After ‘Horrid’ Cliff Deal, Buy Stocks: Dennis Gartman
The deal finally reached over the U.S. "fiscal cliff" should ultimately be positive for the U.S. stock market and investors should buy U.S. equities on any weakness next week, according to The Gartman Letter writer and editor Dennis Gartman.
"This was horrid, awful, vile legislation but we had to pass it and now we can put this fiscal cliff behind us for a while," Gartman told CNBC Thursday, as the rally in global stock markets which followed Wednesday's deal showed signs of fading.
Gartman pointed out that the New Year often starts with a rally because of increased inflows, and said that weakness in U.S. equities should be bought, while investors should sell off the debt markets on their relative strength.
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"Owning stocks at this point is rather like owning stocks in Zimbabwe several years ago – but remember as the Zimbabwean dollar plunged, the stock market soared. We may have the same sort of thing,"he said.
"The corporate world is probably in its bestshape in decades and will do well if the global economic environment is stable.Shares are still really cheap."
(Read More: Gartman on Oil)
He added a note of caution about the pace of the rally – but said he would add if the Dow fell again next week.
Analysts have warned of other threats to the U.S. economic recovery following the dealover the "fiscal cliff" of tax cuts and spending rises.
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Gartman, known for taking bullish views ongold, recommended that investors should have 5-10 percent of their portfolio inthe metal – and denied being a gold bug.
(Read More: Gartman on Gold)
"The trade for the year is to be long gold and equities. Gold is simply another currency," he said. "I wish to own gold and am long gold in euro and yen terms. I don't see any contradiction in being bullish on both gold and equities because it is predicated on the monetary authorities being aggressive in the expansion of reserves. Under those circumstances, gold and equities will both go higher."
Written by Catherine Boyle, CNBC. Twitter: @cboylecnbc.