Thursday, August 4, 2016

Gundlach & Gartman

No that's not some fancy new law firm I'm about to discuss. It's Jeff Gundlach of Double Line Funds and Dennis Gartman of "The Gartman Letter.

Both gave some dire warnings this week about equity markets.  Gundlach was more pessimistic overall, and Gartman was noting caution.  At this point I could see why as stocks have marched up to all time highs. The market will naturally pull back a little bit as investors and traders take profits, and of course some upcoming international central bank meetings can cause institutions  to re-position creating near term swings up and down.


You might recall my post on Gundlach back in May when he said stocks are "Dead Money". Of course since then the market has rallied to all time highs. Since that statement May 25 and his newest on August 1st stocks have gone up 3.8%. That's 47.5%* of what an investor can expect on average for their holdings to gain each year, and it happened in only 6 weeks. Nice call Jeff!!!

If you read between the lines, or in Gundlach's case just read what he said, and you'll notice he isn't even completely following his own advice
that he thinks everyone else should follow.  He's not selling equities in his main funds, and he actually is re-adjusting his US debt position more than anything else. At least according to his word.  But yet he's telling everyone else to sell everything they have including the kids!  What BS advice.  Well Jeff maybe stocks are going up because of this uncertainty, and people are perceiving them as the safest place for their money.

I'll just go out and state my thoughts for the record. Gundlach is a PUNK.  Back in my old neighborhood if you were called a punk it was seen as one of the ultimate insults. You saved that one for the guys who really deserved it. Also calling them a Chump would be good for 2nd place. Yeah he makes money for investors in his fund, but he doesn't give two s**** about the small guy trying his best to run his family investments without a fancy MBA or finance degree. He probably hopes the small guy sells his shares to him when everything has plunged so he can scoop them up at a discount, and then resell it to him at the top when the small guy gets the courage to buy again. Rinse and repeat.

Gartman on the other hand was less adamant about any impending "doom".  He just noted that he's seeing signs of a possible pullback, and he'd be willing to trade it considerably.  He didn't give half-assed advice like Gundlach advocating you sell everything. Maybe Gartman understands that retail investors aren't great at timing the market, and that would likely cause them more financial harm.

If you haven't figured it out I HATE when these guys come out and say this stuff on national TV directly, or via phone interviews.  For one it constantly scares retail(ie individuals with not a lot of money) into thinking they need to sell their stocks because it's risky and they are going to crash. It also embeds bias preventing some people from ever buying in the first place due to aforementioned risk. That can totally ruin their financial future forever.

Is there a time to sell? Absolutely. Should you base it on either of these two CHUMP's advice? Only if you are paying them.  That's true for all advisors.  Don't just make buy or sell decisions because of what some guy says on TV. He does not have your best interest in mind.  At the end of the day only one person ultimately has your best interest in mind and that's you. Up next is the financial advisor you pay. And if he tells you to sell and ends up being wrong then at least you can fire him and call him a punk. They'd probably deserve it.

*calculated with 8% expected average return.

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