We were amused to report early on Monday that just as oil was trading within pennies of $46 and set to tumble, while US equity futures were about to commence their biggest two day gain in two months, none other than Dennis Gartman chimed in with yet another can’t miss “prediction” when he said that “it is time to buy crude oil and to sell equity futures, with the only problem now to decide how to weight the position.”
Sadly for the newsletter writer, “retirement fund investor” and CNBC Fast Money regular, there was another far bigger problem: the trade immediately blowing up in his face and as he writes today, “we have suffered one of our worst days of the year.”
For the dramatic admission that Gartman can actually lose “money” read on:
Share prices have risen nearly universally higher as nine of the ten markets comprising our Internaitonal Index have risen, and only the market in Hong Kong has fallen, and even then it has fallen by the barest of margins. As a result, we have suffered one of our worst days of the year in our retirement funds, losing a bit more than 1% as we came into the markets with a modestly bearish point of view and were therefore modestly net short of the equity market. For the record, as of this morning, stocks here in the US as measured by the S&P are up 1.9% for the year-to-date, while stocks in global terms as measured by our Index are still down 2.3%. Further, from their highs made very nearly one year ago… the actual high having been made May 26th of last year when our International Index was marked at 11,188… stocks are still down a very material 16.5%.
In our retirement account, we are up a mere 4.8% year-to-date, with our position in a Bermuda based crude oil tanker company hurt badly by a downgrade by our friends at Jeffries & Company [sic], taking that stock to an “underperform” rating. Further, our short position in “derivatives” obviously hurt badly too. We ended the day holding our position in the crude oil tanker in its entirety despite the downgrade. We have our position in aluminium intact and still have the out-of-the-money calls which we’d rolled down earlier this week. And we have the “punt” in a fracking related position.
All that in good humor. What makes us very nervous, however, is that following Druck, Singer and JPM, Gartman is the latest to go long gold “in dollar terms.”
We did, however, make two important changes: Firstly, given the recent sharp weakness in the Japanese Yen and the recent modest weakness in the EUR, taking both to levels we thought likely to find support, we moved to reduce our long positions in EUR/gold and Yen/gold modestly, replacing those positions with US dollar denominated gold instead, ending the day evenly split between the three “types” of gold but keeping our over-all gold position intact. Secondly, mid-day we reduced our short derivatives position by about one third also, discretion being the better part of trading valor.
Because if there is anything that can send gold plunging, and more than offset ongoing Goldman “bearishness” on the precious metal, it is Gartman starting to buy.
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