Being Wrong for Five Years Makes Peter Schiff Right Now? 52 comments
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Here is my problem with the praise being heaped on Peter Schiff. Watch the following video. Disclosure ("none" means no position): Long GS, GE, WFC, none
Great, right? No.
The problem? Here is Schiff in 2002: Schiff predicts Nasdaq 500 and Dow 4000
Now, had you listened to Peter in 2002, 2003, 2004, 2005, 2006 or even 3/4 of 2007, you lost your shirt. Had you placed bets based on Schiff's market calls, you lost everything you wagered.
The S&P (.INX) went from 1054 in May of 2002 (the date of the interview) to 1561 in Oct. 2007, a 48% gain and the Dow (.DJI) rose 40%.
Banking stocks, the primary victim of the housing bust, went up (JP Morgan (JPM) 36%, Bank of America (BAC) 41%, Wells Fargo (WFC) 39% , Wachovia (WB) 31% and American Express (AXP) 51%) during that time frame (dividends excluded which would dramatically add to results).
Bottom line? Had you listened to Mr. Schiff at anytime before Oct. 2007, you lost...big. To those who did, there is little consolation in the praise being heaped on him today.
Milton Freidman said, "markets can stay dislocated longer than you can stay solvent." For those who bet with Schiff between 2002-2007, they know the statement well.
Why is it a big deal? After all, Berkshire's (BRK.A) Warren Buffett claims he cannot time the market and often watches share prices decline in investments (like recent investments in Goldman Sachs (GS) and GE) before a rebound. How is this any different?
For one, Warren's loss is limited to his investment. He buys 1 share of stock "a" at $25. $25 is the most he can lose.
Now, if we listen to Peter and "short" stock "a" at 25, our loss has no limit. If it goes to $100, we lose $75. In shorting, we are only limited in our upside. If "a" goes to zero, "Schiffers" profit $25.
Buffett's strategy is an investing one and Schiff's is a trading and timing one.
Buffett followers can hold their shares, collect their dividend and wait for the rebound. Schiff followers collect no dividend and watched for over 5 years as their bet went wrong. How many stuck around? How many shorted into every market drop or "presumed" top over 5 years, only repeatedly losing money as the market kept rising and Schiff kept pounding his message home?
Schiff should not be getting the praise he is getting today for being "so right" after saying the same thing and being "so wrong" for the previous 5 years.
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This article has 52 comments:
I don't know what your problem is with Mr. Shiff. Considering your remarks I think its the timing issue solely and a few missed (inflationed) profits during the period you '02-'07.
What actually is the true case about Mr. Shiff, is that the man is talking long-term. Long term in my views is minimum 5 years and longer. Simply said, fundamentally he was right all along.
In my view, your comments are a rant against the missed timing of his remarks, but then you should know, that timing isn't a virtue we receive from by looking at a cristal ball or so.
The man saw the fundamentals of the US economy long before the pundits at Fox a.o. and even the most 'important' economists in the world ever saw a glimpse of the total devistation lying ahead. Mind you, where not even close to what is coming. Its just the beginning of the demise.
Basically, your column of today is just a rant. A missed opportunity to focus on the actual problem of his wrong timing caused by the former manipulating US (republican-lead) government apparatus. The FED's lack of sound monetary policy, starting from Greenspan till the horror that is prolonged by Bernanke and Paulson. These are the so called experts. It's a scam. And by what you say, you should join them self-fulfilled zombies.
Mr. Shiff earns all the credits he gets momentarily, after being demised for the last 5 years. The man was right all along, and I'm glad I bought his books some time ago. Sure I was sceptical, but every point I investigated (as far as I could) he was spot on right, relatively. Timing will always be "manipulated" by external, non-controllable parties of (counter) interest.
brgds,
it was credit then and its credit now. the paper worth. fool's gold. these are the years of the thief 1997-2007 with Enron as the big bust and being the caper that exposed the whole mess (thieves art) of cooking books. It was all misleading as you are doing now with this mother goose tale of a story.
What is more interesting revealed in those videos is the utter denial
and outright scorn of the commentators responding to Schiff.
Absolutely not. Schiff's strategy is one of buying and holding dividend yielding foreign stocks, mostly in the natural resource sector (I have an account with his company). To make money in the recent stock market bubble you had to be a trader, ie. buy low and get the heck out at the top. Schiff isn't right about everything, but he is a refreshing dose of reality in a world of talking heads on TV telling you to buy-buy-buy at dow 14000 and that your house is going to make you rich, goldilocks economy, etc. Schiff has been saying for years that the US economy is seriously unbalanced and there is going to have to be a period of painful readjustment. Now the stuff is hitting the fan you have to give him credit.
You quoted : Milton Freidman said, "markets can stay dislocated longer than you can stay solvent. "
Per Quote Details :John Maynard Keynes said, "The market can stay irrational longer than you can stay solvent."
And I also happen to think that it takes some courage for a man to speak against "the tide". After all, it is not that easy to take the road less traveled.
www.europac.net/schiff...
Also, if you have time watch a 2006 presentation I gave to a convention of mortgage bankers and tell me how wrong I was!
uk.youtube.com/results...
www.europac.net/schiff...
I put that video up on my web site for a reason. It is not as though Sullivan had to dig it up!
The investment community, under the auspices of some trusted overseer (Barrons? Hulbert? the SEC?!?), should set up a play-trade playpen where pundits and others could place their bets on the record. They could then display their PP (PlayPen) scores in parentheses after their name, when they published an article. (If not, it would look suspicious.)
You obviously didn't listen to a word he's ever said.
Boo!
We carry Peter on this one.
He's on my list of most visionary people to keep an eye on in the future.
brgds
This time the Fed doesn't have an magical wand to re-inflate the economy, without causing mass inflation. For the short term, deflation is going to be in control. Sooner or later the US treasury market is going to crash and well see a full throttle push into to mass inflation. The US is going to continue to load up on new short term debt. At some point the global market is not going to be able to absorb new govt' debt (especially in global recession). When the Treasury bond market crashes (6% or higher on short term bills), it will be the end of road. Suddenly US interest payment outlays will soar, which will eventually consume a high percentage of tax revenue. This will force the gov't to print dollars to pay its bills. Lets not also forget the huge entitlement programs, which outlays are now shifting into higher gears.
I tried to invest with his company but the person I dealt with was pretty snooty, and didn't seem interested in me.
Anyone can say they predicted xyz. Did he capitalize on it? And If he did, he would be enjoying the fruits of his speculation, not blowing hot air on SA.
See ya Todd, wouldn't want to be ya.
PS. Here's a tip. Food Stamps can get 80 cents on the dollar on the black market
Think of a different analogy. Something without a non recourse end. A bear market can die, but the stocks exchange stays open. The cancer victim succumbs, that's all she wrote.
I
On Nov 19 06:48 PM willynill wrote:
> If your doctor said you had cancer and could live only a little while
> longer, are you going to say the doctor was wrong if you have a temporary
> remission? No, the doctor was still right.
If this you a couple points....I hear you have a "response" coming
no reason to watch a 2006 presentation...I already said that recently you have been "very right"..
the point was for 4-5 years you were very wrong in regards to dow / nasdaq..
you don't get points for yelling "it's 3 o'clock" every hour and then when it is actually 3 o'clock looking around and saying "told you so".
"I would have been right had housing collapsed sooner" you say.....ok...if Kennedy had ducked he'd still be here. What is the point? If a lot of things would have happened differently a lot of things would have ended differently...
It didn't and you weren't..
In regard to the dollar, it is just the opposite...you were very right for a while, before being very wrong now. Problem is that as late as July I believe you were saying the dollar was doomed yet it is up what 25% since then?
The markets in general. The international markets you invest in rode the wave up and now down with the US market, many far worse on the downside now. No idea what your positions are (not listed) but one has to assume you have not "bucked the trend" based on your writings.
Guys like Ackman, Tilson and Paulson, who began going short mortgages (and by-products) in 2005-2006 are the ones "who were right".
There is more but I guess I'll save it for the rebuttal??
On Nov 19 03:11 PM Peter Schiff wrote:
> One last point. I first made my NASDAQ 500 prediction when it hit
> it's high of 5,000 in 2000. Pretty close wouldn't you say. I wonder
> what Todd Sullivan was saying about the NASDAQ back then? I sure
> know what most people were saying in 2000 when I predicted a 90%
> crash in the NASDAQ. I guess I was wrong as it only fell 80% --
> but as i wrote, at the rate it is now falling it might hit 500 yet.
> Of course, adjusted for inflation, its practically there already!
the analogy is the dr. said you have 6 months to live, you sold and gave everything away and lived 6 more years without anything...
pissed at the doc?
On Nov 20 01:07 AM degreenodal wrote:
> If the remission proved temporary, there would not be much to say.
>
>
> Think of a different analogy. Something without a non recourse end.
> A bear market can die, but the stocks exchange stays open. The cancer
> victim succumbs, that's all she wrote.
>
>
> I
>
>
> On Nov 19 06:48 PM willynill wrote:
You know we never invest/give away more than 5 to 10 percent of total investment capital all at once.
There is always family inheretance that can use some capital.
Crazy analogy.
> Here's a tip. Food Stamps can get 80 cents on the dollar on the black market
What planet are you on? Food stamps only get you 50 cents on the dollar. If you are getting 80, 30 cents of it is charity.
Your argument that Mr. Schiff was wrong about the timing and distance of market changes is petty, innaccurate and of little value to your audience.
It is more than clear that Mr. Schiff has consistently recommended commodities and some foreign issues. At no point to my knowledge, was there a recommendation to short the index.
Mr. Schiff has had to endure a long period of rude, unnecessary and uncalled for public ridicule from an unapologizing media. Because he refused to agree with an incorrect consensus. Although you are a minor offender, you would be the first to apologize for what has been incorrect and inappropriate media behavior.
I am getting very tired of all the mud slinging and witch burnings of Mr. Schiff. I am not sure I could have kept my sanity and resolve this long.
I didn't hear him once tell people to short stocks. So I guess you're equating missed gains with losses even though there were plenty of other opportunities that did not involve overvalued US company (particularly financial services) stock. Are you trying to tell us that Schiff was wrong and all that occurred between '01 and '07, particularly in real estate was not ludicrously overvalued due to speculation driven by cheap borrowing and facilitated by the Fed? That would put you in danger of resembling a blowhard moron. Aside from picking the exact date, he nailed it in '01. He just didn't foresee Fed policy and irrational exuberance delaying the inevitable for so long. Can you blame him? Looking back does any of that run up make sense really? In '01, '02, '03....? Or have you forgotten what historical averages are?
My landlord has taken up a bad crack habit to go with his gambling addiction and is out of money. Not only is he begging me to lend him money to bet on the next big game so he can finally get out of the hole, but when I don't lend him the money he uses his key to go into my apartment and steal it from me. I like my apartment as it is in a good neighborhood and convenient for getting to work so I don't want to move. But darned if I'm going to finance the landlords gambling and crack habit. Still I have to deal with the fact that he has the keys to my apartment so I hide my cash very carefully which means somewhere other than my apartment building.
On Nov 20 12:06 PM User 253060 wrote:
> To EndTheFed: Good story, but wouldn't you rather work with your
> neighbors to get rid of your landlord and own the place with your
> neighbors? Bet if you did, your apartment building may be a better
> place to live.
Watch that video again, what did I recommend -- Sell U.S. stocks, get out of the dollar, buy high yielding foreign stocks, and buy commodities, including gold and oil.
Lets see back in May 2002 the Down was over 10,000 and the NASDAQ was at 1700. So in the past 6 years, U.S stocks are DOWN about 25% Also the dollar Index was at 107, and even with the recent rally is only at 88, or a decline of %18. Oil was at $30 per barrel, now $50 and gold was at $300 per ounce and is now at about $750.
In addition, most foreign stock markets are still well above May 2002 levels, and with high dividend yields, they have considerably out-preformed U.S stocks.
Check your facts next time!!
I repeat what sr9web said: "it pays to read and consider a wide variey of views on a ongoing basis." considering the banquet guest list just sticks you in the mud and these fields confuse acquaintances with friends all the time
On Nov 20 04:53 PM sr9web wrote:
> To the author: Don't be a sap... Nobody is saying one should have
> blindly followed Schiff. Rather, what one should do is is let each
> reco rise and fall on its on merits. Schiff correctly pointed out
> towards this current crisis and he did so in a timely manner. That's
> why it pays to read and consider a wide variey of views on a ongoing
> basis.
This Interview is in May of 2002
In May of 2002, Gold was 300$, the US dollar index was at 110, Almost every Commodity from oil, to wheat, to soybeans was half the price they are now (and this is after the massive sell off in the market)
I suggest you look at a chart next time you decide to make a fool of yourself
As for oil (WOW) up to $50 from $30 in only six years. What’s that 7.5%? You could do that with junk bonds. As for gold, well I guess goldbugs have their place, but I’ll never buy any. BTW I was 83% cash on 10/31/07 and remained so until October of this year.
On Nov 20 04:25 PM Peter Schiff wrote:
> Another thing
>
> Watch that video again, what did I recommend -- Sell U.S. stocks,
> get out of the dollar, buy high yielding foreign stocks, and buy
> commodities, including gold and oil.
>
> Lets see back in May 2002 the Down was over 10,000 and the NASDAQ
> was at 1700. So in the past 6 years, U.S stocks are DOWN about 25%
> Also the dollar Index was at 107, and even with the recent rally
> is only at 88, or a decline of %18. Oil was at $30 per barrel, now
> $50 and gold was at $300 per ounce and is now at about $750.
>
> In addition, most foreign stock markets are still well above May
> 2002 levels, and with high dividend yields, they have considerably
> out-preformed U.S stocks.
>
> Check your facts next time!!
I hear from the Schiff fans, well these are only temporary downturns and besides you are getting the dividends.
Well researching these companies he got me into I so far this evening can identify 3 that look like they could go under. Try Babcock & Brown Power for example.
All he did was call the US downturn right. He didn't expect deflation, commodites being worse than any other assest class, that decoupling wasn't going to happen for many years to come, ect... And the guy goes on the tv tooting his horn like he is some kind of oracle. He lost his clients a ton of money. If he truly believes in capitalism his brokerage will be out of business based on performance.
One glaring area where the Austrian cultists have been wrong is with respect to inflation. (And yes, inflation matters more than stock picks.) All were forecasting high inflation by this time last year. For example, here is what Peter Schiff was saying late last year:
www.financialsense.com...
Here is a good rebuttal from about about the same time (with an exchange):
www.freedom4um.com/cgi...
On the other hand many New Keynesian economists were forecasting the possibility of deflation a year ago. Here is a January 2008 entry from Nouriel Roubini’s blog (you’ll need premium access to read the whole thing, but you’ll get the gist of it from the beginning):
www.rgemonitor.com/blo.../
Use any index you want, CPI, PPI or PCE, we are experiencing deflation right now (even measures of core inflation are flat or declining).
Note that virtually all of the so called economists that got it wrong in the “Peter Schiff Was Right” video were Supply Siders and with the exception of Art Laffer they weren’t even academic economists. The only other person to actually have any degrees in economics was Ben Stein, and that includes Peter Schiff (accounting and finance). Note also that they appeared on Fox Noise. (Time to change the channel to MSNBC and see what Paul Krugman has to say.)
“No, but I stayed at a Holiday Inn last night.”
If we don't produce anything and our wealth consist of nothing more than "funny money" and our purchases are all financed by foreign investment, what happens when they pull the plug? We still have innovation and design, so maybe all is not lost. But wait a minute. We have all but given that away too haven't we?
As I see it, the only hope is that Americans come up with the next great thing as they have so often done in the past. If so, I pray they'll keep the factories here this time. Parity with the rest of the world won't be a issue this time around because as the dollar sinks and with no influx of foreign investment we will be right there with China and Mexico.
Thats how we will get out of this and it will be long and painful. Lets hope we still have enough tool makers, machinist, designers and engineers. For me, I'd just assume have someone like Steve Jobs as president. -
Gary Workman
The Carpet Machine, Inc.
Fort Walton Beach, FL
I think you misunderstood Peter. Investors who listened to Peter Schiff in 2002 would not have "lost their pants." Foreign stocks outperformed US stocks between 2002-2007. Gold had quadrupled while S&P only gained 48%. And why would you short stocks? In 'Crash Proof,' Peter explicitly advised us NOT to short stocks, because the US Dollar is in long-term decline and it can lose value faster than stocks can. Schiff's strategy is an investing one, not a timing one. His investment strategy holds for the long-term and not merely for just the five years from 2002-2007.
Wrong. Look up gold vs S&P during the same time frame. I think gold was up over 200% where as S&P was up maybe 90-100%.
"Bottom line? Had you listened to Mr. Schiff at anytime before Oct. 2007, you lost...big. To those who did, there is little consolation in the praise being heaped on him today. "
Wrong
"Now, if we listen to Peter and "short" stock "a" at 25, our loss has no limit. If it goes to $100, we lose $75. In shorting, we are only limited in our upside. If "a" goes to zero, "Schiffers" profit $25. "
Schiff advocated against shorting actually. Where do you get these facts? jeez.
"Milton Freidman said, "markets can stay dislocated longer than you can stay solvent." For those who bet with Schiff between 2002-2007, they know the statement well."
Again, wrong, see above.
"Buffett's strategy is an investing one and Schiff's is a trading and timing one"
Wrong. Schiff's strategy was three fold::
1. Invest in gold, silver, commodities.
2. Invest in foreign dividend paying stocks for the long haul. The idea is to collect dividends in foreign currency to hedge against inflation. These foreign stocks out performed US markets, all while paying significantly higher dividends.
3. Hold some cash to take advantage of buying opportunities in the event that foreign stocks dip in conjunction with US stocks.
Except for the last point, those are long term investments, nothing to do with timing.
"Schiff followers collect no dividend and watched for over 5 years as their bet went wrong. How many stuck around? How many shorted into every market drop or "presumed" top over 5 years, only repeatedly losing money as the market kept rising and Schiff kept pounding his message home?"
Wrong, wrong and wrong.
Mr. Sullivan, you sir, are a flat out liar.
People who are investing on Schiff's advice are doing quite well.
No, that's not quite accurate. Austrians advocate a method that accepts the fact that mathematics isn't able to measure human wants, needs and actions. The scientific method when fully applied to mainstream schools, shows them woefully lacking in their ability to even predict a 1/2 of what happen last year in the economy.
Here's a quote from your boy Paul Krugman from 2002 in the NYT, "To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble." www.nytimes.com/2002/0...
Yea... he sure got that one right.
The fact that Austrians were mostly wrong on the short term de-leveraging, does not mean they are wrong on the long term. They got the housing bubble right, the exposure and spillover to the rest of the market, and they got the government's reaction to such a bursting correct, trillions of dollars of printed money. I don't see how you can not think we'll have inflation based on the things they're doing.