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The Dennis Gartman Interview (exclusively for my readers)
By Rob | June 30, 2008
Dennis Gartman is one of the most influential and powerful figures in the investment world. His name is spelled next to financial icons such as to George Soros, Marc Faber and Jim Rogers. Perhaps one of the most dynamic market thinkers in the industry, for the past 20+ years, Dennis Gartman is involoved in publishing an extremely insightful daily newsletter known as The Gartman Letter. His research incorporates fundamental, technical, political and economic analysis of the global markets. His long list of clients include institutions such as Goldman Sachs, UBS, Soros Asset Management and JP Morgan. Additionally, Mr. Gartman has lectured at central banks around the world. With that in mind, I was extremely happy to catch up with Dennis and ask him questions exclusively for my readers.
Dennis, in 2003 you said that a good proportion of your clients read your reports mostly for the political circumstances and said that part of your job is to protect people from the next political blowup. With that in mind, which two countries would you go long for the next 5-10 years and which two countries would you short and why?
I would be long of Canada and Australia… two countries with very stable governments; highly productive and educated populations, with both raw materials and high tech products that can be sold into the growing Asian markets. I would be short of Japan and Russia; two countries with aging populations that are also becoming smaller and smaller and smaller. One needs a growing population to sustain economic growth; neither has that.
If you are forming a team of the best investing brains, strategist and traders, and your life depends on whether your team outperform the S&P 500 - who would you hire?
I’d hire myself; I’d hire the two young men already hired; I’d hire Brian Wesbury as my chief economist, and I’d hire Paul Tudor Jones.
Do you believe in cycles in the financial markets and what is the typical length in commodity cycles for gold, oil, bonds. Would this be dictated by moving averages, or trendlines, economic conditions or human sentiment?
I do indeed believe in cycles; Things rise; things fall; empires rise and empires fall. So too the markets. A generation seems about reasonable for a cycle. Kondratieff was probably right; things then to move in thirty to fourty year cycles… not always and not in everything; but usually and far more often than not. Why? Human sentiment ebbs and flows, and markets follow sentiment.
Dennis, your clients are basically institutions, hedge funds, and traders. Just like them, I enjoy your research, but would like to share some of your picks with my readers. What stocks/commodities should we buy now looking to exit two-to-five years from now? Is this congruent with what you are holding and do you ever happen to recommend mutual funds?
I have no idea what to hold two months from now, and certainly I’d be idiotic to try to chose something to hold for five years. The best that one can do is put the trade on today that seems to be the strongest, and hope that the position has merit next week, then next month, then next quarter then next year.
Many of my readers have great aspirations - of becoming the best investors and traders they could possibly be. What steps should they take and how would you guide them to go through the learning process, what skills and life advice would you offer them?
The only thing that a great investor needs is the ability to say he’s wrong when he is wrong. Being wrong is part of the deal; being wrong and remaining wrong is not. Great investors know that they shall be wrong 70% of the time and yet also know they can not only survive that ratio, they can prosper. Great investors know their own limitations, and they act accordingly. All else is pap.
Dennis, you once said: “When a security falls below the price you paid for it the market is telling you were wrong.” How should traders/investors manage a trade once we are in it and how many holding should a $100,000 account have in order to be diversified.
Managing a position is easy; if something moves against you more than 2% you have no choice but to reduce your position… perhaps not entirely, but at least acknowledging that the position is unprofitable and reducing it somewhat pays homage to the “trading Gods.” They like that. When the trade begins to work, add half again as much… on strength if one is long; on weakness if one is short. Add half again as much the next time, and the next and the next, all the while defending the position against losses with stops, or options, or market orders to exit/and or reduce the trade if one is disciplined enough to do that.
Dennis ,thank you for answering all questions and looking forward to talking to you again in the future!
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June 30th, 2008 at 1:54 pm
good job,any comments from Mr. Gartman is always an eye opener.He seems to be long in commodities from these two countries.I wonder he has change his mind to go long on gold short term, since march 08
June 30th, 2008 at 4:14 pm
As far as i remember he did change his mind on gold and went long. I actually stayed long gold since last year, and although it did have a orderly correction, the long term fundamentals still look bright.
July 4th, 2008 at 10:08 pm
Happy 4th everyone!!!
Great interview Rob.