Peter Schiff

I spent a long time researching Schiff last night. The compilation on the videos around the internet are pretty amazing. He certainly seems to have been right, calling for this economy and the bubble bursting.

Having said that, I think we need to be careful here – much of that video was taken out of context. As you know, I am not a believer in anyone’s ability to do this type of forcasting well. My first experience with this was an advisor I knew who was suggesting that I move my clients out of the market back in 1995, based on the recommendations of Elaine Garzelli, a “Seer” who had correctly forcasted Black Monday in 1987, and had cashed in on that fame with a number of books. By the date you can see that she missed the best 5 years in the markets history, and subsequently called “the bottom of the tech market” in August, 2000 – ouch. I’ve said to you before that if someone claims they can successfully predict the market or the economy on the short term, then they have a book to sell – in Schiff’s case there are two books. I researched the new one. “Crash Proof” and think much of it is off-base.

To summarize, here are some places that Schiff appears to be way off:

Schiff’s Investment Thesis:

US Dollar Will Go To Zero (Hyperinflation).
Decoupling (The rest of the world would be immune to a US slowdown.
Buy foreign equities and commodities and hold them with no exit strategy.

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
Source: Kirk Shinkle, Senior Editor, US News & World Report

I have heard (meaning hearsay only – his firm does not release performance numbers so far as I can see. Also, it is an Austrian firm, though he is clearly an American, yes?) that his firm has not put up good numbers. Given that the first of his investment produts on his website is Canadian Energy Trusts, I can guess that is at least believable. The Canadian Energy Trusts I know are down between 50% and 90%┬áin the trailing 12. Not surprising with commodity prices.

Snake Oil, anyone?