Schiff firm: Shedlock exaggerates our clients' losses
Andrew Schiff, Peter Schiff's brother, responds to the Shedlock piece. He notes Shedlock is trying to attract clients. He says Shedlock exaggerates the losses of clients of Euro Pacific Capital, Schiff's broker-dealer firm. (Not a hedge fund.) But he doesn't refute anything Shedlock said. The Schiffs say the dollar is overvalued, just as the housing market was three years ago, and will fall. Bottom line: Even prescient people, such as Peter Schiff and Nouriel Roubini, who both called the housing bubble, are not omniscient. But you knew that. (Or should have.)
It is disappointing that you would choose to raise the profile on Mr. Shedlock’s attack on our firm. In particular, his posting on Market Oracle is primarily an attempt to attract business to his own firm (Sitka Capital Management), by bashing a much larger and better known firm. However, the strategies employed by the two firms are completely different and make a direct comparison useless.
While it is true, that our accounts have suffered badly in 2008, a fact that we have never disputed or ran from, his estimates for the size our of typical client losses are exaggerated and unfair. We have thousands of clients, and since all of our accounts are run individually, holding up the performance of one client is not representative of our firm as a whole. In choosing to characterize our performance he considers only that time frame which he knows was the worst period for our clients. The biggest impediment to our performance in 2008 has been the rally in the dollar, which we did not predict. However, we believe that the rally is as illogical as it is transitory. We still believe that for many fundamental reasons the dollar will fall dramatically. Shedlocks’ criticism is similar to jabs peter got in 2005 when housing market experts were ridiculing him for making gloomy predictions about home prices which at that point were still strong. It didn’t mean that he was wrong then about a housing bubble.
Also, as a broker dealer (not a Registered Investment Advisor as Mr. Shedlock’s firm), it would be illegal for us to publish or to otherwise make claims as to past or expected investment performance. Mr. Shedlock knows this, but sees a chance to gain credibility as a result of our lack of response to his challenge.
I would ask that you mention that commercial interest rather than journalistic objectivity informs Mr. Shedlock’s posting. Please feel free to contact me with any questions.