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January 26, 2009

Deflating the Peter Schiff bubble

Peter Schiff is being lionized as somebody who got it right about the housing meltdown. Mike Shedlock begs to differ. Sez he:

There are numerous YouTube videos, articles, and references to Peter Schiff being "right" rapidly circulating the globe. While Schiff was indeed correct about the US imploding, most of the praise heaped on Schiff is simply unwarranted, and I can prove it.

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.
Highlight in red is mine.

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.

I have an actual portfolio statement from one of Schiff's clients at the end to discuss, for now let's discuss the main points of Schiff's thesis.

Posted by Jay Hancock at 11:41 AM | | Comments (8)


I believe there are 2 arguments going on here. The first argument says

Was Peter Schiff "right" about the economic meltdown? The answer to that question is... Yes. Peter has been very consistent in his message about the economy.

The second argument is saying

"If Peter Schiff was right about the economic downturn, was his strategy at EuroPacific correct in "protecting" his clients from the economic downturn prediction?

I don't think it's fair to tell people that Peter Schiff was wrong about the economy just because his strategy failed to protect his clients from it.

Great story, you should interview some of Schiff's clients and get them to go on record.

He's been trashing Obama like he knows the future of our country and if hates USA so much he should move to one of his investment countries.

after reading schiff, i don't see how he was that correct? he predicted one thing. everyone was seeing it. my realtor even said, this gravy train will come to an end soon.

if he was really great, his client's would have seen the returns which obvioulsy they did not.

since he's all over the TV and press, who is running his firm?

although i didn't vote for obama i want to give him a chance and agree with obama2009 that if he hates the good old usa so much then he should leave.


You apparently haven't seen his comments on various news channels over the past couple of years. Your realtor's comment about the "housing bubble" isn't even close to the predictions that Peter made. He called the economic downturn in scary detail and anyone listened to him, they had an opportunity of a lifetime to protect themselves.

I'm an independent trader who has been very influenced by Schiff. 2008 was a profitable year for me. To highlight a few clients and say that because they were unprofitable Schiff's thesis is off target is inaccurate.

I wrote a larger analysis of Schiff vs Shedlock.

I think Schiff is still going to be the winner.

Obama2009, it is interesting that you are trotting out the patriotism canard much like President Bush's supporters did during the run-up to the Iraq War. People on the left incorrectly demonized war opponents as anti-American; now it appears the left is more than willing to use just such a charge.

Peter has been on record (all his shows are archived) as stating that he WOULD move to one of the foreign nations that he invests in but that his son (who is 5 or 6 years old) lives in America. I certainly don't think it's illogical to desire to live close to one's child. Note that Jim Rogers, who advocates many of the same ideas that Peter does, HAS moved to Hong Kong.

Finally, Peter, as a follower of the Austrian school of economics, simply does not believe that government spending can create real economic growth and, to the contrary, believes that government spending prolonged the Great Depression. This is why he "trashes" Obama; he believes that government spending will lengthen this downturn.


Schiff is trying to save this country from total collapse, believes in economic freedom, the constitution and liberty. While Obama wants more war, more status quo and want to spend this country into oblivion. How is that NOT patriotic?? Rebellion against your government is the most patriotic thing you can do.

Peter Schiff's strategy focused on buying value in foreign markets. The fact that foreign stock markets crashed just means that these stocks are now even better values. To sell out at the bottom is ridiculous if you bought in at a good price and have a good dividend yield and the economy is set for rapid growth (I'm talking China, not the US).

As Asia exits their recession in a year or two, growth will continue and those stocks that are now undervalued should appreciate.

The US economy is in serious trouble teetering on financial collapse and the stimulus packages will only make things worse (study the Great Depression, Japan in the 90's, and Austrian Economics and you too will see the light).

Its not the he or I hate America, its that we hate what is happening to our country and our current efforts to change things have not worked. God Bless Ron Paul for all that he's done and he is treated like an outcast. Those of us that have spared our wealth will help to rebuild this once great country.

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.

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