Something strange is going on. Heading into the Friday open, in his daily letter to “clients”, Dennis Gartman said that in his “retirement portfolio” he was short the market and long gold, to wit:
In our own retirement fund here at TGL, we have essentially the same positions that we’ve had for the past several days… and in the case of gold, for the past several months and years; that is, we are long of a small position in a small coal mining company; we are long of gold in terms of Yen, EURs and US dollars (the latter via the shares of the largest gold mining firm in North America, against which we are short of now deep-in-the-money calls) but we are net-short of the market via derivatives.
He also provided a P&L update: “For the year-do-date, we are up 5.7% in our retirement funds, pleasantly out performing our International Index by 19.1% thus far and outperforming the S&P by a somewhat smaller 16.2%.”
Which is great: a cynic would ask if Gartman was up because he was fading the calls Gartman was giving his “clients”, but we are not cynics, and instead will congratulate Gartman on his long overdue “outperformance.”
And yet, something odd emerges which makes us doubt the veracity of anything Gartman says.
Here is his latest positional update as of this morning, it comes at a time when both the market has ripped, and gold has slid from Friday’s levels, levels which supposedly resulted in Gartman’s retirement funds being up 5.7%.
This is what he said:
We remain, here at TGL, in our retirement funds with the positions we had in place at the end of last week; that is we are long of the shares of a small coal mining company and we are long of gold in EUR, Yen and US dollar terms (the latter in the form of the shares of the largest gold mining company in North America, hedged, however, with rather deep-in-the-money calls written against them, and the former two in the form of GEUR and GYEN). We are also short of the market generally via derivatives that give us a modest net short position over all, and it is our intention to add to that derivative position sometime later today, sufficiently so to take our net position modestly shorter.
Ok, so no change, which is also wonderful – good to see less flipflopping in the virtual, pardon retirement portfolio.
And yet what makes zero sense is thisL
As of Friday’s close, for the year-to-date we were “up” 7.3%.
So going into a day when he was short the market and long gold, and when he was supposedly up 5.7%, a day in which stocks soared and gold dropped, Gartman ended that very day up another 1.6% and is, in his own words, up 7.3% year-to-date.
While by now we have gotten the hang of Gartman’s “investing”, we fail to make any sense of Gartman’s math.
If someone can explain to us how someone, even Gartman, can generate a nearly 2% return in a day when all your major positions lose, we would be all ears, and furthermore we would promptly patent the “explanation” because we are confident there are many “hedge fund” managers out there who would love to replicate the Gartman logic of being up on a day when the market rips against them.
via Zero Hedge http://ift.tt/1PYV8WM Tyler Durden