Saturday, July 11, 2009

GT_ JULY 11/2009

This was an entertaining item in the Globe Report on Business last week – readers were invited to direct questions on the capital markets to an “expert” - I believe header was “Ask Dennis Gartman “ or ask an expert who lives in a foreign country

Here is a clip (with the typos)

Vaidyisa Bala writes: What are some of the best dividend growth stocks in Canda for long term (5 to 10 years ) investment you recommend? This could be in any stable sector.

Dennis Gartman: Dividend stocks for 5-10 years? I’d say probably the same dividend stocks that were good for the past 5-10 years, which is none. I’ve no ability to look out 5-10 years, and anyone who tells you they can is a charlatan and/or foolish. Perhaps a year or so is reasonable, and to that end I’d buy raw materials manufacturers and miners: steel; copper; zinc; grain growers; water… these are where I’d put my money… with stops on everything.

WOW – this guy really ignores the question – the answer is flippant and furthermore Gartman knows little of Canadian equity history – but we need to check out his story
Below is a long term chart of the TSX Financial (dividend paying) Index – note the relatively smooth returns from 1990 to 2007 – the 2008 collapse and subsequent recovery was a global event – in answer to the question a stable group

Below a long term chart of Canada’s Metal Mines – not a stable group and clearly not relative to the question because of the volatility and unpredictable returns

From 1991 to 2003 basically dead money – no income just nothing but lost opportunity to be in places like financials, technology consumer – now look at the big gains from 2004 to 2007 and then once again dead and volatile money from the 2007 peak to date

So Gartman would buy raw materials manufacturers and miners: steel; copper; zinc; grain growers; water OK great what are these names? Aside from the miners what are the great names in grain growers and water?

The only asset left is a hole in Saskatchewan - Potash Corporation of Saskatchewan which at its manic peak was worth more than Canada largest bank and RIM – can we now even think of Potash as a reasonable investment for our investor who seeks the safety of “stable dividend growth”?

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