Colin Twiggs, Author at the patient investor

February 6, 2013

Hedge Funds Are Now Buying Stocks While Retail Investors Sell | Business Insider

Matthew Boesler writes:

We have noted how, based on weekly data from BofA Merrill Lynch, it appears that hedge funds have been sellers of stocks for the last several weeks, while on the flip-side of the coin, individual investors have been buying up stocks at a rapid pace over the same timeframe. Now – coincident with the “rough patch” the S&P 500 has run into the market hasn’t really gone down, just sideways – those roles appear to have reversed.

Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.

February 6, 2013

High Frequency Trading Fake Quotes | Business Insider

Linette Lopez writes:

Nanex, a Chicago-based market research firm, sent us a chart that illustrates what can stand in a trader’s way when they’re trying to quote the right price……

“It happens all the time,” [Nanex CEO Eric] Hunsader told Business Insider. “It crowds out legitimate prices… it’s like SPAM. Maybe one of these guys is a legit offer but there’s no way of knowing.”

View chart at High Frequency Trading Fake Quotes – Business Insider.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

February 5, 2013

Getting the Property Problem Wrong | David D. Friedman | Libertarianism.org

David D. Friedman, in his reply to Matt Zwolinski, says that the solution to the conflict between individual freedom and property rights lies with distinguishing between ownership rights over uncreated property, such as land, and ownership over created property, such as a crop of wheat (or a railroad train):

….You wish to stand on a certain piece of common property. I am there already. You have the same right as I do to stand there, but you do not have a right to move or injure me, hence you cannot exercise your right to stand there without acting unjustly. I have not appropriated the land I am standing on in the usual sense of the term, but I have “de facto” appropriated it for as long as I stand there, not by altering the nature of your right to the land but by making it impractical for you to exercise it without violating other rights.

…..I plant wheat in a field. You come and want to plant wheat in the same field. I point out to you that the field is common property which you are welcome to use, but the wheat I have planted is my property (the result of my labor in gathering seeds, watering them so they would sprout, etc.) and you do not have the right to disturb it. Any way you can figure out to exercise your right to the field without violating my right to the wheat is fine with me.

Taking the last example, a problem arises if one individual plants the entire common area with wheat, preventing anyone else from doing so and causing them to starve. There have to be conventions in the use of common property — which have evolved over time into property rights.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

February 5, 2013

Liberty and Property | Matt Zwolinski | Libertarianism.org

Interesting discussion from Matt Zwolinski on the conflict between individual freedom and property rights, the two basics tenets of Libertarianism:

A property right in land is a right to control access to that land. It is a “right to say ‘No’.” But if all land is privately owned, and all landowners have a right to say “No” to all non-landowners, then non-landowners are not equally free with landowners. They exist in a state of dependence. Like feudal serfs or the most abject slaves, they live only by the consent of those in command……

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

February 5, 2013

Did Securitization Lead to Riskier Corporate Lending? – Liberty Street Economics

João Santos writes:

There’s ample evidence that securitization led mortgage lenders to take more risk, thereby contributing to a large increase in mortgage delinquencies during the financial crisis. In this post, I discuss evidence from a recent research study I undertook with Vitaly Bord suggesting that securitization also led to riskier corporate lending. We show that during the boom years of securitization, corporate loans that banks securitized at loan origination underperformed similar, unsecuritized loans originated by the same banks. Additionally, we report evidence suggesting that the performance gap reflects looser underwriting standards applied by banks to loans they securitize.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

February 5, 2013

CBO Sees Rising U.S. Debt, Economic Rebound in 2014 | WSJ.com

DAMIAN PALETTA at WSJ writes:

Economic growth and recent legislation have cut the federal budget deficit in half in the past four years, but federal debt will still hit historic levels if more isn’t done, the Congressional Budget Office said Tuesday in the annual update of its budget and economic forecast.

The CBO said it expected economic growth to be sluggish in 2013, in part because of a sharp drop in government spending, but it sees a better economy in 2014 as the recovery takes hold.

via CBO Sees Rising U.S. Debt, Economic Rebound in 2014 – WSJ.com.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

February 5, 2013

Nana Rolland: North Korean Pawn in a Chinese Chess Game – WSJ.com

NANA ROLLAND at WSJ writes:

While it steps up its own provocative actions, including recurrent intrusions into Japanese waters and airspace around the disputed islands, China exhorts the U.S. to restrain its “troublemaking” Japanese friends. The implied linkage is clear: As Beijing tries to forestall North Korean brinksmanship, it expects Washington to do the same.

We have seen this gambit before. In 2003, when Beijing feared that Taiwanese president Chen Shui-bian might be inching toward independence, it called on Washington to bring him to heel. In return, it agreed to host multiparty negotiations to persuade Pyongyang to abandon its nuclear-weapons programs.

Beijing got the better end of that deal…..

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

February 5, 2013

Chinese Firms Shrug at Rising Debt | WSJ.com

DINNY MCMAHON And COLUM MURPHY at WSJ write:

Analysts at Standard Chartered PLC estimate that Chinese corporate debt was equivalent to 128% of gross domestic product by the end of 2012, up from 101% at the end of 2009. In a 2011 research paper, economists at the Bank for International Settlements found that when a country’s corporate debt exceeds 90%, it becomes a drag on growth.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

February 5, 2013

EconoMonitor » Australia’s Economic Outlook—The Nauru Option?

Satyajit Das writes:

In a 29 November 2010 speech entitled The Challenge of Prosperity, RBA Governor sought to illustrate the combined effects of the gains of the appreciating terms of trade position and the A$ strength in the following terms: “In 2005 a shipload of iron ore was worth the same as around 2,200 flat screen televisions In 2010, the same shipload was worth around 22,000 flat screen TVs”. In a Freudian slip, the RBA Governor identified a fundamental issue with Australia’s economic model.

Australia may have substantially wasted the proceeds of its mineral booms, with the proceeds channelled into consumption. The nations did not channel enough into strategic long term investments or develop a new industrial base. According to one study, the commodity boom increased government revenues between 2002 and 2008 by around A$180 billion of which A$36 billion was used to repay public debt, A$69 billion was placed into the Future Fund (to meet the cost of public sector superannuation liabilities) and $75 billion was transferred to households in the form of tax cuts and payments.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

February 5, 2013

Immigrants in Switzerland are far more likely to have their application for citizenship rejected if the decision is made using a referendum. | EUROPP

When immigrants in Switzerland apply for citizenship, the decision is made in the municipality where they reside. While in some parts of Switzerland these decisions are made by elected representatives, in other municipalities individual applications are subject to a public referendum. Dominik Hangartner and Jens Hainmueller assess the impact of direct democracy on citizenship applications, finding that far fewer applications are accepted when a referendum is used. The applicant’s country of origin is the most important factor in determining success, with applicants from Turkey and the former Yugoslavia over ten times more likely to be rejected than those from other countries, such as Italy.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.