Gartman, Cashin, Klarman, & Marks: Market Music Has Stopped, I’m Getting Out. The Psychology of The Markets Has Changed, And Changed Dramatically. The Un-Abating Risks of Collapse Dwarf All Other Factors. Time to Go Short?
Dennis Gartman, founder, editor and publisher of the Gartman Letter, tells CNBC why he thinks the psychology of the markets has changed, and changed dramatically.
One can spend all day watching financial media channels stuffed full of self-promoting index-hugging asset-managers and be left with the belief that all is well and that the market does indeed represent our reality… Or, as UBS’ Art Cashin notes today (confirming what we first published a month ago –here, here, and here), there is more (well less) to today’s global economy and markets than meets the eye or rests in the headlines. His excellent diatribe today reiterates our previous comments of investing icons such as Baupost’s Seth Klarman and Oaktree’s Howard Marks that “(The) underpinnings of our economy and financial system are so precarious that the un-abating risks of collapse dwarf all other factors.”
Via Art Cashin,
Cautionary Comments From Investing Icons – Near legendary investor, Seth Klarman caused a good deal of buzz yesterday:
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Investing today may well be harder than it has been at any time in our three decades of existence,” writes Seth Klarman in his year-end letter. The Fed’s “relentless interventions and manipulations” have left few purchase targets for Baupost, he laments. “(The) underpinnings of our economy and financial system are so precarious that the un-abating risks of collapse dwarf all other factors.
Another icon causing a lot of buzz was Howard Marks of Oaktree Capital. Warren Buffet once said something like – Whatever Howard Marks writes, I try to read. Marks gave an interview which you can access at http://business.outlookindia.com/article.aspx?283882. Here’s a typical part:
The level of economic activity, anecdotal as you describe, is not an indication of health in the future. It is an indication of health in the present. The question is, what are the implications for the future? When you say restaurants are full and you can’t get a cab, there is no contravening the fact that the economy is doing well at the top. The problem is the people who are not in the upper strata; their incomes are flat to down, they are losing their overtime. The joblessness rate is up significantly and that excludes people who aren’t seeking jobs and are unemployed — their future is not good. The ratio of income from the top to bottom is higher than in the past, which itself is unhealthy.
12 sells to every buy
The February 2, 2013, edition of The Economist presented a rousing endorsement for Scandinavian living. (“Cecil Rhodes once said that ‘to be born an Englishman is to win first prize in the lottery of life.’ Today the same could be said about being born Nordic.”) The front cover (“The Next Supermodel: Why the World Should Look to the Nordic Countries”) followed by an editorial and a 14-page supplement, cited the authority of 37 experts. Nowhere did the esteemed magazine mention three of the largest housing bubbles in the world. This does not serve the Economist’sconstituent short sellers. More fundamentally, it betrays the establishment’s blank slate of lessons learned from the past decade.