Watch Peter Schiff: It Pays to Be Contrarian

I have admired and followed Peter Schiff’s work over the years. Although contrarian at times, his market analysis is very solid and insightful and can be accessed through Hillbent.com or directly at Peter’s website.

Being bearish is almost akin to high treason in America’s financial industry and media. Some of my money manager peers discredited me for having a 65% cash allocation from January 2008 and later increasing it to 90% on September 17th, 2008 and missing the two biggest moves of the market that followed the $700 billion bailout plan announced by Treasury Secretary Henry Paulson.

Despite the current bear market, I follow and analyze the U.S. markets daily in real time, i.e. monitoring for clues of change and continually building a solid watch list of companies that highly correlates with my investment thesis. Whenever the market trend and economic fundamentals turn around, a legitimate new business cycle will offer plenty of time to realize profits. Until then, I will research investment themes and stocks that offer compelling market growth and/or value opportunities and bring them to the attention of readers.

Back to Peter Schiff… In a nutshell, the emperor has no clothes and while openly discussing this violates investment finance etiquette, Peter’s penchant for the truth should be lauded and not taunted. Enjoy…

The above video should emphasize many of the "media’s market gurus" are too narrow minded and myopic in their focus on the capital markets to acknowledge the possibility of a flat world or black swan. Yet in extraordinary times such as these, they also seem to refute the phoenix-like principles of the business cycle. However, the "real investment gurus" know much better and many of them are averse to sharing these secrets of the temple with the general public. In fact, whenever the media dismisses someone like Peter Schiff, it actually serves their cause. Never underestimate the power of the art of distraction. Their recent testimony before the House Committee on Oversight and Government makes it evident that these hedgies also shared Peter Schiff’s investment bias. Yet, no one from CNBC or other mainstream financial peep shows would discredit any of them (or Peter Schiff if he had a net-worth profile comparable to theirs).

Although I continue to emphasize in the Market Condition Summary that the primary trend for equities is downward and bearish, this is the perfect time to start preparing for a bottoming process. If the S&P 500 breaks support at the 840-850 level, then another down-leg testing the 2002 and 2003 lows between the 770 to 790 range could be experienced.

Understand that there will be no blaring of trumpets to usher in the new bull market and this is why it is more important than ever to monitor companies or securities with good fundamentals and price-volume relationships that confirm accumulation patterns to correctly identify their intermediate and long-term market direction. Instead of being obsessed with the current situation, remember that, like Peter Schiff and some of the elite hedgies, it pays to be contrarian.

Disclosures: None

Comments

[Boubou:]

Thanks for giving some more exposure to this extraordinary video.
This should be compulsory viewing for investors.
I hope Ben Stein and the rest , steering poeple into disastrous investments see it frequently.
In retrospect, , Peter should have put his clients in cash, not gold, commodities, foreign dividend payers, so that could now re-enter and clean up, but then he is selling stocks after all.
I wish i had listened to him and others such as Weiss, Rogers and Roubini and then cashed out 9 months ago

2008 Nov 16 08:33 AM

[ArtfulDodger:]

One of the problems, though, Boubou, is that Schiff, Rogers, and Roubini have been negative on US stocks since the DOW was down around 5000.

Rogers moved very early into commodities and China, but he's stayed in both all the way through the latest sharp downturn. I'm sure he made a lot in the run up in both areas, but he's had to of gotten killed in both over the last several months.

So, they've all been right of late about the US stock market, but they all also missed the huge run up from 5000 or so to 14000 and the chance to have sold out after some fat returns.

In my view, it's wrong to follow perma-bulls like Ben Stein all the time, just as it's wrong to follow perma-bears like Schiff all the time.

I listen to their views, but try to think for myself. Then I blame myself when things go wrong, and pat myself when they go right.

And I never look back and say, I wish I had listened to ..., because it's not productive thought.

Today, most everyone commenting on this site is negative. It's not a lock, but it's a good chance they're going to be as wrong as they were when they were all oil bulls, writing everyday to buy, buy, buy oil when it was $140 per barrel because it's never going to stop going up.

They nearly put a hit out on my back in June and July when I wrote that oil would soon crash, as would commodities.

The news on stocks is now all negative; everybody and his mother have dumped stocks and run into treasuries selling at all-time highs. They're going to get a lot for their money doing that.

There are a few excellent buys out there today in stocks. Look for very low debt companies with lots of free cash flow that are in sectors that all the money the government is dumping into the system will benefit. Pick some with nice, fat dividends so you can collect them while you wait on the current madness to subside.

That's what I'm doing. A year from now I think we'll be happy we did.

2008 Nov 16 09:15 AM

[goldis4ever:]

I've read Peter Schiff's articles almost regularly for the last few years and he's been spot-on on almost everything. Just a few short years ago, he and a few others -- such as Gary North, Puru Saxena and the "Rude Awakening" team -- had justifiably predicted that the sh!t will hit the fan soon. But they merely got laughed off by the financial establisment goons.

What those folks got wrong was the timing, however. They all felt the debacle should've arrived much sooner. And that was only because of the band-aid cures the Fed had used that had only served to prolong the inevitable.

Mr. Schiff had certainly made those "financial experts" on the opposite end look like real dumb jackasses. Btw, did Laffer make good on his penny bet? I doubt it.

2008 Nov 16 10:01 AM

[Smarty_Pants:]

For those who care to learn you need only study Austrian Economic theory, which is the school of thought Mr. Schiff follows.

Educate yourself and you will see things coming yourself or at least will be able to evaluate what's going on in a rational manner.

Start at: mises.org

and

lewrockwell.com

2008 Nov 16 10:39 AM

[kurt walter:]

Listen to the TV financial gurus. Then do the exact opposite of what they say. Schiff was so right. Amazing. They others, well, I bet they lost a lot of money in 2008. The beauty of videotape is we can look back and see what the "experts" said.

2008 Nov 16 04:43 PM

[Did U Think...:]

Dude, it is WAY too early to start looking for a bottom. Dow 9k is nosebleed territory.

Go back to dot bomb and look at the charts of the major indices. They were going to completely wash out but were not allowed to do so because Greenspan opened the credit floodgates. This caused the housing bubble.

There is no new bubble to be inflated to avoid a 1929 style deflationary crash. Yes, a bottom will be put in, but it will be dow 4k or less, perhaps far less (like sub 1k if you listen to Prechter).

Speaking of being right on things, yes, Schiff was right about the crash in the USA but he got his a$$ handed to him for believing in decoupling and the the China tail was going to immediately wag the USA dog. He is getting literally snuffed for this serious mistake and so are investors in Europac. He is out admitting it (to his credit) but also saying "in it for the long run" which detracts from his credibility. He is only down 50% right now, but he will be down 90% before this is over and he will be screaming "foul" like some novice investor. Prechter was also crying "inflation" the whole time and "buy gold" as the dollar strengthened. There will be inflation eventually, but investing is all about timing and if you get the timing wrong then you will underperform. Schiff is underperforming in a major way.

A lot of people like to bash Prechter. I think this is because he was early on many of his negative market calls. Again, timing is everything here. So he missed out on a lot of profit potential but one thing he did not do is lose money like Schiff has done.

It is now clear that Prechter is the the current winner in the "correct investing vision" contest. Prechter says we are looking at the unwinding of a grand supercycle which will take the Dow below 1k. He says this should be compared to the panic of 1873, not anything in the current century. He is the only one I have seen with the clear vision and chart predictions around mania theory which are so useful that it is hard to even put it into words. The whole market is one big mania and all one has to do is look at a chart to give a 2 year maximum price target for any stock with high accuracy. As Prechter puts it "it is all one market" because all of it rose on an expanding credit supply and it is all falling on a collapsing credit supply. These are the same factors that caused the boom bust leading to the panic of 1873, Dow 1929, and all other major boom busts in history.

Prechter should get a lot more credit than people are giving him. His book "Conquer The Crash" is a must read.

2008 Nov 16 05:30 PM

[sickofthehype:]

Spewing negativity and right once in twenty years. Not to mention 6-8 years early.

You guys need to check out how he made his first million and then how he invests in contrary to what he writes.

Wake up people. Everyone wants a fortune teller, but this broken clock isn't it.

2008 Nov 16 08:47 PM

[Did U Think...:]

His call would have been spot on back then had Greenspan not pulled out all the stops and created the greatest credit bubble of all time. His "negativity" has turned out to be common sense which, even in the face of overwhelming evidence that Prechter was right, does not seem to be all that common.


On Nov 16 08:47 PM sickofthehype wrote:

> Spewing negativity and right once in twenty years. Not to mention
> 6-8 years early.
>
> You guys need to check out how he made his first million and then
> how he invests in contrary to what he writes.
>
> Wake up people. Everyone wants a fortune teller, but this broken
> clock isn't it.

2008 Nov 16 09:36 PM

[pdxfin:]

Schiff was 1/2 right. He only was able to recognize the US bubbles and was investing his clients money in bubbles across the world. I know of 4 others who invested them along with me and we are looking at balances of 30-50% of our original investment (way down). Looking at some of the stocks, they have gone to penny stocks and are being delisted. Does this sound like stocks that are going to be roaring back or pay dividends? Not likely, more likely bankrupt.

2008 Dec 07 06:57 PM

[Shannon Melton:]

More from Paco Ahlgren on the Treasury bubble, gold, oil, and the failing dollar.

experienceiseverything...

Jan 07 12:26 PM

[SoYouThinkY...:]

I have nothing against Schiff and I often agree with his investment opinions but I have a few problems with the way he argues at times. In his book he mentions how great his currency picks have performed (at the time) against the dollar in the prior 12 months. Since then, the dollar has trumped all of the currencies he mentioned. When pressed about it during media appearances he claims that (1) 12 months is too short of a time frame and (2) they are all fiat currencies so it doesn't matter. That is dishonest dialogue.

For my full review of Schiff's book please go to soyouthinkyoucaninvest...

Apr 10 06:43 PM