I'm glad that someone else noticed what a joke Peter Schiff is
January 28, 2009
– Comments (13)
I have seen tons of YouTube videos and blog posts touting how right Peter Schiff has been and how he is an all-knowing soothsayer who saw this whole financial meltdown coming. I suppose to a certain degree he was right when he predicted the current economic storm.
However, having read his book Crash Proof when it was first published I kept asking myself what all of the fuss about Schiff is about. Throughout the book Schiff touted the theory of decoupling and the collapse of the U.S. dollar and pushed investment in commodities, gold, and foreign stocks. Ahhhhh hello? Didn't those things, other than gold, get completely hammered alongside everything else this year? Isn't the dollar much stronger and aren't foreign stock markets much lower today than they were when he advised readers to invest in them.
It doesn't matter how right Schiff was about the whole mess we are in right now if the investment advise that he dished out based upon it was terrible. Investing is all about making money, it doesn't matter how you got there. And Schiff lost money, a lot of money for his clients. Mich, who many people here on CAPS read...but I rarely do (mainly because his site used to always make my browser crash for some reason) pointed out in a recent article just how bad Schiff's investment advice has been: Peter Schiff Was Wrong . His article even contains a supposed snapshot from a portfolio that Schiff helped set up for a client (see below). Yuck.
I'd rather be wrong about the reasons and make money than right as heck and lose all of my money like this.
The lesson that I take away from this is if you aren't buying things with large yields with the intention of holding on to them for the long run, don't fight Mr. Market. You can be sure as ship that your theory on what will happen is right, but you won't make a dime and will probably lose many if Mr. Market is working against you. As the old Keynes saying goes, the market can remain irrational a lot longer than you can remain solvent.
This is one of the reasons that I have given up looking for capital gains and am instead focusing on yield in my real money portfolio. I am focusing on trying to create a diverse mix of preferred stock, bonds, and some common stock that yield as close to 10% as possible (I generally look for lower, safer yields on the common) . I'll gladly lock in a 10% annual return in perpetuity and take whatever capital gains come my way than rather than sitting on my thumb for a decade worried as heck about the potential inflation that would result from a collapse in the U.S. dollar that might never happen because the rest of the world is as messed up as us.
I am still bearish on the dollar and think that interest rates will eventually be much higher. I am long UDN and TBT in CAPS (not real life). However, I'm not going to let the fact that there might be hyperinflation down the road prevent me from locking in double digit yields today. The best thing about this disastrous market is that it has brought back the concept of risk and risk premiums that had nearly completely disappeared during the leverage-fuled bull run of the past decade.
Deej
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