Even the Savviest Investor Can Get Caught Up, Screw up When It Comes to the Crypto Space

Legendary finance writer Dennis Gartman didn’t shy away this week in admitting he suffered major losses from a crypto-related play because he went against his golden investment rule.

One of the most well-known and respected financial writers in the investment industry has had to admit that a crypto space investment got the best of him and his money.

Dennis Gartman, the writer behind the famous Gartman Newsletter, wrote in his publication Tuesday that he’s lost dearly from his investment in Riot Blockchain.

In a change from the usual narrative about scams and their victims, Gartman steps up quickly and puts the blame on himself, not Riot Blockchain. While Riot Blockchain has not been charged by any regulators as being a scam, an investigation by CNBC has raised serious questions about its name change, which now includes the popular word ‘Blockchain.’

Let’s discuss.

The admission

When Gartman wrote about how the Riot Blockchain investment went south on him, he essentially pointed out how the crypto craze can lead to even the savviest investor abandoning core investment principles.

In Gartman’s case, the number one rule was broken, and that is to never buy a stock that’s in decline.

Gartman stated:

“More importantly, we are smarting from having broken our own primary rule of trading to never, ever add to a losing position.”

Even some of Gartman’s followers, who are familiar with his bearish investment strategies, which typically center on owning tangible assets, expressed surprise that he was investing in crypto-related assets.

CNBC puts Riot Blockchain on blast

We’ve told you about the concerns about Riot Blockchain, which is a  biotech-company-turned-Blockchain-startup. Formerly doing business as Bioptix, it changed its name to include the word ‘Blockchain’ and immediately saw its stock price soar.

However, many suspected it only changed its name to ride the cash wave from being affiliated with the lightning hot crypto space.

Well, CNBC did an extensive investigation about the biotech company, and when that investigation’s findings were broadcast on Friday, Feb. 16, Riot Blockchain’s stock plummeted, losing a third of its value.

About the rapid, and deep, fall, Gartman said:

“Friday was one of the worst days we have suffered through in a very long while. We were long of a sizeable position in a Blockchain-focused company that was the victim of a CNBC expose, which sent the shares down more than 20% and which sent us ‘down’ for the year to date, having been up about 6% previously.”

Be on the lookout

Investors have been warned by regulators to be careful when it comes to investing in companies because they seem to be affiliated with the crypto space.

In a recent warning statement that preceded Gartman’s reveal, the financial regulator FINRA said:

Especially in today’s “hot” cryptocurrency environment, it’s easy for companies or their promoters to make glorified claims about new products, services and other cryptocurrency-related connections. And, even when legitimate companies flock to a hot, new sector, fraudsters almost always follow suit, exploiting the news to launch their latest frauds du jour. Follow these tips to avoid costly mistakes.

Despite the losses from the Riot Blockchain investment, Gartman is still optimistic about the Blockchain technology. We’ll keep you informed about his next crypto-related moves, if they even happen.

“Lessons have to be learned again and again and again it seems. Or at least we apparently have to learn them over and over and over again.” – Dennis Gartman

Source: Read Full Article

Leave a Reply