by in Public

When Newsletter Writers Start a Hedge Fund

One question that was asked during the live chat even at KirkReport.com was how much money I make from trading vs. portfolio management vs. this website, to which I replied …

I make the bulk of my money money trading and managing money at the firm. The website is basically a college savings plan for my two kids. The key is to keep your income source diversified. If your “monthly nut” is not covered, you will find yourself in the bad position of forcing trades because the mortgage is due on the 15th. This is not what trading schools tell people; they like to market a fantasy lifestyle where people run away from a job they hate and trade their way to financial freedom.
Look at all the industry professionals — NOBODY is trading at home in their pyjamas hoping to pay the mortgage with trading profits. EVERY market professional has a source of income to take care of basic office and living expenses. Brokers earn commission. Managers charge fees plus incentive. Trading schools charge tuition. Many trading gurus do the rubber chicken circuit non-stop talking about trading. They are selling maps, tents, spades and jeans to prospective gold miners.

… and pointed out the continuing saga of what happens when newsletter writers try to trade.
Bloomberg reports that Dennis Gartman has started a hedge fund, but given the performance of his Canadian ETF where he “will use equity securities, futures contracts and exchange-traded funds (“ETFs”) to provide the Fund with long and short exposure to multiple asset classes which may include but are not limited to global equities, commodities, fixed income and currencies,” he’s had to update his schtick.
20-gartman
Gartman’s Canadian Fund vs. S&P 500 Index in CAD
Gartman’s Canadian fund is lagging the S&P since inception on March 26, 2009. Seeing that the ETF essentially trades the same universe as his new fund that “will trade equities, grains, metals and almost anything that moves in the global markets,” including crude oil”, and has “no mandate or limitation as to what I can or cannot trade. I am always long something and short something. I am always looking for ways to hedge my positions”, Gartman is smart to market River Crescent as a fund that includes some “well-known hedge-fund managers” other than himself.
If anything, he is a fast learner, following his Simple Rule 16: Do More Of That Which Is Working and Less Of That Which Is Not.

8 Comments

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  1. Teresa,
    Have you ever thought of starting a Fund?

  2. No, it’s just too much work. I have to do things like attend WWE events and go stargazing in the desert. 😉 The kids will need adult supervision for some time to come.

  3. Another thing: it’s interesting that Gartman’s fund “seeks to raise” $200 million. That’s the size of the book of a mediocre asset-gathering stockbroker around here.

  4. Teresa,
    So basically you are saying that Gartman is a glorified stockbroker. Who’s fund is greatly lagging the S&P 500?

  5. Teresa,
    I was just reflecting back to March when a lot of the pundits were projecting Dow 5,000. They were evrywhere. I haven’t seen many interveiws with them lately. Where is the Skinny Lady? Is their a club they all go to until the media jumps back on their bandwagon?

    • I think they Dow 5,000 pundits are still doing their thing, but now that the market is going up, journalists need to quote the ones projecting Dow 11,000 in search of an “explanation”. When prices drift down again, they will call on The Skinny Lady. This is why financial news is a good window into the collective psyche of the market, especially the part when they ask, “How much higher/lower will it go?”

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