12 ways in which Peter Schiff/ !!!!!!? were wrong

StevieJ

wintersunshine wrote: »

Last year was the worst year for his clients. He invested their money in the Aussie stock market, for example, down 41% and bet against the dollar AND US Treasuries - I'm sure you know how that ended...

However, full of confidence he said (From Fortune mag-Feb 9 2009)

"None of this shocks me. Oftentimes in the short run markets are irrational. My problem is I see things too clearly and too far in advance."

Well bet that's a big comfort to his clients:rolleyes: :rotfl:

Sounds like one of the HPCers who sold in 2001 :eek:

the_ash_and_the_oak

StevieJ wrote: »

Sounds like one of the HPCers who sold in 2001 :eek:

Actually I think this is only partially correct. I don't think its exactly right to say he was "right, but right too early" (even if is one day correct about decoupling). His idea was that when the bust came it would manifest in a certain way. He was completely correct about the bust but got it wrong about how it would unravel. This isn't the same as being too early. I think he misread that other countries were in a far worse situation than the US and that a consequence of the bust would be a (however temporary) flight to the dollar.

If he is eventually right about the US (which he may well be) it will not be that it happened later than he thought (which is one thing) - it will be that the bust unfolded in a way he didn't anticipate,

WTF?_2

the_ash_and_the_oak wrote: »

Actually I think this is only partially correct. I don't think its exactly right to say he was "right, but right too early" (even if is one day correct about decoupling). His idea was that when the bust came it would manifest in a certain way. He was completely correct about the bust but got it wrong about how it would unravel. This isn't the same as being too early. I think he misread that other countries were in a far worse situation than the US and that a consequence of the bust would be a (however temporary) flight to the dollar.

If he is eventually right about the US (which he may well be) it will not be that it happened later than he thought (which is one thing) - it will be that the bust unfolded in a way he didn't anticipate,

Schiff had the guts to stand up and call the sub-prime and housing crash and that gets him admiration from me.

He also has very definite views on the end game - the collapse of the dollar and hyperinflation in the US - which may or may not turn out correct. I think the US may benefit at the expense of the rest of the world.

As you say, the way it is unfolding has taken him by surprise and left his brokerage exposed.

Here's another view about the way things are going in the near term but which more or less shares the Schiff view of the endgame. This one is very UK relevant. Well worth a listen.

http://commoditywatch.podbean.com/2009/01/25/mike-hampton-on-the-uk-economic-mess/

wintersunshine

the_ash_and_the_oak wrote: »

Actually I think this is only partially correct. I don't think its exactly right to say he was "right, but right too early" (even if is one day correct about decoupling). His idea was that when the bust came it would manifest in a certain way. He was completely correct about the bust but got it wrong about how it would unravel. This isn't the same as being too early. I think he misread that other countries were in a far worse situation than the US and that a consequence of the bust would be a (however temporary) flight to the dollar.

If he is eventually right about the US (which he may well be) it will not be that it happened later than he thought (which is one thing) - it will be that the bust unfolded in a way he didn't anticipate,

Good points imho.

But surely using that logic you will by definition never be wrong. There is going to be a HPC - yes well we all know that - what we want to know is when?

If you predict the dollar is going to fall surely you have to mean sometime soon - not years from now?

Predicting Treasuries would crash when we have ended up with a massive Treasury bubble is just way off, imho.

the_ash_and_the_oak

wintersunshine wrote: »

Good points imho.

But surely using that logic you will by definition never be wrong. There is going to be a HPC - yes well we all know that - what we want to know is when?

Yes and no. I think the emphasis on timing is the wrong way of looking at it. This is why I also think it is a mistake to criticise those who called it 'too early'. For example HPC - the important point is not when the bubble crashes. It is when the bubble starts. If doesn't matter if the bubble lasts for 6 months or 8 years after that point. It is in a bubble. You can play cautious and exit the bubble or you can try ride it and squeeze every penny out of it but hope there is enough time to exit when it does turn. It doesn't matter, it will return to a level lower than when it started. This is why I do not believe those that sold in 2004 (like my grandparents) were wrong, or early. A crash is only inevitable if a bubble forms. You may indeed make more money from staying in a bubble, you may lose the lot. But once the bubble starts the rest is inevitable.

StevieJ

the_ash_and_the_oak wrote: »

Yes and no. I think the emphasis on timing is the wrong way of looking at it. This is why I also think it is a mistake to criticise those who called it 'too early'. For example HPC - the important point is not when the bubble crashes. It is when the bubble starts. If doesn't matter if the bubble lasts for 6 months or 8 years after that point. It is in a bubble. You can play cautious and exit the bubble or you can try ride it and squeeze every penny out of it but hope there is enough time to exit when it does turn. It doesn't matter, it will return to a level lower than when it started. This is why I do not believe those that sold in 2004 (like my grandparents) were wrong, or early. A crash is only inevitable if a bubble forms. You may indeed make more money from staying in a bubble, you may lose the lot. But once the bubble starts the rest is inevitable.

Houses prices increased beyond the trend because long term interest rates and inflation had reduced ( changing traditiional affordability ratios), who is to say this was a bubble back in 2001. The bubble came when excess funds found there way into the market, and had to be placed somewhere with higher risk this was much later IMO.

the_ash_and_the_oak

StevieJ wrote: »

Houses prices increased beyond the trend because long term interest rates and inflation had reduced ( changing traditiional affordability ratios), who is to say this was a bubble back in 2001. The bubble came when excess funds found there way into the market, and had to be placed somewhere with higher risk this was much later IMO.

Yes - while it is almost always clear when a bubble has popped, there is much less consensus as to when bubble territory is entered in the first place (even - or perhaps especially - in hindsight)

StevieJ

the_ash_and_the_oak wrote: »

Yes - while it is almost always clear when a bubble has popped, there is much less consensus as to when bubble territory is entered in the first place (even - or perhaps especially - in hindsight)

The sooner those excess funds (now sat on the sidelines) find their way into the stock market and form a nice little bubble, the happier I will be :beer:

purch

..in fact, I have barely heard of the bloke!

He's the one who starts all the threads about how the Economy is about to implode around our ears, tells everyone how silly they were/are, and tells anyone whose bought a bar of chocolate in the last 5 years that they are a spendthrift and a waster and will burn in hell for such profligacy !!!

C'mon, you must have seen his posts !!!!

StevieJ

purch wrote: »

He's the one who starts all the threads about how the Economy is about to implode around our ears, tells everyone how silly they were/are, and tells anyone whose bought a bar of chocolate in the last 5 years that they are a spendthrift and a waster and will burn in hell for such profligacy !!!

C'mon, you must have seen his posts !!!!

That is !!!!!! his interpreter :eek: