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Thread: Peter Schiff Wrong SO many times/

  1. #1
    Havakasha is offline
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    Peter Schiff Wrong SO many times/

    Sorry, I should have kept my earlier thread "Peter Schiff was wrong". I will be sure to
    keep this one up and running and added to as i find out new things over the next months.
    For those who dont know, Peter Schiff is an economist and follower of the Austrian school
    of economics. He is one of S&L's favorite economists. He might even be in love with him?
    Not in a sexual way of course.
    Among his most recent predictions: For 2011 he predicted a catastrophic collapse of the
    U.S. stock market in Jan. 2011, he predicted HYPER inflation, and he predicted interest rates
    on 10 year notes would climb to 6%. For the next 2 to 3 years he is predicting that
    either Gold will reach $12,000 or the Dow will fall to 1,400. I believe S&L called this
    a "brave" prediction. Of course, he supported the U.S.defaulting on the debt, so together with all his fellow Republicans (who seem intent on sabatoging the economy in my opinion) he might actually make this last prediction come true.

    http://seekingalpha.com/article/1068...hiff-right-now

    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.
    Last edited by Havakasha; 09-20-2011 at 07:01 PM.

  2. #2
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    Peter Schiff Was Wrong
    By Barry Ritholtz - January 27th, 2009, 7:30PM

    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.

    Schiff’s Overall Thesis

    US Equity Markets Will Crash.
    US Dollar Will Go To Zero (Hyperinflation).
    Decoupling (The rest of the world would be immune to a US slowdown.
    Buy foreign equities and commodities and hold them with no exit strategy.
    Schiff was correct about point number 1 above. The US equity markets crashed. That was a very good call. Unfortunately, his investment thesis centered on shorting the dollar in a hyperinflation bet, and buying foreign equities rather than shorting US equities.

    Furthermore, Schiff made no allowances for being wrong and had no exit strategy whatsoever.

    What happened in 2008 was that foreign equities sold off much harder than US equities, and a strengthening US dollar compounded the situation.

    In other words, Schiff failed where it matters most: Peter Schiff did not protect his client’s assets.
    Last edited by Havakasha; 09-21-2011 at 12:59 PM.

  3. #3
    Havakasha is offline
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    wikipedia:

    "...SCHIFF WASNT JUST WRONG, BUT ENDED UP BEING HUGELY WRONG" (Read down the article
    to see what this quote refers to).


    U.S. bear market
    In his 2007 book Crash Proof, Schiff wrote that United States economic policies were fundamentally unsound, and predicted that the United States dollar would lose much of its value.[3] Schiff believed that the imbalance between the amount of goods the U.S. consumed and what it produced would eventually lead to problems for the U.S. economy.[31][32] As a remedy Schiff favored increased personal savings and production which he said would stimulate economic growth.[33] Schiff cited the U.S.'s low personal savings rate as one of the causes of its transformation from the world's largest creditor nation in the 1970s to the largest debtor nation in the year 2000.[34] Schiff attributed the low savings rate to higher inflation and the artificially low interest rates set by the Federal Reserve.[35]
    In a 2002 interview with Southland Today, Schiff predicted that the economic downturn triggered by the bursting of the dot-com stock market bubble would lead to a bear market likely to last "another 5 to 10 years."[36][37] In November 2002, US stock indexes began a bull market uptrend which held steady for five years,[38] until reversing course in 2008, when they began a decline to less than half of their peak 2008 values,[39] followed in 2009 by the Dow climbing 61% from its low point over the following year.[40] After interviewing Schiff in 2009, journalist and finance author Eric Tyson referenced various Schiff predictions during the 2000s and stated that "On all of these counts, Schiff wasn't just wrong but ended up being hugely wrong."[41] Schiff later released a video stating that, "When I gave that interview in 2002, I had no way of knowing how irresponsible the Fed was going to be ... But I recognized that early: back in 2003 and 2004 I changed my forecast ... if you look at what happened to the Dow in terms of gold [and not U.S. dollars], my forecast was extremely accurate."[36]
    In an August 2006 interview he said: "The United States economy is like the Titanic and I am here with the lifeboat trying to get people to leave the ship... I see a real financial crisis coming for the United States."[42] On December 31, 2006 in debate on Fox News, Schiff forecast that "what's going to happen in 2007" is that "real estate prices are going to come crashing back down to Earth".[42]
    As part of these exchanges on Fox News and his repeated appearances on financial news network CNBC, Schiff had mentioned factors such as speculators and "the absence of lending standards" which are now seen by many[43][44] to indeed be contributing factors to the housing crisis which began in 2007. On December 13, 2007 in a Bloomberg interview on the show Open Exchange, Schiff further added that he felt that the crisis would extend to the credit card lending industry.[45] Following this observation, it was soon reported on December 23, 2007 by the Associated Press that "The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October from a year earlier at 17 large credit card trusts examined by the AP... At the same time, defaults -- when lenders essentially give up hope of ever being repaid and write off the debt -- rose 18 percent to almost $961 million in October, according to filings made by the trusts with the Securities and Exchange Commission."[46]
    Last edited by Havakasha; 09-20-2011 at 05:41 PM.

  4. #4
    Havakasha is offline
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    I was hoping that S&L might own up to some of these facts. I fear not.

    Its not easy to own to being duped. Oops.
    Last edited by Havakasha; 09-20-2011 at 07:02 PM.

  5. #5
    Havakasha is offline
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    Doesnt mean i wont keep trying. LOL

  6. #6
    Havakasha is offline
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    I wonder if S&L read this thread or if he is still obsessing about my accountant and my money? lmfao.

    I wanted to add the fact that Mr. Peter Schiff along with the exteme right wing members of the
    tea party was in favor of having the U.S. default on our debt. What does that tell you about these
    guys economic predilections? Scary.
    Last edited by Havakasha; 09-21-2011 at 02:55 AM.

  7. #7
    SiriuslyLong is offline
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    Thank you for bringing attention to Schiff. The more exposure this non mainstream economist gets, the better for all.

    Here's some background on his past.

    Economic forecastingPeter Schiff specializes in the understanding of the Austrian School,[27] a school of economic thought generally categorized as heterodox (or non-mainstream).[27][28][29] Schiff voices strong support for the Austrian School, and says it was first introduced to him by his father, Irwin Schiff.[30]

    [edit] U.S. bear marketIn his 2007 book Crash Proof, Schiff wrote that United States economic policies were fundamentally unsound, and predicted that the United States dollar would lose much of its value.[3] Schiff believed that the imbalance between the amount of goods the U.S. consumed and what it produced would eventually lead to problems for the U.S. economy.[31][32] As a remedy Schiff favored increased personal savings and production which he said would stimulate economic growth.[33] Schiff cited the U.S.'s low personal savings rate as one of the causes of its transformation from the world's largest creditor nation in the 1970s to the largest debtor nation in the year 2000.[34] Schiff attributed the low savings rate to higher inflation and the artificially low interest rates set by the Federal Reserve.[35]

    In a 2002 interview with Southland Today, Schiff predicted that the economic downturn triggered by the bursting of the dot-com stock market bubble would lead to a bear market likely to last "another 5 to 10 years."[36][37] In November 2002, US stock indexes began a bull market uptrend which held steady for five years,[38] until reversing course in 2008, when they began a decline to less than half of their peak 2008 values,[39] followed in 2009 by the Dow climbing 61% from its low point over the following year.[40] After interviewing Schiff in 2009, journalist and finance author Eric Tyson referenced various Schiff predictions during the 2000s and stated that "On all of these counts, Schiff wasn't just wrong but ended up being hugely wrong."[41] Schiff later released a video stating that, "When I gave that interview in 2002, I had no way of knowing how irresponsible the Fed was going to be ... But I recognized that early: back in 2003 and 2004 I changed my forecast ... if you look at what happened to the Dow in terms of gold [and not U.S. dollars], my forecast was extremely accurate."[36]

    In an August 2006 interview he said: "The United States economy is like the Titanic and I am here with the lifeboat trying to get people to leave the ship... I see a real financial crisis coming for the United States."[42] On December 31, 2006 in debate on Fox News, Schiff forecast that "what's going to happen in 2007" is that "real estate prices are going to come crashing back down to Earth".[42]

    As part of these exchanges on Fox News and his repeated appearances on financial news network CNBC, Schiff had mentioned factors such as speculators and "the absence of lending standards" which are now seen by many[43][44] to indeed be contributing factors to the housing crisis which began in 2007. On December 13, 2007 in a Bloomberg interview on the show Open Exchange, Schiff further added that he felt that the crisis would extend to the credit card lending industry.[45] Following this observation, it was soon reported on December 23, 2007 by the Associated Press that "The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October from a year earlier at 17 large credit card trusts examined by the AP... At the same time, defaults -- when lenders essentially give up hope of ever being repaid and write off the debt -- rose 18 percent to almost $961 million in October, according to filings made by the trusts with the Securities and Exchange Commission."[46]

    Since 2007, Schiff has stated many times that if the government doesn't change course there will be hyperinflation in the US.[3] Schiff is one of a minority of economists credited with accurately predicting the financial crisis of 20072010 while "nearly all [macroeconomists] failed to foresee the recession despite plenty of warning signs".[47][48] In his book Crash Proof, he described several aspects of the U.S. economy that would lead to a recession.[3]

    The rest of the overview on Schiff can be found here on Wikipedia: http://en.wikipedia.org/wiki/Peter_Schiff

    Yes, Hava-gafa-kasha like to deride Schiff, not just because it's part of his MO as an ideologue, but because he represents ideas different than what Hava-gafa-kasha believes.

  8. #8
    SiriuslyLong is offline
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    Peter Schiff is a gold bull because of irresponsible fiscal and monetary policy of our government and federal reserve. Hava (get a freakin accountant) supports current policy; hence his reaction to Schiff.

    Gold increased 416% from 2000 to 2010.
    Gold today is up 25% from 2010.

    I followed his advice and bought into a gold ETF (DGL) and I'm up 33%.

    http://en.wikipedia.org/wiki/Gold_as_an_investment

  9. #9
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    Is the Collapse of the U.S. Dollar Imminent?

    Here is a very fair and balanced assessment of the possible collapse of the dollar. Some may not like Schiff because he is contrary to their political positions, but it is simply ignorant to ignore his concern about the value of the US dollar.

    What Would Cause the Dollar to Collapse?:
    Several conditions must be in place before the dollar could collapse. First, there must be an underlying weakness. Second, there must be a viable currency alternative for everyone to stampede into. Third, a triggering event would need to occur.

    The first condition does exist. The dollar declined 40% against the euro between 2002 and 2011. Why? The U.S. debt more than doubled during that time period, from $5.9 trillion to $14 trillion. This increases the chance the U.S. will let the dollar's value slide, allowing it to repay the debt with cheaper money.

    Is There a Viable Alternative to the Dollar?:
    The dollar became the world's reserve currency when President Nixon abandoned the gold standard in the 1970s. The dollar is used for 43% of all cross-border transactions, and 61% the world's central bank foreign currency reserves are in dollars. The next most popular currency? The euro, which comprises only 30% of reserves. Although it is increasing rapidly, it is still less than half the amount held in dollars. China and others have argued for a new global currency. However, replacing the dollar would be a massive undertaking, would require great global resolve and not happen quickly.

    What Event Could Trigger a Dollar Collapse?:
    Altogether, foreign countries own $2.4 trillion in U.S. Treasuries. If China, Japan or other major holders started dumping dollars on the secondary market, this could cause a panic leading to collapse. China owns more than $1 trillion in U.S. Treasuries. That's because China pegs its currency, the yuan, to the dollar. This keeps the prices of its exports to the U.S. relatively cheap. Japan owns more than $800 billion in Treasuries, also keeping its currency, the yen, low to stimulate exports to the U.S. Japan is trying to move out of a 15 year deflationary cycle, and the 2011 nuclear disaster hasn't helped.

    The whole assessment is here: http://useconomy.about.com/od/critic...r_collapse.htm

  10. #10
    SiriuslyLong is offline
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    Quote Originally Posted by Havakasha View Post
    I wonder if S&L read this thread or if he is still obsessing about my accountant and my money? lmfao.

    I wanted to add the fact that Mr. Peter Schiff along with the exteme right wing members of the
    tea party was in favor of having the U.S. default on our debt. What does that tell you about these
    guys economic predilections? Scary.
    I needed to capture this. I didn't see it earlier. This is from an extreme left wing individual - Hava (get a freakin' accountant) kasha. It all makes sense.

    In the mean time, the debt clock ticks away. The US Government still is spending more than it has.

    http://www.usdebtclock.org/

    Next up, $15,000,000,000,000.

    Ideologues like Hava-gafa-kasha think we can sustain this path. Nothing will happen. Scary.

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