The Gartman Letter
Yes, It's Time To Buy
Is it time to buy China? At this point, I think the answer is yes, though not a resounding yes; not a vehement, unmitigated, unhedged yes, but yes nonetheless. I could not care whether the market is down 20 percent from its high in supposed "official" bear market territory, for I've never been one to assume that rigid rules such as this have a place in the world of investment.
The question is, Have the authorities lost control of the circumstances in China? We think not. In fact, I think that the nonaction taken by the Chinese monetary [authorities] … and obviously the acquiescence of the newly in-place political authorities … was a warning shot across the bow of the economic ship there, telling the market and especially those in the housing and/or commercial real estate markets that they cannot believe unequivocally that the government will be there to bail them out of uncomfortable and uneconomic situations.
The People's Bank of China has made it clear that there are indeed consequences to be suffered should investors become overextended. This, I think, is a very good thing.
So the weakness of the past several weeks is very probably an opportunity into which to become involved in China once again, for I've stood aside from the global equity market since February and now have dry powder to put to use. I'll put it to work firstly in China.
[Tyler Mordy's opinion is next.]