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Is This The Start Of A Bear Market?

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As Wall Street attempts to make its way through another wild day some traders are turning to esteemed investor Dennis Gartman for his insights. Gartman warned about a credit correction back in February. Wait until you hear what he says now!

Dennis Gartman is editor and publisher of The Gartman Letter – a newsletter that Eric Bolling calls a “must-read”. Gartman joined the guys for this conversation and following are excerpts from what was said.

What’s happening in the market?

“It’s subprime all the time,” replies Gartman. “And the news is just leeching out bit by piece…”

He adds, “And now you’ve got problems with mortgages. Mortgages, that should not have been made. Banks were racing each other to make mortgages to people who should not have been able to borrow. Now we’re stunned to find out that some of the loans are going toes up? It’s astonishing to me and it’s long overdue. I think it’s going to take a good deal more time before it runs its course.”

How much time?

“A year maybe. Maybe more,” says Gartman. If you look at the re-sets in mortgages we don’t even have the bulk of them coming until the turn of this year. And it’s probably going to be 6 months thereafter – until any of these re-setters find they can’t afford their house and it will be another 6-12 months before any legal action follows.”

He adds, “The problems with the housing industry is that it doesn’t happen over night and it’s not a cancerous growth that can be excised and removed. It takes time to take care of those problems.”

How are you trading this?

“Well, we’ve been short a little while - and trying to stay short the financials. That is where the problems lie and I don’t see any reason to believe these problems are going to go away anytime soon… explains Gartman.

When did you get to the short position?

“About 3 weeks ago,” he says. “The first day that Bear Stearns (BSC) had a problem.

In what position are you most confident?

“We own some obscure things that we try to hedge with, but the biggest trade is to be short financials, ” says Gartman.

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Trader disclosure: On Aug 9 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (JWN), (INTC); Najarian Owns (GS), (AMSC); Bolling Owns (T), (BP), Gold, Silver; Bolling Owns Japanese Yen Futures; Gartman Is Short (BAC), Gartman Is Short (GS)