for the divestments (capital requirements, for one) but I suspect the cause is the obvious one:  a belief that the investments had run their course and a further run-up in Chinese banks was unlikely or, worse, a run-down was likely.

But let's walk one step further here.  The stocks sales by Goldman and BoA generated fairly large gains for the banks.  Unless the banks feared a run-down in the Chinese banks, why would you want to generate large gains in 2013?  Possibly because profits will not be as high this year as last year or next year.  Unfortunately, this is just food for thought because we don't know what Goldman and BoA really think about the likelihood of a Chinese bank disaster. 

Facebook and the Future of Privacy

Wired magazine did a good piece on how a large portion of Facebook's earnings are coming from mobile ads and that the company apparently plans on increasingly moving toward "impression"-based advertising for revenue.  Translation:  charging advertisers every time you simply look at an ad (rather than click).  For this type of advertising to be tracked, however, Facebook has to know what you, yes you, are doing.  That has obvious privacy concerns.  Link to the article below:


http://www.wired.com/business/2013/05/facebook-is-growing-through-risky-business/

Follow-Up on FXCM, Forex, and Japan Stimulus

Modesty is a nice quality but it's not generally rewarded in the financial world.  So, I'll give myself a short, gentle tap on the back for my prediction that the the forex broker FXCM would rise in the wake of the Japan stimulus announcement.  I made that call on April 4 and FXCM has risen 6% since then (the stock was trading at $13.10 when I posted but ended the day at $13.44).   

Forex Trading in Wake of Japan Stimulus: FXCM

I've been thinking about a position in FXCM, a retail foreign exchange trading retail broker.  Now, I've jumped in after a recent pull back in the stock and today's announcement of a massive stimulus by the Bank of Japan, partly aimed at devaluing the Yen.  It would seem that this move could spur a wave of forex trading, as traders assess the effect of the Japan stimulus on currency markets.  We'll see.

Follow Up on My Post on Japanese Elections

In December 2012, I suggested you might want to think about some investments in Japan if Shinzo Abe was elected PM of Japan, because he could well push the country into a US-like central bank stimulus, in an effort to reduce the value of the Yen and boost Japanese exports.  This has now happened, as the Bank of Japan today announced a massive stimulus campaign:

http://money.msn.com/top-stocks/post.aspx?post=452506bc-5f54-43a3-b415-ab99a8de70b2

EWJ, an ETF I recommended at the time of my last post in December 2012, is up more than 10% since then and may now climb higher.

Can You Afford to Be on Facebook? Part II

Jon Evans at TechCrunch agrees with me on the possible dangers of being deeply involved in social media sites like Facebook.  Since he's a novelist, he paints an even scarier picture of your possible future than I did.  Here's a link to his article:


http://techcrunch.com/2013/03/30/big-data-could-cripple-facebook/

Can You Afford to Be on Facebook?

How would you like a potential employer to look at your Facebook "Likes" and conclude that you are not smart enough for the job?  Or, equally bad, that your sexuality is incompatible with the employer's views?  But, you say, nothing in your Likes speaks to these issues.  So you might think, but a joint study between Cambridge University and Microsoft Research predicted a large group of Facebook users' IQ's, sexual orientation, and other traits to a high degree of accuracy using their Facebook Likes.  Here is a link to an article on the study:

http://www.wired.com/gadgetlab/2013/03/facebook-like-research/

Not convinced of the method?  It really doesn't matter.  These studies are being done, they will be found on the internet (or otherwise) by employers, and quite probably incorporated into hiring decisions whether they are accurate or not. 

As this type of use is made of Facebook data, more people will have to ask themselves whether they can afford to be on Facebook.  And that is not a question that will be good for Facebook's business.