Thoughts?
Schiff called the 2000 tech bubble, the 2008 housing crisis, and has been calling for a dollar crisis next. He views all this monetary stimulus through the correct lens, the austrian lens, so he is not fooled by all the Ph.D’s at the Fed.
Yea, I’ve been a pretty big supporter of Schiff for the last 6 years, basically since becoming intersted in finance. He is a little out there though, and sometimes makes silly comments that make him look bad.
Like how theYellen is lying about her intention to raise rates to keep up market confidence. I don’t think she’s lying, I think she really beleives it, but is wrong.
Isn’t the classic Schiff call that gold is going to $5000 in the midst of a dollar collapse/hyperinflation? The guy seems more interested in dogma than data. Not a great track record on his firm’s mutual funds either.
Sure. That sort of comes with the job though. If you are going to call things out that the industry is ignoring (subprime), people are going to say you are silly.
He could be right though. If she actually doesn’t intend to raise rates (ZIRP forever), she HAS to at least say she intents to. So when the market believes she intends to, and then she doesn’t, the market gets a boost…so she can keep it higher for longer. He’s right on his larger point though, they are backed into a corner, and this has to end (and probably ends badly).
Schiff has been recommending gold since 1998, roughly. Gold has vastly outperformed the Dow and S&P since then. So the fact that gold hasn’t hit 5k is trivial, it misses the bigger picture. He has been right to keep his clients in gold and out of US stocks. The markets are going up in nominal terms only. Schiff understands that gold is the best way to protect wealth. And if gold goes up to $5k, the Dow could be at 36k. But you would still be better in gold than stocks.
Schiff has been recommending gold since 2011 as well. If I started listening to him then I’d be down 40%. You’re cherry picking data points. The easiest bullshit test is that his mutual funds haven’t outperformed his peers in the 90th percentile in any 5 year time period. If he was such a genius prognosticator why is that?
Ah, we have a goldbug in our midst! I know better than to engage. Good luck with your hyperinflation!
Yes, investing in his funds has been the easiest way to “Schiff” wealth out of your account…ba doom ching!
But seriously, a broken clock is right twice a day. Guys like this, including people like John Hussman, develop these cult followings because they convince people that they “called” market downturns, when the reality is they are perma-bears. At what point does one “call” a downturn, when they have been selling the same bearish story for years?
http://www.wsj.com/articles/SB123327685671031439
Mr. Schiff’s Darien, Conn., broker-dealer firm, Euro Pacific Capital Inc., advised its clients to bet that the dollar would weaken significantly and that foreign stocks would outpace their U.S. peers. Instead, the dollar advanced against most currencies, magnifying the losses from foreign stocks Mr. Schiff steered his investors into.
Most had one thing in common last year: heavy losses. A number of investors said their Euro Pacific portfolios lost 50% or more in 2008, worse than the 38% drop in the Standard & Poor’s 500-stock index last year. People familiar with the firm say that hardly any securities recommended by Euro Pacific brokers gained ground in 2008.
…Both investments took big hits in 2008, compounded by the fact that the Canadian dollar and the Indian rupee fell 18% and 19%, respectively, against the U.S. dollar. The 83-year-old retiree’s account is now worth about $37,000, a 63% plunge. Mr. Schiff “goes around saying that he was right,” says Mr. De Gennaro. "He was right about one thing and wrong about everything else."
Among investors who turned to Mr. Schiff’s firm just as his strategy began to falter, Brian Kullberg, a design engineer in Portland, Ore., says he started to worry about the state of the U.S. economy in early 2008. He put $70,000 into a Euro Pacific account, hoping it would benefit as the U.S. economy and the dollar weakened. By late January 2009, his investment had shrunk to about $25,000.
He also launched a gold equity fund in 2013 which cannot have had returns better than -50%.
In 2008 schiff run portfolios fell 40-70%.
http://selfinvestors.com/tradingstocks/news/peter-schiffs-euro-pacific-capital-down-40-70-in-2008/
Ah, but there seems to be one small problem. According to Michael Shedlock, Peter Schiff, the President and Chief Global Strategist of Euro Pacific Capital not only didn’t profit from the financial collapse, he failed to do what every other so called professional failed to do for their clients last year. PRESERVE CAPITAL. Turns out, he was largely right on the US macro picture and called a US equity crash but believed global markets would not folllow due to decoupling and that the dollar would continue to crash. Rather than shorting US equities he shorted the dollar (with a bet on hyperinflation) and bought foreign equities and commodities. According to some of Schiff’s own clients, portfolios invested with Schiff were down anywhere from 40 – 70% last year. Ouch. (Shedlock posted an image of an actual Schiff portfolio)
Michael Shedlock points out 12 ways Peter Schiff was wrong last year:
12 Ways Schiff Was Wrong in 2008
- 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
- Wrong on interest rates, both foreign and domestic
Worst of all, he’s also a failed politician.
He’ll be back.
I think Schiff is right in a lot of ways, but his largest detriment is his timing. Markets can stay irrational for a long time. Long enough for him to lose confidence of his listeners.
Right + Early = Wrong
It’s not just timing, it’s execution. He called the subprime bubble in 2008 then promptly somehow managed to lose 40-70% in most of his managed funds vs a 35% market decline because he’s so married to his Austrian outlook he failed to play it forward correctly. He’s a great talker, but a horrible investor. The problem is, you get paid to make returns, not talk.
Additionally, the common criticism you hear of him is piss poor risk management to the point of almost violating his fiduciary duty to clients. He takes all these clumsy positions without regard to downside protection or market signals and rides them into the ground. As long as you can build the hype train on TV telling people you called it and generate new clients to screw over and collect fees from it all works out I guess…
I understand the sentiment, but assuming that the market was irrational the entire time you were wrong, and becomes rational as soon as your prediction is correct is not how it works.
I’ll agree with that.