Well-known economy analyst and internet blogger Mike Shedlock (Mish) argues in a recent article that while peter Schiff may have called a collapse in the US financial markets and economy, he dropped the ball where it matters most: with his clients’ portfolios.
I have talked with many who claim they have invested with Schiff and are down anywhere from 40% to 70% in 2008. There are many other such claims on the internet. They are entirely believable for the simple reason Schiff’s investment thesis was flat out wrong.
This has been confirmed by a variety of forum and blog comment sources on the web with one investor indicating his portfolio is down 60%Â . Another investor on Chris Martenson’s forum claims, that as of November 2008, his investments are down 40%.
Schiff was correct about point number 1 above – The US equity markets crashed. That was a very good call. Unfortunately, his investment thesis centered on shorting the dollar in a hyperinflation bet, and buying foreign equities rather than shorting US equities.
Furthermore, Schiff made no allowances for being wrong and had no exit strategy whatsoever.
What happened in 2008 was that foreign equities sold off much harder than US equities, and a strengthening US dollar compounded the situation.
In other words, Schiff failed where it matters most: Peter Schiff did not protect his client’s assets. Let’s take a look how, and more importantly why, starting with charts of various foreign indices.
Mish explains that Mr. Schiff’s theories on decoupling and hyperinflation of the US dollar simply did not pan out as Schiff had predicted, though Schiff continues to maintain, in recent interviews, that this will be the case in the future.
Schiff asks “But what if it [the US dollar] keeps falling? What if it’s down 5% next week? And 5% the week after that? And then what if it drops 10%? ….”
That was quite some rant, enough to scare many who listened. Schiff is indeed very charismatic.
He never bothers to ask, “What if it doesn’t?” The answer was not so pretty for his clients. The simple fact of the matter is Schiff was wrong where it mattered.
Mish suggests that if hyprinflation were coming, that Schiff should be recommending that his clients buy houses. I had a similar theory in my recent article Brief Thoughts on The Real Estate Market.
Here are 12 reasons Mish gives for why Peter Schiff was wrong:
Wrong about hyperinflation
Wrong about the dollar
Wrong about commodities except for gold
Wrong about foreign currencies except for the Yen
Wrong about foreign equities
Wrong in timing
Wrong in risk management
Wrong in buy and hold thesis
Wrong on decoupling
Wrong on China
Wrong on US treasuries
Mish goes on to post a statement from a EuroPac client portfolio, showing a loss of 61% and challenges Peter Schiff to prove otherwise.
Mish has most definitely called Peter Schiff out on his recent performance in global investing. His clients seem to be down by at least 40% or so. Only time will tell how those portfolios end up. Per Schiff, these are buy and hold strategies, so 6 – 12 months proves nothing. We’ll have to see where these portfolios are in 3 – 5 years.
My feeling is, that now is precisely the time to buy into certain foreign markets like China and sectors like Commodities, Infrastructure and Mining. Prices seem to be way off their highs from mid-2008. I have a strong feeling there’s a bull market somewhere!
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Schiff is a snakeoil salesman, that is why he is on CNBC and FBN. You won’t ever see real experts on TV. Schiff was very wrong. Anything he was right on was known by most. He got the details wrong and that was enough to destroy is clients’ accounts. I will be expecting his brokerage company to face major lawsuits.
I’ll avoid the debate on Schiff being right or wrong for now.. In Schiff’s defense, however, I will say that up to this point, had his clients held through the Nov/March busts, they should be about even or pretty close, especially on the precious metals side. If you are looking for Peter Schiff to provide short-term results, you have the wrong advisor, I think. His position is long-term holds, which means they will fluctuate like crazy during market volatility, but you also get paid dividends while you wait.
Is there any doubt, that if we avoid a world war, that China will be showing very strong growth rates? Also, gold may have gotten slapped in 2008, and may do so again in 2009, but in the long-run, does it matter if you bought at $900, it drops to $750, before ending up at $2200 in 2011/2012?
Schiff is long-term. He is no market timer.
Mr. Mish and other Schiff critics conveniently forget that Peter always claims he cannot, and doesn’t even try to time the market. In his long-term, dividend-based strategy that is irrelevant.  My account with Peter, while down ~45% at the lowest point, is now up 5% over last years HIGHS! That’s a huge return; I don’t see Mr Mishit come out and show HIS clients accounts’ performance now do we. Peter’s buy-hold-and-give-to-your-children strategy doesn’t register on most folks’ short-term investment horizon. This typically american short-term-gain attitude is what got us into this mortgage mess in the first place. Mr. Mish, we expect an apology to Peter, but alas in your arrogance you are probably more concerned trying to figure out how come Peters’ accounts are up so much more than your own since the beginning of this year.
If Schiff is selling snakeoil, give me another bottle. Ted says, “You won’t ever see real experts on TV.” Then I guess Jim Rogers and Warren Buffet never go on TV. I agree with Mac that he is long term, just like Buffet and Rogers. If you think your investments will never go down then you shouldn’t be in the market. If Schiff has lawsuits, they will pale in comparison to firms who told everyone to keep buying Bear Stearns as they were going down the tube. At least Schiff knows how to recognize fundamentals.
Mish smish, he talk like god but stink like fish
Mish gets a lot of things wrong but that’s part of the game of web popularity
consider just how wacko Allan Jones is yet he racks up the hits – so it’s got little to do with right or wrong
Mish might be (i say might) a good analyst but he’s no demographer – he looks at charts that are easy to analyse and form an opinion on but he does not do deep analysis of the mass movements of people – hence his continuous rant about Chinese property prices – here we are witnessing a once in a millennium movement of people from rural to urban life and the consequent property price movements are a “bubbleâ€
he makes the same mistake with those countries that have very high net immigration such as Australia. He sees only the easy to see numbers and fails to dig even a little into the facts simply because he is a pig-headed arrogant Allan Jones clone albeit with a more acceptable visage
but get this
when i listen to the Allan Jones ranters (and there are frighteningly more than i like) they are all now followers of Mish.
And Mish loves it.
Watch how Mish publishes
when things are looking good in the world he runs off at a local level tangent to keep the “oh my good we are all doomed†tone running
as soon as the markets look a little jittery he’s selling “oh my god we are all doomed†in a big way so that he always looks right
and it’s not an issue of right or wrong
in the end we are all dead
so what?
keep reading Mish and you’ll suddenly realize one day he’s just as full of $&IT as any other wacko
yes he has been very entertaining at times
and early on he was almost uniquely lucid
but now?
he’s, let’s face it, BORING
murray