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Popular econoblogger Michael "Mish" Shedlock triggered a firestorm this week when he took down outspoken investment advisor Peter Schiff, claiming that although Schiff may have been right about the U.S. economy imploding, clients who had invested in his funds in the hopes of profiting from his prophecies had seen their accounts decimated:

First, let's start with a look at the claim being made. Peter Schiff concludes many of his articles, books, etc. with the following statement.

"Mr. Schiff is one of the few non-biased investment advisors (not committed solely to the short side of the market) to have correctly called the current bear market before it began and to have positioned his clients accordingly."

I would like to see some proof of that statement. Specifically I would like to see the average returns posted by EuroPacific clients for 2008.

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.

Big Picture author Barry Ritholtz predicted Shedlock's post would set off fireworks "via a major media outlet that picked up the specific details from Mish, and independently verified them. Look for a major story soon (possibly as early as Weds/Thur). As is so often the case these days, a blogger discovered something newsworthy, and the MSM picked up on it afterwards." More from Joe Wiesenthal (aka The Stalwart).

He was right. Today, WSJ's Right Forecast by Schiff, Wrong Plan? does exactly that (though it curiously leaves out any mention of Shedlock):

Peter Schiff predicted a collapse of the U.S. financial system. The bust-up he didn't foresee was the one that made mincemeat of investors who took his advice in 2008.

WSJ speaks with a bunch of Schiff investors, including one who claims his account fell 63%: Schiff "goes around saying that he was right. He was right about one thing and wrong about everything else," he says.

Meanwhile, Schiff responds to Shedlock (without naming him):

Central to the argument that my investment thesis is wrong is the belief that the crisis is over or that the recent trends will continue until it is. But the crisis is just beginning and the movements thus far in the dollar, commodities, and foreign stocks, are mere head fakes. Once the speculators have been flushed from the markets, the underlying long-term trends I have been following should return in earnest.

It remains to be seen whether Schiff will now take on the Journal as well, or leave it at that.

Source: The Shedlock-Schiff Affair: A Chronicle