Peter Schiff – Someone worth listening to but maybe not invest with

Peter Schiff has been a doomsday-sayer since 2006 and has come up against some major financial Gurus. He has been vilified for his believe in what has now come to pass – the worse financial crash since the Great Depression.

Here is a video covering several interviews from 2006. What is really interesting is how all the Guru’s ridicule him and shrug off his warnings as just unbelievable.

Where are they Now? Peter Schiff ridiculed about his dead on prediction of future economy

He was right on the sub prime housing problem and the credit problems. I found this very impressive.

However he is wrong so far on the US dollar because it is stronger (I know as I watched the Aussie Dollar go from US 98 cents to US 63 cents.) He also seems to have got inflation wrong too, at least in the short term.

No one is infallible.

I did some more research on Peter thinking here was someone to follow. I was very disappointed with this next video of Peter responding to one of his client’s questions.

This video is of a call from an client of Peter’s who invested $1.5M in his funds and has lost $500K on paper in just 6 months. What is interesting is Peter tells the guy his portfolio could well be worth $5M in three years time.

Wow! Peter Schiff Feeling the Pressure! Client Down 500K!? Whoa!

He does not doubt that a year from October 2008 the client’s portfolio will be in profit.

This is in direct contradiction to the first video where he says he expects the downturn to last for years.

It is also a lesson in customer relations because to my mind Peter comes across as aggressive and condescending in part.

“I have a whole chapter on liquidity – read it!”

“It has to do with timing. You got in before the majority of the stock declines so unfortunately there is nothing we can do?”

“Have you sold anything?” No. “Then what have you lost?”

“Sure, if we’d waited six months we could have bought you a lot more stock for your money, but we don’t have a crystal ball.” (Now refer to the first video where he does have a crystal ball).

There seems to be a double standard here. In the second video he is in financial planner/salesman mode defending his fund performance using wealth manager financial-speak. This is the problem.

I do not understand why Peter’s company allowed this person to put 90% of his money into his fund when Peter says in the first video he expects the recession to last for years. (However Peter does express deep concern about the value of the dollar and keeping the client’s money in US dollars).

I find it incredible that they would put all his money into a declining market in one go. Six months ago the markets were going down. From the video this seems to have happened because Peter is surprised when he finds the client has invested 90% of his money with him.

So at first blush Peter talk sense about the markets and the economy and is someone worth following. However the way he conducted the interview with his client gives me cause for concern.

What this is telling me is we need to very carefully vet those we follow for advice. More importantly we need to vet those we invest our money with and we must make sure we have a written strategy which they sign off on. That way we may get them emotionally committed to protection our nest egg.

Unfortunately his client will now have to sit tight and hope he can recover his $500K in the next 3-5 years. He also has to hope the returns Peter mentions he will get will be enough to live on in the meantime.

The sad thing is the client was getting 6% on his money prior to investing with Peter. Chasing higher returns is not the thing to do. Avoiding large losses and protecting capital is far more important to Bay Boomers in retirement.

2 Responses to “Peter Schiff – Someone worth listening to but maybe not invest with”

  1. Brian says:

    As a Europac client I can tell you my investment is 1/3 of my original investment. He is right about US economic policy but can’t invest worth anything. The dividends are not as advertised either.

  2. admin says:

    Brian,

    Thank you for reading my blog and for your comment. It is good to get some feedback that confirm my comments.

    I hope you find my blog of use.

    David Bates

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