Peter Schiff was WRONG!!!!

[helmuth_hubener]

"Peter Schiff was Right!" we all cheer? This is the right-thinking, Austrian thing to say? Nope. Peter Schiff was wrong, wrong, wrong. On so many levels he was wrong. And he still is wrong.

I, like him, subscribe to Austrian Economics. I agree with his libertarian political views. But when he has given investment advice, he has been horribly, horribly wrong. Reasons:

1) Even when he has been right, such as 2008 (and if you are a permanent bear, you inevitably get to be right on occasion, when the stock market goes down) those who followed his advice, either by buying overseas stocks and precious metals directly, or by buying into Schiff's EuroPacific Capital fund still lost money! In the case of EuroPacific customers: LOTS of money. The vast majority of their life savings. See here, and here.


2) But, usually you don't have to worry about 1), because his predictions have rarely been right. For his track record of wrong predictions, see here, here, here, here, here, here, here, here, here, and here.

3) On the most fundamental level, he is horribly wrong because he is trying to predict the future at all. He is teling people that they should base their investment decisions on his foreknowledge of the future. But actually, he has no such foreknowledge. So even if he wasn't usually wrong in his predictions, and even if he hadn't managed to still lose money even when he was right, he still would be following a fundamentally flawed methodology. This methodology is called "Fortune Telling". For more explanation of my thoughts on why I think the idea of basing investment decisions on the crystal gazing of gurus is such a disastrously flawed method, see here, here, here, here, here, here, and here.

So to sum up, I say that Peter Schiff is wrong because he makes wrong predictions (the simplest but least important reason); because he loses his clients catastrophic amounts of money even (perhaps especially) when he turns out to be "right," because his bets are breathtakingly foolish and over-risky; and most importantly because he presumes to predict the future at all. Again:

• Makes Wrong Predictions
• Is wrong even when he's "right" (that is: his customers lost money)
• Predicts the future at all.

Schiff's antics on TV are entertaining. But his advice is not wise. I hope no one on RPF is taking investment cues from Peter Schiff.

[Danke]

I got my dad into EuroPacific, he has done well so far.

[dannno]

I don't know any one thing he has been wrong about. Can you actually name one thing he has been wrong about?

He was right about the crash in 2008 that he called and stated all the reasons why, and I believe he will be right about his current investment advice which is made to be longterm investment advice.

You just don't understand the extent to which the dollar and our inflation has been exported, which will eventually come back to bite us and at that point you will understand why Peter Schiff is right.

[helmuth_hubener]

I don't know any one thing he has been wrong about. Can you actually name one thing he has been wrong about?

Peter in 2007 and 2008 repeatedly predicted that hyperinflation of the US dollar was imminent. But it wasn't. Here is just one example of a typical quote from Peter:

The whole idea is to get out of the US Dollar. It is on the verge of collapse. The people who don't get out of the US dollar are going to be completely broke and that is obvious. Look at what Ben Bernanke did. Interest rates are zero. Money is free.

Bernanke is going to run up printing presses as fast as he can. This is pure inflation Latin American style. This is hyperinflation; this is Zimbabwe; this is the identical monetary policy of the Weimar Republic.

I am just as convinced that people who have their money in US dollars are going to be just as broke as people who have their money with Madoff.

I do not know how much time you have. With the dollar dropping 5% a week at this point, could it snap back? But what if it keeps falling? What if it's down 5% next week? And 5% the week after that? And then what if it drops 10%? and another 10%? At some point a year from now the dollar could be dropping 5% a day.

The inflation rate in Zimbabwe is over 100 million percent a year.

The US dollar, it turns out, was not on the verge of collapse.

Anyway, this is just an instance of wrongness of type 2. The other types, 1 and 3, are more important, if you are interested in protecting your wealth.

[gwax23]

He seems to be doing quite well for himself, as well as his clients.

As for the Hyperinflation, its coming, dont you worry.

[Brian4Liberty]

The "Peter Schiff was right" meme was the result of Peter Schiff arguing with Larry "King Dollar, Goldilocks Economy" Kudlow on Kudlow's show. The Housing and stock markets imploded, making Kudlow the fool, and creating "Peter Schiff was right".

What Peter and many "hyper-inflation is around the corner" investors have done wrong is bet against the Casino. King dollar is back, because it is propped up by the Federal Reserve, and forced upon the world at the point of a gun. Betting against the Casino in a game rigged by them tends to have set-backs. Will the Casino go out of business? Not if it has a monopoly, enforced by military power.

[dannno]

Peter in 2007 and 2008 repeatedly predicted that hyperinflation of the US dollar was imminent. But it wasn't. Here is just one example of a typical quote from Peter:

The whole idea is to get out of the US Dollar. It is on the verge of collapse. The people who don't get out of the US dollar are going to be completely broke and that is obvious. Look at what Ben Bernanke did. Interest rates are zero. Money is free.

Bernanke is going to run up printing presses as fast as he can. This is pure inflation Latin American style. This is hyperinflation; this is Zimbabwe; this is the identical monetary policy of the Weimar Republic.

I am just as convinced that people who have their money in US dollars are going to be just as broke as people who have their money with Madoff.

I do not know how much time you have. With the dollar dropping 5% a week at this point, could it snap back? But what if it keeps falling? What if it's down 5% next week? And 5% the week after that? And then what if it drops 10%? and another 10%? At some point a year from now the dollar could be dropping 5% a day.

The inflation rate in Zimbabwe is over 100 million percent a year.

The US dollar, it turns out, was not on the verge of collapse.

Anyway, this is just an instance of wrongness of type 2. The other types, 1 and 3, are more important, if you are interested in protecting your wealth.

Inflation was and is eminent from a long-term perspective.

The bottom line is that Peter Schiff does not and has not made investment decisions for short term gains provided by fed inflation - his investments are geared to profit from the result of that activity.

When he was directing away potential clients from investing in the internet stock bubble in '98 and '99, they acted just like you and thought he was crazy for not investing in the internet stock bubble. After the bubble popped he gained a lot of clients.

[Tod]

One thing he predicted earlier this year is that oil would go up....a LOT. Instead it has gone down.

[Zippyjuan]

Schiff did back off his claims for hyperinflation. He has been predictiong $3000 and $5000 an ounce gold for the past five years or so.

The problem with predictions is that most of them are usually wrong anyways- no matter who is making them. Especially if you give a date for them to happen by.

[dannno]

One thing he predicted earlier this year is that oil would go up....a LOT. Instead it has gone down.

Did he predict it would go up a lot this year, or was the prediction merely made this year of 2013?

It will go up A LOT eventually.

[dannno]

Schiff did back off his claims for hyperinflation. He has been predictiong $3000 and $5000 an ounce gold for the past five years or so.

The problem with predictions is that most of them are usually wrong anyways- no matter who is making them. Especially if you give a date for them to happen by.

Well it did go up to about $2k, but I seem to recall when he was running in 2010 for Senator that he said he only wanted to be there one term, because he didn't know if we had more than one term before everything went down. But that also leaves room for it to happen after the one term. A senate term is 6 years, so that means in 2010 he was predicting that it would probably happen before 2016, but they might be able to stave off the crash until after that.

[Acala]

Saying exactly WHEN a particular economic event will happen is nearly impossible. That's why I'm not a day trader. But anyone who thinks that the dollar is not going to be destroyed by inflation needs to explain to me how the US government is going to meet its roughly $100 trillion (or is it $200 trillion?) in unfunded obligations. It can't except through inflation. Or, perhaps, through a combination of selling all its assets, enacting one-time wealth taxes, and hacking spending with an axe. And that isn't going to happen.

[ctiger2]

Schiff is a long term investor. Come back on in 2020 and say he's wrong. It's only been 5yrs since first crash.

[helmuth_hubener]

Inflation was and is eminent from a long-term perspective.

There is no such thing as long-term imminence. If something is imminent, it is about to happen. The weatherman can't say "the tsumani's landfall is imminent," and then if it doesn't happen, tell everyone for the next four years "I wasn't wrong; I meant imminent in a long term sense. Any moment now..." You can't predict that something is "on the verge of happening... long term." On the verge means short term. That's what it means! Seriously, is it not clear to you that in the quote above Peter Schiff is predicting the possibility of the total collapse of the dollar in the very near term and in an extremely catastophic way? If not, I don't know how Peter could have made himself more clear to you. He was not mincing words. His meaning was pretty obvious. I don't know how anyone could miss it.

The bottom line is that Peter Schiff does not and has not made investment decisions for short term gains provided by fed inflation - his investments are geared to profit from the result of that activity.

Actually, his investments are largely geared to profit from a rise in foreign equities and a rise in worldwide commodity prices. Neither of which are directly related to US dollar inflation, and neither of which have happened in a very big way, by the way.

When he was directing away potential clients from investing in the internet stock bubble in '98 and '99, they acted just like you and thought he was crazy for not investing in the internet stock bubble. After the bubble popped he gained a lot of clients.

If you make enough predictions of collapse, you will eventually be correct. Do you know when? That's right: you will get to be right whenever a collapse occurs! Then you can toot your own horn about how right you were! Case study: Peter Schiff's predictions (some of them) were right in 2001-2, and in 2007-8. If he had been around long enough, he would have also been right in 1981 and 1987. So yes, people can make tons of "Peter Schiff was Right!" videos about how he predicted the crash of 1987 and thus how seriously we should take his current-day predictions. But it doesn't mean they won't lose lots of money if they take those predictions seriously. No one knows the future.

[Zippyjuan]

Economic declines happened about every four years or so in the last century in the US. Saying one will come is not that big of a step for anyone. Eventually they will be right. That doesn't make one an expert.

[dannno]

There is no such thing as long-term imminence. If something is imminent, it is about to happen. The weatherman can't say "the tsumani's landfall is imminent," and then if it doesn't happen, tell everyone for the next four years "I wasn't wrong; I meant imminent in a long term sense. Any moment now..."

That's a poor analogy because imminent merely means that it is approaching. It could be a meteor that is coming in 10 years, we would still be in imminent danger if it is predicted to hit us.

It could be argued that a typhoon or some storm that is supposed to come in 4 years is not technically imminent because the storm hasn't started yet, whereas the actions that the government is taking to ensure that we will experience severe inflation has already occurred and is currently happening. So the collapse is imminent whether it is 1 or 10 years down the line.

[dannno]

Economic declines happened about every four years or so in the last century in the US. Saying one will come is not that big of a step for anyone. Eventually they will be right. That doesn't make one an expert.

What does that make the 'experts' who said it wouldn't happen?

[helmuth_hubener]

Saying exactly WHEN a particular economic event will happen is nearly impossible. That's why I'm not a day trader. But anyone who thinks that the dollar is not going to be destroyed by inflation needs to explain to me how the US government is going to meet its roughly $100 trillion (or is it $200 trillion?) in unfunded obligations. It can't except through inflation. Or, perhaps, through a combination of selling all its assets, enacting one-time wealth taxes, and hacking spending with an axe. And that isn't going to happen.

Unfunded liabilities are different than actual debt. Very different. They still are relevant, for sure. But they're different.

Let's look at a young couple. They have a young baby and one on the way. They have no debt and $10,000 in the bank. The husband makes $50,000 a year and the mom can stay home. What is their financial situation? What would you say? Pretty good?

Do you know what another word for "baby" is? "Unfunded liability."

Count in the "unfunded liabilities" and what was a very solvent, strong financial situation can all of a sudden look like an overwhelming amount of crushing and unsustainable debt. The family is maybe half a million in the hole when you count their unfunded liabilities!

The US government has a tremendous amount of debt. And yes, if it was an actual, responsible company running a legitimate pension plan, its pension liabilities should be counted on its balance sheet too, and should be fully covered by its assets. No question. But it isn't. And because it isn't, in all likelihood the terms of the pension plan are almost certain to simply change. Poof! Problem solved. A private pension can't do that. The federal government can do whatever it can get away with. Retirement age can rise, taxes can increase, benefits can decrease, and means-testing can be added. Add up all those changes -- none of which are inflationary -- and run the numbers and you can see how things can start looking pretty solvent and doable.

That's not to say your concerns are invalid. Obviously high inflation is a very real possibility, and something we should be prepared for. But it is not an inevitability, and even if it were, it is not inevitable that it will happen at a certain time.

The same exact reasoning you have set forth here, Acala, was being set forth in the 1990s. and the 1980s. And even the 1970s. And in fact, even before that. And here's the kicker: the logic was just as sound and just as true then! But if you had bet the farm on this inevitable collapse back then, you would have had a long wait, huh? You'd still be waiting, 40 or 50 years later! And if you really truly believed in the inevitable collapse, you may have completely torn up your life preparing for it, and for what? To live out in the underground bunker for the next 40 years?

There exists a happy concept called "provident living." I believe in it. I believe in preparedness, and in providence. Paranoia, in contrast, is not productive. You should be prepared to survive and thrive should hyperinflation come. Sure. But are you prepared to thrive if prosperity comes instead?

[helmuth_hubener]

That's a poor analogy because imminent merely means that it is approaching. It could be a meteor that is coming in 10 years, we would still be in imminent danger if it is predicted to hit us.

It could be argued....

Yes, a lot of things could be argued, but that's not what Schiff meant. You can't predict that something is "on the verge of happening... long term." On the verge means short term. That's what it means! Seriously, is it not clear to you that in the quote above Peter Schiff is predicting the possibility of the total collapse of the dollar in the very near term and in an extremely catastophic way? If not, I don't know how Peter could have made himself more clear to you. He was not mincing words. His meaning was pretty obvious. I don't know how anyone could miss it.

[helmuth_hubener]

What does that make the 'experts' who said it wouldn't happen?

Well it probably makes them fools, too.

[dannno]

Yes, a lot of things could be argued, but that's not what Schiff meant. You can't predict that something is "on the verge of happening... long term." On the verge means short term. That's what it means! Seriously, is it not clear to you that in the quote above Peter Schiff is predicting the possibility of the total collapse of the dollar in the very near term and in an extremely catastophic way? If not, I don't know how Peter could have made himself more clear to you. He was not mincing words. His meaning was pretty obvious. I don't know how anyone could miss it.

I've listened to at least 20-25 hours or more of Schiff talking and he always refers to the hyperinflation event being possibly within the next couple years, but maybe 5 or 10 years out.

People misconstrue his statements and he might possibly mis-speak on occasion, but he never purposely makes any claims about what will definitely happen in the short term.

[Danke]

The US government has a tremendous amount of debt. And yes, if it was an actual, responsible company running a legitimate pension plan, its pension liabilities should be counted on its balance sheet too, and should be fully covered by its assets. No question. But it isn't. And because it isn't, in all likelihood the terms of the pension plan are almost certain to simply change. Poof! Problem solved. A private pension can't do that.

What? private pensions have been doing that for at least a couple of decades now.

[specsaregood]

But anyone who thinks that the dollar is not going to be destroyed by inflation needs to explain to me how the US government is going to meet its roughly $100 trillion (or is it $200 trillion?) in unfunded obligations. It can't except through inflation.

Maybe it doesn't plan on meeting those obligations. Which *I think* would be deflationary.

[gwax23]

Im a schiff youtube subscriber and always watch his most recent videos so i thought U guys would find this interesting:

http://www.youtube.com/watch?v=YTICKDjOHR0

[cubical]

Peter in 2007 and 2008 repeatedly predicted that hyperinflation of the US dollar was imminent. But it wasn't. Here is just one example of a typical quote from Peter:

The whole idea is to get out of the US Dollar. It is on the verge of collapse. The people who don't get out of the US dollar are going to be completely broke and that is obvious. Look at what Ben Bernanke did. Interest rates are zero. Money is free.

Bernanke is going to run up printing presses as fast as he can. This is pure inflation Latin American style. This is hyperinflation; this is Zimbabwe; this is the identical monetary policy of the Weimar Republic.

I am just as convinced that people who have their money in US dollars are going to be just as broke as people who have their money with Madoff.

I do not know how much time you have. With the dollar dropping 5% a week at this point, could it snap back? But what if it keeps falling? What if it's down 5% next week? And 5% the week after that? And then what if it drops 10%? and another 10%? At some point a year from now the dollar could be dropping 5% a day.

The inflation rate in Zimbabwe is over 100 million percent a year.

The US dollar, it turns out, was not on the verge of collapse.

Anyway, this is just an instance of wrongness of type 2. The other types, 1 and 3, are more important, if you are interested in protecting your wealth.

Do you have a link to these quotes and their context?

If we have hyperinflation within the next 5 years(which peter says is the worst case scenario), you don't think he was right to say what he said? Will the history books say he was wrong? You are talking like a trader. Let me guess, you are in college and think you have it all figured out now.

Peter has been saying to get into gold for over a decade, as it when it was under $300 an ounce. Where were you the other 9 out of 10 years? Your stocks are back to where they were in 2000. Congrats.

Personally, I feel peter is underplaying the collapse. I fully expect hyperinflation.

[cubical]

Unfunded liabilities are different than actual debt. Very different. They still are relevant, for sure. But they're different.

Let's look at a young couple. They have a young baby and one on the way. They have no debt and $10,000 in the bank. The husband makes $50,000 a year and the mom can stay home. What is their financial situation? What would you say? Pretty good?

Do you know what another word for "baby" is? "Unfunded liability."

Count in the "unfunded liabilities" and what was a very solvent, strong financial situation can all of a sudden look like an overwhelming amount of crushing and unsustainable debt. The family is maybe half a million in the hole when you count their unfunded liabilities!

This is your reasoning for why the US's unfunded liabilities are not a problem? What if that same couple had 100 kids on the way? All is fine when you can just make up a scenario and say it fits.

Ever heard of present value? Present value of debt has been estimated in the range of 40 to 200 trillion. Here is one example.

http://www.economicpolicyjournal.com...l-us-debt.html

[cubical]

Economic declines happened about every four years or so in the last century in the US. Saying one will come is not that big of a step for anyone. Eventually they will be right. That doesn't make one an expert.

A global reserve currency collapse is not something that comes around every 4 years.

[Zippyjuan]

If he is so convinced of a dollar collapse he should be taking all of his money out of dollar denominated investments and should be encouraging his investors to do the same. EuroPac should be out of stocks. Maybe even short it. Are they?

And if the dollar and US economy totally collapses it will bring pretty much the rest of the world with it so buying foreign stocks will offer little protection.

In my opinion, Schiff uses fear to sell his own products. Buy my book. Invest in my funds.

Let's check out his US Equity fund. Granted this is a pretty new fund and doesn't have much track record. Since inception, it has returned without including any sales charges (4.5%) annually an average of 3.09%. Add in the fees, it drops to 0.14% a year. Compared to the S&P 500 which has returned 16.2% annually. http://www.europacificfunds.com/stratUS_fund.html

Consumer Staples are 26% of this fund. Biggest holdings are Microsoft, Apple, a Utilities SPDR, Century Link (highspeed internet and phone company), ATT, ExonMobile, WalMart.

His international Value Fund? Without fees, average annual return since inception: 1.96%. With fees, 0.62%. They compare that with the performance of the MSCI AC World Ex US Value Net Index which over the same time period averaged 4.58% a year. http://www.europacificfunds.com/value_fund.html

His International Value Fund's biggest countries are Canada (16.7%), Japan (13.3%- doesn't Schiff say Japan is collapsing too?), Norway (12.7% which seems a large amount for a small country) and Australia (8.7%) which rely heavily on trade with the US- a collapse of the dollar and the US economy would definately hurt them. http://www.europacificfunds.com/value_fundOverview.html

EuroPack Hard Investment Fund (basically commodities): http://www.europacificfunds.com/hardassets_fund.html Since inception without fees: negative (loss) of 9.7% and with fees negative 11.2% returns. Comparable index there is the S&P Global Natural Resources Index which has averaged a loss of 6.63% over the same period.

Got distracted checking out his returns. Was actually looking for holdings in the funds.

[Fredom101]

Don't know if this was mentioned already, but Schiff IS wrong, completely wrong about Bitcoin, which he hates.

[PRB]

As for the Hyperinflation, its coming, dont you worry.

just like global warming?