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January 26, 2009

Peter Schiff was Right^H^H^H^H^HWrong

Savage takedown of Peter Schiff by Mish this weekend. The gist: While the celebrated Schiff made a good call on real estate and on the U.S. market crash, he failed clients in that he didn’t adequately protect their assets because too many of his other views were wrong, from decoupling on outward.

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. Let's take a look how, and more importantly why, starting with charts of various foreign indices.

Read the whole thing.

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