INVESTMENT REPORTER
Money never sleeps, and Dennis Gartman doesn't get much shuteye, either.
As the author of an influential newsletter that tracks global financial markets - everything from grains and currencies to stocks and precious metals - he's usually up half the night writing.
"I get up about 1 o'clock in the morning ... and I write furiously until 5 o'clock," the Virginia-based Mr. Gartman says. Thanks to his nocturnal habits, his Gartman Letter usually lands in clients' in-boxes well before the sun rises so they can get the jump on the trading day.
When he's not writing or trading, Mr. Gartman spends his time advising the recently launched Horizons AlphaPro Gartman Fund, which invests based on strategies in the Gartman Letter.
We sat down with Mr. Gartman when he was in Toronto recently.
With all the potentially inflationary stimulus being pumped into the economy, a lot of investors like gold right now. You don't. Why not?
It should be going up, shouldn't it? But it's not going up ... and that's the first thing that good traders should be aware of, that things don't do what logic would dictate they should do.
Do you have a theory as to why it's not going up?
It could be IMF [International Monetary Fund] sales, it could be the potential for IMF sales, it could be a lack of Indian buying, it could be any number of things. We'll find out. What I've learned in 35 years of doing this is that you'll probably find out later why it's not going up.
What about oil?
I don't know what to do with oil. I can make you the case that oil goes to $65 (U.S.), I can make you the case that oil goes to $35,
I can make you the case that oil is happy as a lark either side of $50. And I can make all three of those cases and embrace them enthusiastically and so therefore I have no position in oil.
We're getting some contradictory signals about the U.S. economy. Some people say we're nearing a bottom, others are still predicting a Great Depression II scenario. Is that possible?
It's not going to happen. What took a rather severe recession in 1929 and 1930 and turned it into the Depression of the 1930s was that after the stock market crashed we did something totally idiotic ... we raised taxes to balance the budget and the Treasury secretary asked the Federal Reserve bank at the time to drain reserves from the system ... How stupid was that? That's beyond belief that you could be that dumb.
And today?
[Federal Reserve chairman] Ben Bernanke understands that that was in fact idiocy, and when he saw the banking system implode last year, he made certain there was going to be ... a huge surfeit of liquidity to make certain that the implosion of the banking system would not devolve into a depression, and I applaud him for that.
What are the implications for the stock market? Do you think this is a sucker's rally or a new bull market?
I actually think that the low was made last October, November and tested again in January [based on Mr. Gartman's proprietary TGL International Index], probably never to be seen again. Can I be wrong? Hell, yes. But I don't think that those lows will be seen again.
So stocks are a good buy?
What is the no-brainer trade, what is the asset that is so cheap compared to any other asset that you could look at it 25 years from now and say, "Gee, how did I miss that?" And the only asset I find is stocks. That's the only asset that is under-represented and anathema to most investors, and that's how bottoms are made.
What stocks do you like?
I like owning the makers of things that if you drop them on your foot, it will hurt. Stuff. We're buyers of stuff. We are long Freeport McMoRan, we are long Southern Copper, we are long Alcoa. How much more basic in materials can you be than two copper companies and an aluminum company?
You're a trader. But do you think there's a place for buy-and-hold investing?
No. Because it costs you huge sums of money. Buy and hold means when something goes against you, you sit with it. Why would you do that? Because once something starts down, you don't know how far it will go. Buying and holding Nortel from $100 down to $1 really isn't such a good idea, is it? Buy and hold - nonsense, and you can quote me on it. Absolute and utter nonsense.
You follow a lot of economic indicators. Are there any obscure or esoteric ones that are your favourites?
I watch what I call the direction of revisions. One of the things you learn about economics is that in economic upturns, all data are always revised for the better. In an economic downturn the revisions are always for the worse.
What's interesting now is in the past month and half we're starting to see revisions getting better.
The revisions are no longer now for the worse, they're for the better, which tells me the economy is probably going to start doing better.
People forget that the end of recession comes at the worst of the economic circumstances. Things are their [worst] at the bottom ... conversely, at the highs the news is always spectacularly good.
Given all of that, what is your best guess as to when we will start pulling out of this recession?
We may well be coming out of it now.
