Peter Schiff Was Wrong About the US Stock Market

[Zippyjuan]

Schiff has a whole research term selecting the best paying dividend paying foreign stocks. You're not benefiting from that if you just buy indexes.

You can get cheap index dividend paying funds. Schiff does charge a lot for what he offers. And one reason index funds have low costs is that they don't have lots of high paid researchers or do much trading of the stocks in the index. Like individual investors, if a firm actively trades funds, that adds to the costs and lowers real returns. Or if you want dividends, you can't get lower costs than having a DRIP or dividend re-investment plan. I have one in the local utilty and the last time I made a $5000 share purchase, that cost me less than one dollar. Yes, less than one dollar. The dividends get rolled over into buying new shares at zero cost to me.

Here is a Vanguard dividend index (I do have a couple Vanguard index funds but not this one):
https://personal.vanguard.com/us/funds/snapshot?FundId=0602&FundIntExt=INT

Expense ratio
as of 05/29/2012 0.25% This is 77% lower than the average expense ratio of funds with similar holdings.*

Plus no- load (no up front costs while Schiff will charge 4.5% for his). Give Schiff $100 and you really only invest $96.50 while you get the whole $100 working for you here. He has to get you a 4.66% gain just to get you back to the $100 you put in. In the other fund, you would already have $104.66.

Foreign stocks? Yep, got them too. https://personal.vanguard.com/us/funds/snapshot?FundId=0113&FundIntExt=INT again -no load.

Expense ratio
as of 02/28/2013 0.22% This is 83% lower than the average expense ratio of funds with similar holdings.*

Peter Schiff's expense ratio (this is for his International Value Fund but his other funds have simliar ratios)? His are eight times higher.

The gross and net expense ratios are 1.88% and 1.75%, respectively.

http://www.europac.net/sites/default/files/files/Value_Fund_Fact_Sheet_12_31_2012.pdf

 

[toathis]

So you think this is over and the Keynesians are right?

If interest rates rise to somewhat normal levels, the debt stops climbing, we quit printing money and the economy doesn't crash, I'll admit I'm wrong. Unless you you think we can have ultra low interest, QE and increasing debt forever?

Interest rates will rise when the FED decides they want them to. Has the last half-decade+ not proven this to be a reality by now.

The Deficit is shrinking and this year will be the first in many years where the Federal Budget deficit will be below $1trillion dollars.

Kudos on the balls to admit if you are wrong. So far the Austrians have been dead wrong going on 5 years+ now

 

[Madison320]

Interest rates will rise when the FED decides they want them to. Has the last half-decade+ not proven this to be a reality by now.

The Deficit is shrinking and this year will be the first in many years where the Federal Budget deficit will be below $1trillion dollars.

Kudos on the balls to admit if you are wrong. So far the Austrians have been dead wrong going on 5 years+ now

So you think the fed can just set the interest rate and that's that? Somebody quick call Zimbabwe or Argentina and let them know how easy it is!

I don't pay much attention to the budget deficit. For a more accurate number look how much the total debt increases in a given year. It's probably going to surpass 1 trillion again this year.

How have the Austrians been wrong the last 5 years?

 

[jon_perez]

I'm not a fan of Peter Schiff. He comes off as too arrogant a lot of times.

Market sentiment comes and goes.

It would be very very bad if the current strength in stocks and bonds + weakness in gold lulls people into a state of complacency. None of this has changed the distressing fundamentals underlying the US economy which the Ron Paul movement has concerned itself with..

However, I do think some flexibility in terms of outlook is warranted. The shift to natural gas sounds like it is going to have enormous consequences and help lower the trade imbalance between the US and the oil producing countries. It should also lend support to the dollar.

As for people whose investing/economic opinions I listen to - they include Buffet, Jim Rogers, Gary North, Ron Paul, Marc Faber, Gary Shilling and yes, even Paul Krugman. I can also understand where Schiff is coming from, he's rational and less extreme than, say, Prechter, but it seems his worldview is just a tad too simplistic and fails to factor in a lot of stuff.

In this clip, I don't think Schiff was able to muster much of an argument to counter what Shilling was saying:



And if you had listened to Shilling rather than Schiff that time 2.5 years ago, you would have made out handsomely now.

* Krugman's (and now everyone else's) liquidity trap argument explains Japanese deflation despite ZIRP. I asked this question in RPF many years ago and the explanation I got was not convincing (e.g. that the Japanese borrow internally). The liquidity trap argument makes more sense, and it seems to apply to the US to some degree (but not as much as Japan).

* Shilling, a deflationista, has also made convincing explanations of why we are still in the midst of deleveraging despite stimulus efforts from governments (but I don't believe it to the same depth/degree that he seems to imply). Mish Shedlock is also a deflationista *and* Austrian to boot - apparently you can be both.

People think it is Austrian vs. Keynesian vs. Monetarist... but I think these theories are ALL right to some degree and wrong in some aspects as well. All of us are blind men to a lesser or greater degree when we try to touch, feel and interpret the broad elephant that is economic reality. Not to mention the fact that this is dynamic and constantly changing. You should think of it as analyzing a chess board that doesn't stay still, rather than a static position.

For investors, the most reliable test of how smart or clueless you are would be how much your brokerage account has grown or shrunk. And even for that, luck and timing plays a not insubstantial part.

 

[Schifference]

I own physical gold and silver. I just bought more silver Friday. If I dig two holes and in the first put I bury my precious metals, and in the second I bury Federal Reserve notes, Which one will you want to dig up?

 

[jon_perez]

^ You agree with Warren Buffet then. Gold is mainly good for sitting in storage and being moved back and forth. Certainly much better than paper for that purpose...

 

[toathis]

 

[oyarde]

I do not really give a crap what the man charges , I have none of his funds and doubt most here do .What I notice most is , people pointing to his flaws, where I see the same or more with most others . Is that strange ?

 

[matt0611]

BERNANKE: "Well, I guess I don't buy your premise. It's a pretty unlikely possibility. We've never had a decline in house prices on a nationwide basis. So what I think is more likely is that house prices will slow, maybe stabilize: might slow consumption spending a bit. I don't think it's going to drive the economy too far from its full employment path, though."

LOL yes, we should listen to this guy ^^^^


Just keep printing those dollars, I'm sure we will get out of this somehow, never mind that the economic fundamentals still look downright awful 5 years later.

 

[KingNothing]

You think the paper dollar can survive another decade within the current climate ?

Unequivocally, yes.

 

[KingNothing]

have you considered the petrodollar is the last stop-gap holding this whole system together?

It isn't "the last stop-gap" -- you've missed the boat entirely.

The petrodollar has penetrated nearly every market on the planet. That is not something easily replaced. It is also relatively stable in price, compared to most currencies that have ever existed. That's not to say it is perfect or that we should be complacent -- the current paradigm institutionalizes graft in the favor of big banks and corporations and petro-states.

 

[matt0611]

I do not really give a crap what the man charges , I have none of his funds and doubt most here do .What I notice most is , people pointing to his flaws, where I see the same or more with most others . Is that strange ?

Exactly, I own none of his funds and don't do business with him either. I still think most of his positions are fundamentally correct though.

Once it was exposed that the OP's premise was a sham this thread turned into bashing Peter's investing fees.

 

[KingNothing]

I've about given up arguing with people. They'll never believe the dollar can crash, until it crashes. I'm just wondering what their explanation will be when it crashes.

You can't constantly predict doomsday, though. That does you no good.

 

[KingNothing]

A well diversified portfolio does everyone well. Yadda, yadda, non-correlated risk premiums.

A little bit of equity, debt, and maybe some alternatives like real estate, gold, and fine art is a solid way to diversify. We should be talking more about the importance of diversification. But yeah, Peter Schiff is still a tool.

Agreed, but I don't think Peter is a tool. Obviously one can make money taking his approach.

 

[Madison320]

* Krugman's (and now everyone else's) liquidity trap argument explains Japanese deflation despite ZIRP. I asked this question in RPF many years ago and the explanation I got was not convincing (e.g. that the Japanese borrow internally). The liquidity trap argument makes more sense, and it seems to apply to the US to some degree (but not as much as Japan).

* Shilling, a deflationista, has also made convincing explanations of why we are still in the midst of deleveraging despite stimulus efforts from governments (but I don't believe it to the same depth/degree that he seems to imply). Mish Shedlock is also a deflationista *and* Austrian to boot - apparently you can be both.

I think the deflationists are making a huge mistake by equating money with credit. ZIRP causes bubbles but not across the board price inflation. Japan didn't have price inflation because they didn't print money. How did Zimbabwe manage to have hyperinflation? They barely even have a banking sytem! It's all about QE and the US has quadrupled it's monetary base over the last 4 years. Price inflation in dollars is coming, it's just a matter of time.

 

[toathis]

This is what a career ending looks like

 

[Zippyjuan]

I think the deflationists are making a huge mistake by equating money with credit. ZIRP causes bubbles but not across the board price inflation. Japan didn't have price inflation because they didn't print money. How did Zimbabwe manage to have hyperinflation? They barely even have a banking sytem! It's all about QE and the US has quadrupled it's monetary base over the last 4 years. Price inflation in dollars is coming, it's just a matter of time.

The monetary base keeps getting tossed around but it tells you very little about money. The base is the total amount of cash money plus excess reserves the banks have at the Federal Reserve. Now if one thinks that having a large "base" is bad, then the base going back down to its usual place of near zero should be good, yes? But what does that mean? Banks pulling out their excess reserves and loaning them out to people to spend- putting it into circulation. More money chasing the same number of goods can lead to price inflation. Could. It depends on how quickly the base gets drawn down and how. We have had five years of high monetary base and that has led to... nothing so far. Because what is more important is velocity. How much money moves around how quickly and that has been very low. To kick off high price inflation, the excess reserves at the Fed would need to be quickly dispersed into the economy which would require a huge demand for borrowing from both companies and individuals. Exploding economic growth.

 

[oyarde]

The monetary base keeps getting tossed around but it tells you very little about money. The base is the total amount of cash money plus excess reserves the banks have at the Federal Reserve. Now if one thinks that having a large "base" is bad, then the base going back down to its usual place of near zero should be good, yes? But what does that mean? Banks pulling out their excess reserves and loaning them out to people to spend- putting it into circulation. More money chasing the same number of goods can lead to price inflation. Could. It depends on how quickly the base gets drawn down and how. We have had five years of high monetary base and that has led to... nothing so far. Because what is more important is velocity. How much money moves around how quickly and that has been very low. To kick off high price inflation, the excess reserves at the Fed would need to be quickly dispersed into the economy which would require a huge demand for borrowing from both companies and individuals. Exploding economic growth.

Makes sense , and the only thing stopping ( now , that I see ) it is there is and will be no exploding economic growth , anywhere.