Markets ‘extremely exaggerated,’ but bulls will linger for ‘next several years’: Dennis Gartman
As the U.S. stock market continues to reach new milestones, Dennis Gartman, The Gartman Letter editor and publisher, last Friday, told FOX Business that fundamentals are exaggerated.
“Price to earnings multiples are extremely exaggerated. Price to value multiples are extremely exaggerated. The psychology is extremely exaggerated. I have found the market to be overbought for a long period of time,” Gartman told Maria Bartiromo on “Mornings with Maria.”
The Dow Jones Industry Average, on Tuesday, hit 26,000 for the first time, after completing the fastest rise on record between 1,000 point milestones.
The markets have been propelled by strong economic growth in the U.S. and overseas, tame inflation, double-digit earnings growth and optimism over tax reform. Despite Gartman’s view on the inflated market, in his opinion, it will continue to rally.
“Let’s be quite honest, it has been a bull market, it continues to be a bull market and… it will continue to be a bull market until it stops,” he said.
The benchmark 10-year U.S. Treasury yield, last week, also rose to its highest level since March. Gartman pointed out how an environment with higher yields and higher stocks can coexist.
“It is not unusual to see interest rates rise and stock prices to go higher and we are in that environment. The economy is doing well and that’s going to drive interest rates higher for the next several years, I think, and we may very well see stock prices continue,” he said.
Even so, Gartman advises to wait for a correction to put new money to work.
“Any two or three hundred point break… on slow volume, on lesser volume that takes a protracted two or three weeks to evolve then I would [invest],” he said. “Would I buy stocks this morning? Not with my money [and] not with yours.”
When asked whether he would invest in the energy sector Gartman replied, “It has to depend on what sort of energy one wants to be involved in,” and added he would “probably” buy a refiner and natural gas.
Gartman added, “if you’re going to be in buyer of energy take a look at some of the trusts. The yields on some of these trusts are extraordinarily high and they are fairly well defined and fairly well covered.”