Dennis Gartman’s decision to end his daily investing newsletter says a lot about the transformation the investing world has undergone over the past generation.
When he launched The Gartman Letter in 1987, celebrity stock pickers were all the rage. Computers, index funds and quantitative investing had only begun to infiltrate the trading world and most investors believed a smart, determined person could still outsmart the combined wisdom of the market. At a time when news travelled at a stately pace, this do-it-yourself attitude seemed entirely reasonable.
“When I started, I used to get the China People’s Daily three days late in the mail, and I was still two days ahead of everyone else in the West,” Mr. Gartman said in a phone interview from his home in Virginia.
The need for a newsletter to serve as an information conduit has disappeared, Mr. Gartman said. Multitudes of online sources provide instant access to breaking financial news, statistics and analysis. “The ubiquity of the internet has made information so readily available that the competition has become more difficult,” he acknowledged.
In addition, at 69, he is feeling his own age. His right hand “is acting a bit independent” and it takes him six hours to type what used to take three. All of that prompted him to announce last Friday that he was winding up his venerable letter, once one of the widest read investing dispatches for active traders.
The end of The Gartman Letter underlines how investing has transformed itself from a craft practised by humans with opinions to an engineering discipline dominated by math geeks with formulas.
According to Merrill Lynch, about 45 per cent of assets under management in U.S. investment funds now follow indexing approaches – passive investing, in the jargon. Passive investors simply track market benchmarks and make no active attempt to outwit other traders.
This makes perfect sense if you accept the theory that markets are efficient compilers of information. According to this logic, the market price of a stock already reflects an accurate summation of all the publicly available facts and opinions about it.
To be sure, not everyone buys the efficient markets hypothesis. Much of the investment industry continues to insist that smart, informed traders can still outpace the market.
Perhaps so. But even those who see a role for active management are relying more and more on mathematical approaches. Many, for instance, try to isolate factors or attributes such as “low volatility,” “momentum” or “value,” which have distinguished winning stocks in the past. They then bet heavily on mechanically assembled portfolios of stocks that possess a hefty dose of the factors that have worked historically.
That was never Mr. Gartman’s style. His newsletter roamed widely, surveying economic, political and market trends, usually with special attention to the commodity markets where Mr. Gartman had spent the early years of his career as an economist. His opinions were sharp, clearly expressed and typically delivered with an easy personal charm.
He was far from infallible: The Horizons Gartman ETF, an exchange-traded fund that followed his advice, launched in 2009 but fizzled and was closed in 2013. Nor was he particularly consistent. In 2018, he acknowledged a bad bet on the stock of Riot Blockchain Inc., a cryptocurrency promoter, only two months after telling CNBC that bitcoin was nonsense.
Still, his morning newsletter was a welcome feature of many traders’ days. Mr. Gartman says he will continue to do TV and radio interviews. And he continues to be a big believer in the appeal of commodities over the next few years. “Wheat is cheap, cotton is cheap, corn is cheap. … [Be] a buyer of the movers and purveyors of commodities.”