Peter Schiff was WRONG!!!!

[helmuth_hubener]

"A well-known study out of UC Berkeley by organizational behavior professor Philip Tetlock found that television pundits—that is, people who earn their livings by holding forth confidently on the basis of limited information—make worse predictions about political and economic trends than they would by random chance. And the very worst prognosticators tend to be the most famous and the most confident"​

-- Quiet: The Power of Introverts in a World that Can't Stop Talking, by Susan Cain (download free)

See also an article from the Philip Tetlock, How Accurate are Your Pet Pundits? One excerpt especially relevant for our topic:

"First, as the skeptics warned, when hordes of pundits are jostling for the limelight, many are tempted to claim that they know more than they do. Boom and doom pundits are the most reliable over-claimers.

Between 1985 and 2005, boomsters made 10-year forecasts that exaggerated the chances of big positive changes in both financial markets (e.g., a Dow Jones Industrial Average of 36,000) and world politics.... They assigned probabilities of 65% to rosy scenarios that materialized only 15% of the time.

In the same period, doomsters performed even more poorly, exaggerating the chances of negative changes in all the same places where boomsters accentuated the positive, plus several more.... They assigned probabilities of 70% to bleak scenarios that materialized only 12% of the time."​

This research all certainly lines up with the prediction results of Peter Schiff that all of us have found and painstakingly documented in this thread. Peter is a doomster if ever there was one. Napolean, The Brain, and Lebron James excel Peter not one whit in the confidence category. And making a usefully correct prediction about 12% of the time? That sounds about right. If anything, it might be a little high.

So the next time Peter Schiff -- or any other pundit -- is brashly and confidently proclaiming exactly what is coming, exactly what all the incicators and all his knowledge makes obvious... take your Magic 8 Ball in hand. Ask it about the prognostication topic in question. Give it a shake. Read the answer it gives. And then, if you are determined to make a financial decision based on a prediction, make it based on the prediction of the Magic 8 Ball. The Magic 8 Ball will do a better job for you. The Magic 8 Ball will be right more often than the pundit. The Magic 8 Ball will more successfully shepherd your precious funds. Yes, in a head-to-head prognostication matchup of Schiff vs. 8 Ball: The 8 Ball wins.

 

[helmuth_hubener]

Starting with Gaddafi post #1 in this thread:

This thread is a good contrarian indicator.

Contrary of what? Indicating what? Do you mean perhaps that when this thread is getting a lot of activity, it means that the "contrary" is true: events are about to transpaire proving Peter Schiff not wrong, but right? I would think the lifetime of the thread is too short to show very much like that. But, all you market-beater geniuses have to have your "indicators," so if I by my simple posts can provide you with yours, I am only to gratified to be your guiding star. "May the Indicators Be Ever in Your Favor."

The Schiff-haters come out of the woodwork and tout how "wrong" he's been, when in fact you're up better than 5x if you took his advice and invested in gold vs. if you took any other investor's advice and invested in the Dow or their special mutual fund.

Let's parse this out. You make several claims.

1. We are Schiff-haters. Verdict: False. I am not a Schiff-hater. I do not hate Peter Schiff. I like Peter Schiff. Source: I am the world's leading expert on my onw emotions and opinions.

2. Though we are not Schiff-haters, whoever we are we are touting how wrong Peter has been. Verdict: True. I am touting this, exactly. Proving how wrong Peter Schiff has been, and thus hopefully convincing people to stop putting their trust in pundits -- even their favorite pundits whom they agree with and love -- and thus hopefully helping them to preserve their wealth from catasprophic losses, has been the purpose of this thread.

3. "[Y]ou're up better than 5x if you took his advice and invested in gold". Verdict: Highly Misleading Statement. Peter has at no time recommended putting 100% of one's portfolio into gold. Rather, in fact, he has many, many times strenuously declaimed such advice. Thus, no Peter-Schiff-advice-following portfolio could have gone up by 500% (5x) due to the 500% rise in nominal gold prices since 2000. To sum up simply: his advice was not to invest solely in gold, and so if you took his advice, you did not in fact get the returns that Gaddafi is referencing -- returns one would have only got if he were invested solely in gold. And even then one would have only got this 500% return if he invested 100% of his funds in gold all exactly at one precise, particular moment in time -- the year 2000. If he invested in 2002, or 2004, or 2006 (or 1990) the returns would have been less.

Peter Schiff does not recommend holding enough gold, in my view. In this thread, we Schiff fans and detractors (and fan-detractors) all put our heads together and we have found no instance where Peter recommended holding more than 20% of one's assets in gold bullion coins. More often, it is 10% or even 5%. That is far too low. And what's more, whatever the percent -- 5%, 10%, what-have-you -- it is always the total precious metals-related assets. This includes gold futures, silver ETFs, coins, and futures, platinum ETFs, coins, and futures, and gold, silver and platinum mining companies, including junior mining companies. This is way off-track, in my view. It is a poor strategy indeed. That junior mining company you invested in may very well not do so hot, even if hyper-inflation occurs -- perhaps especially if hyper-inflation occurs! A full 25% in solid, physical gold bullion coins (no silver, no platinum, no futures, no miners, no mess): that is a more safe and reasonable strategy, as best as I can tell.

4. "[Y]ou're up better than 5x... vs. if you took any other investor's advice and invested in the Dow or their special mutual fund." So with this line, you seem to not only be claiming that followers of Peter Schiff's advice have generally seen their portfolios' worths quintuple (which is false; see 3. above) but that their portfolios have gone up 5 times more than any other investor's advice! A remarkable claim. Verdict: False. Obviously. I need only find one investor's advice which has not been a full 5 times worse than Peter Schiff's to prove this wrong, when obviously there are legions to choose from. I will choose my favorite, of course: Harry Browne. Has a Peter-Schiff-advice-following portfolio outperformed this:

Hmm? No, it hasn't. Peter Schiff has been beaten by a super-safe, non-risk-taking, super-conservative, low-return strategy, advocated by an investment advisor who has the distinct disadvantage of being dead! A dead man cannot react to market events and trends, change and tweak his recommendations, optimize his allocation,... he can't do anything. But yet, Browne's portfolio just keeps chugging along:

Yes: Schiff lost to a dead man. Forget outperforming him by 5 times. Forget outperforming anyone living by 5 times. Schiff loses to the Magic 8 Ball. And Schiff loses to a corpse.

You DO realize gold has outperformed Warren Buffett, right?

I did not realize this specifically, but certainly I recognize that gold went up dramatically in the "aught" decade (2000-2010). What will it do 2010-2020? It could go up substantially again. That is certainly a possibility. It could also go down substantially. I am prepared for either possibility. Are you?

People laugh at the fact that gold doesn't pay dividends...

I do not laugh at that. Gold realizes gains via something called "capital appreciation". If I bought it for $1,000 and can sell it for $2,000 (in real terms, accounting for inflation/deflation), then I gained. Does it really matter that it didn't pay any dividends? Well yes, it does matter: because there were no dividends paid, I don't need to pay any dividend tax. Advantage: gold.

neither does Berkshire Hathaway. Neither does oil or corn. So that must mean Buffett, energy, and agriculture are jokes, and we should all just consume dividend paying stocks or corporate bonds.

How, pray tell, would one "consume" a stock? Eat the stock certificate?

This thread embodies the short-term mindedness of most "investors" aka speculators.

Oh does it, now? I have managed to somehow capture and embody that spirit, have I? How did I do that? I am surprised by this acheivement you are attributing to me. What exactly have I written, or has anyone else here written, which is "short-term minded"? Please get back to me on that. I can wait. I am in no hurry. Oh, wait: maybe I am! I forgot about my short-mindedness already! Drat!

The "logic" aka emotional knee-jerk reaction is analogous to why most managed mutual funds fail to outperform index funds...because the focus is so short-term, so quarterly-focused, that if a fund has a down year or two, funds flee, yet investors take for granted the above-average returns that outperformed the market over the course of the past decade.

This is a simplistic, almost infantile, level of understanding and analysis of the investment issues involved in "why most managed mutual funds fail to outperform index funds". There are mountains more to say on the subject. Try reading Why the Best-Laid Investment Plans Usually Fail.

It's a "what have you done for me lately" game...and it's funny because the market acts this way for a reason. It's the most efficient way to allocate capital for a reason...because the bubblicious nature of the current economy has even the loyalists doubting sound investment advice.

This reads like total gibberish to me. Have you switched to a different language in mid-post?

Gold is being raided by the bears and debt and social media stocks are being ran with the bulls. Of course, one would say social media stocks are ridiculous speculations that are hardly investments, as no company like Twitter could possibly be worth $45 billion when it loses money.

What you are saying is that you know better than all the very wealthy, very smart, very informed people who disagree and think Twitter could possibly be worth $45 billion. And that maybe gold is over-valued. And that maybe social media is of great value. Come now. Even blind hubris can only take you so far. Are you really so sure that you know so much more than everyone? If so.... you're just lost.

And your money will soon follow you. (and likewise be lost, I mean)

If your barometer of "who is right" is based on what the stock market has done in very recent short-term memory, then you could make all sorts of ludicrous statements.

I think a good barometer would be: who has reliably made clear, precise, actionable statements which were correct, which have been proven correct, and which (best of all) have reliably resulted in people protecting and growing their wealth?

Don't you think that would be a good barometer?

Bubbles distort loyalist views as it's far more convenient to throw stones when there's a lull in the storm.

Busts distort loyalist views as it's far more convenient to throw stones when there's a lull in the long-term general upward trend.

Again, you're probably looking at a mining stock that went from $8 to $2, and you argue that Schiff's advice would have lost someone 75% of their investment over the past 2 years...yet what if 5 years from now that mining stock is $80?

Well, I'm looking at a little bit different of an issue, namely that he doesn't know the future and shouldn't be delusionally claiming that he does, but let's look at your imaginary mining stock. Just because the stock has gone from $8 to $2, is it going to feel any obligation to go back up to the "right" level, the $8 price? Is it even going to be any more likely to go up, since well, after all: consider the heights it was at before? Well, let's see: what are the chances of flipping a 'heads' after landing on 'tails' 9 straght times? What about after 99 tails?

Is it a bad investment because you got in at $8 vs. $2 and now it's $80? No...certainly, a lower entry point is always optimal, in which case you could say EVERY publicly traded company is a horrible investment because you could have bought in at pennies on the dollar if you discovered Disney when it was started in Walt's house decades ago.

You are blowing my mind, here, Gaddafi.

Woz, one of the three founders of Apple, owns millions of shares of the company at a cost of $0.15 per share. If you bought Apple when it was $20/share, are you a "loser" now that it's $500 or so? I suppose everyone is a loser, because you missed out on great returns. Here's an idea: make some money so that you can get involved in private equity deals. Then you could say every publicly traded company is a joke, because the returns in private equity are far greater than anything you'll find on the Shanghai or New York exchanges.

Blowing. My. Mind.

Of course, Schiff was laughed at in 2005 and 2006 for his claims. They didn't come to fruition until 2008. Was he wrong? No.

Actually: Yes. Because they didn't come to fruition in 2008. Not at all. Not even close. He predicted inflation. Instead, we got deflation. He predicted US government bonds would crash. Instead, US government bonds were fantastically strong, putting in one of the best performances in the entire history of US bonds. He predicted he would keep his customers protected and in fact grow their wealth. Instead, their portfolios plummeted. In 2008, Peter Schiff was horribly, horribly, wrong.

 

[helmuth_hubener]

Hey, what do you know? A whole series of brand-new wrong-headed statements from Peter Schiff! They may come true, they may not, but what is wrong-headed about them is: he thinks he knows. He does! He actually thinks he knows! Sigh, sigh, head-shake and face-palm.

People think this is a head fake or a dead cat bounce. Instead, it’s the resumption of the (gold) bull market. [uh huh. I'm sure it is. Unless it isn't. In which case, Peter Schiff will give a new interview and admit he was wrong. Of course. Right? Ah, ha, ha, ha, ha.]

So, I think there is a tremendous opportunity for people who want to hit a home run in gold and silver to get into the mining companies. . . . The best performing stock funds so far in 2014 are the gold funds. [Let's check back at the end of 2014 and see whether this turned out to be a home run or a foul ball.]

The budget deficits are going to get bigger than ever. [Unlikely, considering "than ever" would have to exceed 1.4 trillion dollars a year.]

We’re going to be hit with a tsunami of inflation. . . . I think we’re going to be stuck with a lot of the money, which means it will bid up consumer prices. New Fed Chief Janet Yellen said she wants more inflation. Well, she’s going to get it. [Wolf! Wolf! Well, the wolf may come someday... but it just may not come this day. A thing about wolves: they don't always follow our time schedule.]

The economy is going to be so bad by the November mid-term elections that he’s not sure the Republican’s will take back the Senate. [Or it could be really good. Either way, I am sure Peter Schiff will claim to be right. 100%.]​

-- http://www.lewrockwell.com/2014/02/greg-hunter/coming-a-tsunami-of-inflation/

 

[helmuth_hubener]

Post #2. I already replied to it here: http://www.ronpaulforums.com/showth...as-WRONG!!!!&p=5371710&viewfull=1#post5371710 , but let's do it again for redundancy.

Back to the doctor analogy...I suppose it's not 100% correct. For instance: some obese people die old without any health problems apart from their weight. No heart attacks, strokes, etc., yet perfectly healthy people die young from ailments that are more common in overweight people.

As I did say once before, but I'll repeat it: I think it's a terrific analogy, and I congratulate you on it. It definitely hits upon some of the truth of the situation. And the reason that you now give for wanting to toss out your analogy is one of the very truths it illuminates: the world is uncertain. Human beings are diverse. Human experience is diverse. Just because a general principle is correct does not mean that the future can necessarily be predicted with exactness.

Unlike the lucky obese guy who eat McDonalds weekly and lives out his life without ever a worry, the economy cannot continue on the path that it's in. Because if that's the case, then the world is turned upside down. Banks can lend to anyone and if they go bankrupt and the loans go bad, the Fed can just print up the shortfall. There's no inflation because theoretically the money supply is destroyed with a defaulted loan, and the Fed only brings the bank back to even.

Why can the economy not continue on the path that it's on? Can you explain that to me? And can your explanation please remember to account for the fact that it has been "continuing on the path it's been on" for longer than either of us has been alive? How do you know that it will not continue for at least that long again?

Of course, it doesn't work that way. Some people can smoke for 80 years and not have a spot on their lungs...but economics doesn't operate like biological phenomena or freak accidents.

Well, economies are made up of biological agents. Namely: humans. Does not the nature of the components affect the nature of the system? If I build a clock out of Snickers bars, it will smell like chocolate, and maybe peanuts. If I instead cut its gears out of bismuth, it will be diamagnetic. The properties of the components out of which a system is built will assuredly affect the properties of the whole.

Also, since economic history appears to be positively replete with accounts of "freak accidents," an understanding of those would seem to not be entirely out of order, either. Wouldn't you say?

In EVERY instance, money printing leads to inflation.

What does that mean? Most importantly: what do you mean by inflation? By the standard Austrian definition, your statement is wrong. By that definition, increased money supply is inflation. It doesn't "lead to" it. That's what it is.

If you're talking about price inflation, well, the supply of US dollars probably went up in 2008, but yet prices went down. So "EVERY" instance would seem to be an exaggeration. Unless you are using a non-standard definition of "EVERY".

Even if the money printing is milder than the increase in productivity, the additional money supply prevents prices from falling further than they otherwise would, thus inflation.

Is that really inflation? What do you mean by inflation? Could you please define the term? Thanks.

In some instances, the obese, the unhealthy, the smokers, never have to pay the piper due to the luck of the draw. In EVERY instance, inflation leads to distortions and higher prices, even if the inflation is mild.

So, there is no "luck of the draw" or uncertainty when it comes to human action? Is that what you have got from Mises? I must say, I have picked up a rather different message.

As to your second sentence: again, please define inflation. As it is, it seems like perhaps you are saying that in EVERY instance inflation leads to inflation. Which is tautological, but..... maybe not that useful.

 

[dannno]

Post #2. I already replied to it here: http://www.ronpaulforums.com/showth...as-WRONG!!!!&p=5371710&viewfull=1#post5371710 , but let's do it again for redundancy.

Are you paid by the word or the character count?

 

[helmuth_hubener]

Are you paid by the word or the character count?

By the dollar.

 

[Zippyjuan]

Yeah, Harry Browne sounds like an investing dumbass. As Doug Casey says, he's an idiot savant. Maybe a bright guy, but he's clueless.

Case in point: David Einhorn outperformed the market at a 24% compound annual rate since the 1990's. Warren Buffett's compound annual return is something like 22% for decades. How do you explain the countless of people who became multi-millionaires/billionaires when they only had a couple grand to start out? Because they all outperformed the market.

In Harry Browne's view, just do index investing. YEAH!

Every company in the S&P or Dow or NASDAQ demonstrates you can outperform the market. Because they wouldn't be on those indices if they didn't!!

Note that such people are rare. The market is the sum of all investors so the average investor will get the average return. For every dollar that Buffet outperforms the market, there is somebody underperforming the market by an equal dollar. This ignores any transactions costs which will lower returns so actually if those are factored in, the average investor will underperform the market. The more one trades, the higher the transaction costs and the lower the real returns. Buffet tends to buy what he feels are undervslued companies (usually not popular with "mainstream" investors- like when bad news drives down the price of a stock- early in the financial crisis when bank shares were crashing, he was buying) and tends to buy and hold which keeps his costs low.

Beating the market does happen- if somebody was invested in the right thing at the right time. But staying there is incredibly difficult. Beat the maket one period and trail the market the next as what is "hot" changes. I made my largest stock investment of 2009 in March of that year- the very week the market hit its lowest level of the economic crash. Was I "smart"? No. Could I do it again? Not likely. It was simply luck.

But if you want, you can buy a share in Berkshire Hathaway for $750,000 (the current price).

 

[Mini-Me]

But if you want, you can buy a share in Berkshire Hathaway for $750,000 (the current price).

They're not really big on buying partial shares either.

 

[helmuth_hubener]

$750,000

They're not really big on buying partial shares either.

Huh? Where are you guys getting your information? BRK-A is $177,650, Zippy.

You can always buy B-class stock. About $118. Or you could buy micro-shares (fractional shares) from various firms offering them, such as Folio Investing or ShareBuilder.

Loyal3 also has it (for BRK-B), apparently with no fees:

https://www.loyal3.com/signup/stock/select/7decfa62-e422-4139-b80f-f0c852ffbc66

I don't recommend any of this, of course.

 

[Mini-Me]

I was making a joke based on what I thought was the case, but you ruined the funny with facts I wasn't aware of.

 

[helmuth_hubener]

Here's some more juicy predictions from Peter Schiff:


(Thanks to Bryan in this thread)

"But the problem is, the people who are expecting lower gold prices are probably wrong." -- Peter Schiff, video above, 4:52.

The contrary position: "But the problem is, the people who are higher lower gold prices are probably wrong."

Which will be right? 50-50 chance. 100% chance, though, that Peter will claim to have been right no matter what happens. Reality does not affect that, not in the least. Objective reality and empirical facts simply do not play into it. His rightness is disprovable -- it is a religious tenet.

"The stock market is... now headed lower in terms of gold, and that is a trend that I am convinced will continue." -- Peter Schiff, video above, 21:59

The contrary position: "The stock market is... now headed lower in terms of gold, but that is a trend that is going to reverse."

Which will be right? 50-50 chance. 100% chance, though, again, that Peter will claim to have been right no matter what happens.

"[Some foolish people think] the US economy is on the verge of a protracted period of economic growth. All that is nonsense." -- Peter Schiff, video above, 5:35.

The contrary position: "Some people think the US economy is on the verge of a protracted period of economic growth. That is not nonsense, rather it is one possibility."

In this case, Schiff is already wrong. To dismiss even the mere possibility of protracted prosperity as "nonsense" is arrogant beyond belief. To even entertain the thought of prosperity, to even consider this possibility, that is supposedly "nonsense" and "foolish"? Unbelievable. And if we're sitting in 2016 having just went through years of relative prosperity and no collapse, will he admit to having been wrong? Of course not.

 

[helmuth_hubener]

Also, it's very wrong to say anyone can predict a recession because eventually one will happen, and so Schiff is just a broke clock that's right twice a day...

OK.... why? It would only be a "wrong" thing to say if his information were more useful than that of the broken clock. As it happens: it isn't.

Schiff isn't saying, "we'll have a recession one day," he's saying, "We'll have a recession for these reasons,"

OK, so he has some reasons. Are those reasons actionable? Does it matter for an investor what the reasons are that some clueless person is claiming to know the future? Either your prediction is right or wrong. If you're wrong, you're wrong. It may make you feel better to tell yourself "Well, but there were some really unassailable reasons that the prediction should have come true," but it will not make your pocketbook feel better.

and in fact we've never left the recession that's been going on for years.

Well, that raises the question: what exactly is a recession in Peter Schiff's mind, and how will we even know if one occurs and he is thus proven right? We were in a recession in 2004? 2005? 2012? 2013? If yes to all of those, how about 1984? 1999? 1995? I mean, what even defines a recession? Based on what you just wrote, recession=everything. Objective data and facts don't matter. The only question to ask is: Did a year just occur? It was a year of recession, then. By definition. All years are years of recession.

He's outlining step-by-step how and why the economy is as in bad of shape as it is, and why certain investments, like commodities, will outperform the conventional asset classes, like equities and bonds.

Yes, that is very nice of him. Unfortunately, he is usually wrong.

It's day and night difference from what you're arguing. Anyone can say we'll have a recession some day, but not everyone can answer the questions, "Why?" and "Where should I put my money?"

That is true. Peter Schiff can't. This is empirically demonstrated by the returns his customers have gotten over the years by following his advice.

Jim Cramer was wildly bullish on the housing sector. He was "right" for years until it crashed

Peter Schiff was wildly bullish on the gold mining sector. He was "right" for years until it crashed.

and you very likely lost most of your income in 2008, when in October he told you sell EVERYTHING on national television.

Why would you think that? Why would I even be aware of what that particular entertainer was saying? I wasn't.

Schiff told you to avoid financials in 2006, and behold in 2007/08/09, they collapsed.

He also told you to invest in foreign equities in a variety of developed nations and so-called emerging markets (impoverished third-world jungles). Lo and behold! In 2007/08/09, they collapsed.

Whoops. Minor glitch.

"But, but, some of them went back up in the years since," the Schiff-apologists have so often responded. "You can't invest for the short term. You have to ride out the storms."

And that point is not entirely untrue. Y'all seem to apply it awfully selectively, however. You never seem to mention, for instance, that financials have also climbed back up in the years since, just like Peter's speculative foreign stocks have. Why is recommending one "right" and the other "wrong"? They both look equally right to the pocketbook.

He's been buying gold for over 15 years, and over the last 13 you point to ONE down year and say, "A-HAH! HE WAS WRONG!"

Nope. Didn't do that. I think you're making up imaginary things. That can be fun. A good imagination can be a real asset in life.

It is possible for someone who doesn't understand the subject matter to correctly guess the right letter on a multiple choice question. It's entirely different when the person actually understands the question, and lays out his answer.

Is it really so different? Is it different for your pocketbook?

Mises predicted the collapse of the Federal Reserve. He predicted the collapse of socialized medicine.

No, he didn't. I have not read him make such predictions. It was a lot more sophisticated than that. Mises was not an investment advisor. He was not telling people, "Short the Federal Reserve by selling all your dollar-denominated assets. She's gonna blow!" Nope, Mises didn't say that at all. Peter Schiff did. But Ludwig von Mises did not.

What Mises said was that global, universal socialism cannot support an industrial-level society, because it cannot calculate. Pockets of non-global, non-total socialism can survive, because they can still emulate market calculation to an extent.

So, you have simply misunderstood Mises (and Rothbard). I told you this before, and hinted that I would explain to you how you had misunderstood it. You now have that explanation.

Yet we've had the Fed for over 100 years, and socialized medicine exists in much of the world, and has for many years. Does that mean he's "wrong"?

Nope, just means you misunderstood him. The Fed could last another 100 years. That wouldn't contradict anything Mises ever wrote, as far as I know.

When in the 1970s where we had high inflation, many Austrian economists said, "THIS IS IT!" and commented on how fiat money was finally out the door. Yet it's 2014 and we still have Federal Reserve Notes, with no major country with a gold standard.

Yes. Exactly. They were wrong. Can you admit they were wrong? I mean, it's now 40 years later. Is it not obvious enough that they were wrong? We can look back with the benefit of a full 40 years of hindsight -- 40 years with good historical records and somewhat good economic data (as good as it ever has been, at any time in history). What they predicted did not happen. It is clear as crystal that these people were wrong. That is the whole point of this thread. These people were at least as smart as Peter Schiff. They were brilliant, some of them. They were in the right economic school. They had all the right ideas, according to you. Yet they were disastrously and utterly wrong.

Isn't it possible that Peter Schiff is wrong, too? If they were wrong, couldn't he be wrong? Isn't it worth it to accept that fact and take it into consideration when planning your investments?

I suppose you could say Mises was entirely wrong because none of his predictions came true. You could also say he's a broken clock because certainly, one day, fiat money will collapse as well as socialized medicine, since everything created by humans wither away over time. But the difference between Mises saying it and a caveman is that Mises actually explained WHY.

You could say that if you misunderstood Mises, as I believe you have. See above for an explanation of Mises' actual view.

And one more time: the pocketbook doesn't care why it's empty. A gain is a gain. A loss is a loss.

Let's be wise, not foolish. Let's make gains, not losses.

 

[helmuth_hubener]

I was making a joke based on what I thought was the case, but you ruined the funny with facts I wasn't aware of.

Sorry!

 

[toathis]

Funny video of Peter Schiff responding to a caller in regards to accurate predictions

 

[helmuth_hubener]

"The fact that it hasn't already happened, that's what's the amazing part of it." -- Peter Schiff, March 5th, 2014

Some have been being amazed for 40 years or longer now.

That's too much amazement for me. I don't think I can take that kind of protracted amazement. I'll just accept that I don't know the future and then 10 years down the road if Peter Schiff's predictions still haven't come true I won't have to suffer an amazement heart attack.

 

[helmuth_hubener]

The question isn't how much did long-term government bonds go up, but how large was your portfolio in government bonds?

Easy: 25%.

Because you only realized the full 22.5% gain IF you had 100% allocation.

Bingo, bingo. You've got it exactly. Good job.

Suppose you had 50% in long-term government bonds. That's less than a 12% return.

Specifically, the gains from the bonds push up the overall portfolio 11.75%. Again, good job. You are saying all kinds of true things in this post.

And I know you didn't have 50% of your net worth in government bonds, so certainly everything else in your portfolio, aside from the few hundred dollars in cash, tanked, which negated whatever gains in bonds you would have realized.

Oh, man, Gaddafi! You were on such a roll! Why've you got to go and mess it up? Stick to the truth! 1: You almost certainly don't know anything about what 50% of my net worth was or wasn't in, other than what I've told you, which you seem to not have read. I actually did tell you in a previous post, however, and if you had read it, you would have learned that 2: the bulk of my long-term liquid savings were in gold in 2008. Also if you had read my posts, you would have learned that 3: gold, far from "tanking," went up in the calendar year 2008. 4: I don't know what few hundred dollars of cash you're talking about.

Glad to clear some things up.

So I find your returns to be as absurd as your analysis of Peter Schiff's portfolio, of which you have very little understanding of.

What returns? You find my returns to be absurd? Which returns? What is absurd about them? Are they too high for you?

Further, the concept of "owning every asset" is completely ridiculous autopilot investing.

Well, certainly you have proven that you are able to ridicule it. So it can be said to be "ridiculable". Whether it is actually ridiculous will depend on what you're seeking, I suppose. If you're seeking the impossible -- a safe, reliable way to consistently beat the market and make a fortune -- then I suppose anything that fails to give you that and instead only gives you the possible would indeed seem ridiculous.

You look at it the common man way: that if you own everything, you're bound to be bailed out by one sector. Yet you're ignoring the very point of investing: to make money, not mitigate losses.

Actually, I am not "ignoring" that. I am disagreeing with that. I am repudiating that. I believe that a very, very important role of investments should be to mitigate losses.

You are not going to make a fortune investing your money in the stock market. That doesn't happen. It's not a realistic expectation. It's chasing unicorns.

By owning every basket, which you don't, you hedge yourself into no return.

You seem to have misunderstood me. I do not mean that we should own every asset in existence. I mean that we should own all of the four Permanent Portfolio assets all the time. Those four assets are stocks, bonds, gold, and cash. That's few enough baskets that you can keep a hefty percentage in each -- about 25%. So I think your point is excellent, and it's totally true, and I'd like to applaud it. I myself made the same point in my conversation with GunnyFreedom. But the point does not argue against the Permanent Portfolio.

You limit your upside severely. Because if you had allocation in stocks and bonds and interest rates go up, you have no protection. A higher discount rate reduces the profitability and increases the opportunity costs to capital, which reduces the returns on equities and bonds.

Yes, higher interest rates are generally bad for stocks, and they are always very bad for long-term bonds. What gives you the protection from higher interest rates -- that is, from high inflation? Gold, of course. 25%.

So no, this idea of "owning everything" only ensures you'll underperform in a rising rate environment.

Well, look at the actual data and tell me that. We had a decade of rising rate environment called the 1970s. Who came out of that decade smelling like a rose? You guessed it: Harry Browne. His Permanent Portfolio, far from "underperforming," over-performed by a large margin. So, empirically: you're wrong. Sorry!

The key isn't to diversify and own everything.

Why not? Key to what? How about owning just 4 things? Is 4 too high a number for you?

Again, your logic is contradictory. On the one hand, as a "business owner" that you apparently are, you know it's important to focus on a few core competencies and not get distracted with tertiary ventures. Yet at the same time, you adhere to the theory that conglomeratizing your portfolio is a good idea. That's analogous to sprinting before you're even out of the womb, let alone crawling yet.

Sprinting before you're out of the womb..... I will again applaud you. You have an excellent ability for coming up with these colorful metaphors. But I do not see how this one applies. I really don't understand. Are you saying that by conservatively diversifying I am trying to expand my wealth too quickly? "Sprinting in the womb" as you put it? I would think you'd want to criticize me for the opposite: not aspiring to go fast enough.

You will just have to explain this one to me, because I don't get it.

Warren Buffett's returns are gradually waning because his portfolio is gradually becoming the market, because he owns nearly everything. It's hard to outperform everything (the market) when you own everything.

Well, that is one theory, I suppose. I don't think that Buffett owns even close to everything, but there is likely a grain of truth in what you are saying.

Warren Buffett didn't make his money owning everything, just as how Bill Gates or Jim Rogers didn't make their money diversifying.

Right. True. Good job.

Now how did they make it? Their careers! By being tremendously productive and successful in their careers! Not by choosing the right stocks for their IRA.

Diversification, as I mentioned, is lazy autopilot investing. Any chump can do it. It's not a mystery; it's the entire structure of the modern 401(k) system where you own baskets of funds that invest in 30-40 different companies.

Any chump can do it, very few do, even fewer do it well, and all of that is irrelevant to my pocketbook. My pocketbook doesn't care how many hours I spent poring over financial reports and reading Warren Buffett and Benjamin Graham biographies. All it knows is: how much money is inside me? It doesn't matter if what I did was easy. It doesn't matter if I didn't sweat and labor and agonize. It doesn't matter whether or not a "chump" could duplicate my results. What matters is how much money is in the pocketbook.

You want to know what I think of diversification? It's that you own barely enough of a great story, and too much of a bankrupt one. I do enjoy you posting about US Government Bonds being a good returning asset during 2008, because I clearly pointed out that US Dollars did well, so obviously US Dollars with a 0 + x maturity are along the same lines. But let's face it: you didn't invest 100%, much less 50%, of your portfolio into US Government Bonds. So your claim of a 22.5% return is absurd, because the only ones who realized a 22.5% return were those with 100% allocation into bonds, which you did't have.

Sir, you have falsely characterized what I wrote, perhaps intentionally. I stated that bonds went up 22.5%. I did not claim that I owned any of them. Your burning anger at me apparently made you blind. I hope you are now calm and rational enough to have some reading comprehension and so this clarifies things for you.

Then again, if you did, you're far better at market timing that 99.9% of the population, to which, of course, I laugh at considering here we are....5 years after the fact. Shouldn't you be on a yacht? I mean, if you had known the world was going to flock to US Government Bonds when the US economy was collapsing with the most bankrupt government ever, you must have had some incredible insight that people would run to the storm during a financial hurricane.

Yachts are boring. Well, unless they're going to Antarctica. Anyway, some of us have more exciting things to do than trucking about on yachts.

I look forward to your reply!

 

[helmuth_hubener]

Hahah!! I LOVE this!! So, you made my point for me: you made money "mostly in your business" (whatever that is. A blog of some sort?)

Something like that (not really). I appreciate the compliment, though (that I write well enough that you think it's plausible that I might do it for a living).

This is the point I made earlier:

Did you hire someone to do enterprise valuation on your company on a regular basis?

Of course not! No one does that with private companies! Just as nobody hires a real estate agent to do daily appraisals of their house! But yet here you are, talking about how much money Schiff clients apparently lost when I'm sure most didn't sell shares during the crisis, using NYSE market cap valuations as your guide.

I'm sorry, but this is just a very strained point. I say: Such-and-such performed extremely and dramatically poorly during such-and-such time-frame. Your "point," as you say, that you counter that with is... wait for it... "It doesn't matter! As long as you didn't sell, and I'm sure that most Schiff clients didn't, then poor performance doesn't matter."

Now I and other denizens of the Permanent Portfolio are the #1 poster children for not checking on your portfolio and not worrying about short-term swings. We check even less than the Bogleheads, I'd say. Holding on, staying the course, not jumping ship with every swing, is a good long-term strategy. But performance matters. Just because you don't slavishly check on it every day doesn't mean it doesn't matter. If I had an emergency and needed to cash out my portfolio today, guess what? The value of it today would matter. It would affect pretty directly how much money I could get from it.

Things go up, things go down. But just not worrying when they go down and just staying the course is not a surefire recipe for having them go up again! Did you know that? Sometimes stocks or other assets go down and never come back up. We may not like it, but we ought to deal with it.

As I said, and you keep side-stepping this, you don't understand investing. You don't understand the hypocritical nature of your analysis. You take a snapshot of a Schiff client's portfolio during a financial crisis, a small window of time in one's investing career mind you, to make some sort of trump-card point, yet at the same time you don't apply that logic to other businesses that don't have daily market valuations like publicly traded companies do---like the "company" you own that probably has yet to turn a profit.

Wow, you really want me to hate you, don't you? Sorry: I don't! But feel free to keep making unfounded insult attempts.

I do not and never did claim that Schiff is somehow a failure at investment just because he failed to increase his clients' value during one "small window of time". You have misunderstood me, or perhaps are just intentionally mischaracterizing me. Let me try to explain it more simply:

1) Peter Schiff frequently claims, proudly and loudly, to have been the man who correctly predicted the 2008 crisis.
2) His advice lost his clients lots of money during 2008.
3) If his prediction really was correct, if he had really known what was going to happen, then why did he give advice that would fail so badly?

My conclusion is that his prediction was actually not correct in any useful way.

I'll spell it out: it's asinine to get excited about a 6-month time period of a portfolio. Unless you plan on buying today and selling in half a year, then it's all just market noise. And if you're buying stocks, which is buying a company, and planning to sell it in half a year's time, then you aren't investing but speculating.

Yet people do. We know that people do. This is why, for instance, I do not share your complete surety that most Schiff clients didn't sell their positions in 2008. If you look at the Quantitative Analysis of Investor Behavior, you should see very clearly that actually many/most people do sell off during and shortly after panics. They do get excited about 6-month time periods. Volatility matters.

And it doesn't just matter to "speculators" and people planning to get rich quickly (people such as yourself). Many, many normal people with very long time horizons who had been saving up for retirement for decades took their money out of their stocks in the end of 2008 and 2009. They'd lost 30% of their life savings already. They didn't have any desire to wait around seeing if they could lose the rest. That didn't seem fun to them. Go figure.

Because nobody buys a house or a company with intentions of selling it half a year later. Can you? Sure you can! If the market pays you a significant premium, why not? But without knowing the future, you could care less what the value is 6 months from now. It's funny that you make the common man's mistake of using short term benchmarks, like a portfolio snapshot over a few month's time, as justification for any of your points. And people wonder why there's so much groupthink on Wall Street! Because people like helmuth hound money managers with screenshots of other money managers and scream, "HEY! This guy outperformed you last quarter. I'm pulling my funds and going to him!" So now you have an industry motivated on reflexivity.

This paragraph does not make sense nor follow logical principles. You are essentially characterizing me as a crazed yield-chaser, thinking very short-term. This is very far removed from reality.

I do agree that very short-term thinking may not be very useful is investing. I just don't know why you are putting me in that short-term camp.

It's a weird psychology. Because stocks are ownership in companies, real companies, but people like helmuth just cannot connect that in their minds. For whatever reason, the NYSE ticker symbols just create a wall in logic. Because helmuth would agree it's absurd to value a company on a short term basis, yet when it comes to public companies, he's quick to pull out short term charts. Hahhaahahhha

Well, I'm glad you know everything about me. I'm just all about the short term! Why think about tomorrow? Live in the moment!

And if helmuth does really have a successful business, then the returns must be somewhat atrocious. Assuming he started the company before 2008, which he had to have if he invested money in it during 2008, and now it's 2014, then he's making marginal profit at best. Which is funny because the opportunity costs to capital would suggest he would have made significantly more money investing in other people's businesses than his own, but I'm sure he'll brag about phantom returns in his business, because earlier he said he was "Doing entrepreneurial things," which to any businessman listening to that would know that's code for, "I'm going to school, but taking general studies. Not too sure what I want to do yet, and I've been in college for the past 5 years."

LOL, yes any businessman would know that.

Then again, I don't know helmuth. He may very well be successful in his business.

Wait, that would be impossible. That would contradict what every businessman knows.

I have my doubts, though, as a successful businessman running a 5+ year old business certainly wouldn't have time to go out of his way to post how Peter Schiff was wrong on an internet message board, and to continuously follow up on it over the course of several months.

Well, perhaps he shouldn't. But perhaps it's a form of recreation for him.

 

[helmuth_hubener]

So wait, I did a little calculating of the "permanent portfolio":

25% in LT Government bonds yielded less than 6%.
25% in cash yielded 0%; in real terms, negative
25% in gold yielding marginal gains of 2-3%
25% in stocks...well...considering the S&P tanked by over 50%...yeah...

Your calculations are completely wrong, and because they are very transparently wrong, they are likely intentionally wrong. Or, alternative explanation: you are just not very intelligent.

Long-term US government bonds were up about 22.5% according to the Simba spreadsheet. Actually, if you were holding the bonds via an ETF, you did much better. Here's a chart showing the iShares ETF for long term government bonds (ticker TLT) as the red line:

Up about 35%. The 6% number obviously bears no particular resemblance to reality. Perhaps you just made it up and 6 is a favorite number of yours?

Bonds +22.5% (or as high as +35%)
Gold +5%
Cash +6.7%
Stocks -37%

Result: -0.7

Pretty much break-even. It carried steadily through a year that, for most investors, was very tumultuous -- one of the most severe crises in our lifetimes. That is pretty good. Pretty impressive. It performed exactly as designed.

So nobody believe helmuth's numbers as even the nominal numbers yield negative returns.

What numbers? What numbers have I presented which nobody should believe? Did I not include enough random made-up numbers for you? Not enough 6s?

I wonder what the inflation adjusted numbers are. They don't add up. He says he gained 22.5% in LT government bonds, yet he subscribes to the permanent portfolio which would have reduced that "gain" by 25%, assuming, of course, he sold at the end of 2008, which he didn't. So these gains are just phantom gains, just like how people who bought and held Pets.com made millions, when in fact they held past the bankruptcy.

You're just intentionally misunderstanding. I will not be goaded into being tedious.

Also, 50% allocation to cash + bonds? That's a lot of exposure to country-specific risk. No thanks.

Yes, it is a lot of exposure to certain assets with certain well-understood and predictable risks -- that is, that behave in certain ways during certain economic conditions. The way that they behave and the times in which they do it happen to be very valuable to a well-designed portfolio.

Of course, helmuth selectively ignores gold stocks from 2000-2008, where you made 10-20x your money if you just threw a dart at the board and bought a random junior. So his story of Schiff being wrong revolves around

Umm, I have not ignored gold from 2000-2008. I have been addressing it quite thoroughly throughout this whole thread.

1) No one taking profits in 10-20 baggers in gold mining stocks
2) Investors cashing out at the bottom in 2008
3) Buying back into gold stocks at the peak in 2011
4) Selling gold stocks last month at the bottom

None of these four items has to do with why Peter Schiff is wrong. I explained why he is, was, and will be wrong, as I see it, in my first post of the thread. You could review it if you like.

Unless you sold at the bottom, which Schiff never advocated selling in 2008..unless you bought gold stocks and sold them at the trough, which he never recommended, then you followed Schiff's advice and haven't lost money. If I buy Microsoft at $30 and it drops to $20, but I don't sell until it reaches $50, helmuth would say I lost money between $30 and $20. How do you figure?

Actually, I wouldn't say that.

I'm collecting dividends in the meantime. The IRS sees me making a capital gain as I didn't sell at $20. Yet helmuth assumes, by posting a fake Schiff-advised portfolio, that people lost money.

Actually, I don't assume that. I try to assume very little. What I have done is post factual information. Peter Schiff can confirm to you that his clients lost money during 2008. It really isn't that complicated. It's a fact, a very simple fact, a very easy-to-understand, inescapable, non-disputed fact. Yet you're trying to dispute it. To do so, you are putting yourself through all kinds of rhetorical contortions and backflips.

Instead, just accept the truth: it is not reasonable in any useful way to say that one's investment advice was "right" in a year when your investment advice led to large losses. Thus, it is not reasonable to say that Schiff's advice was "right" in 2008, when in fact his advice led to large losses.

Realized or not is a completely unrelated and ridiculous issue to bring up. If his advice had led to large gains in 2008, it would not have mattered whether those gains were realized by all the clients, and of course they wouldn't have been. We would still say that his advice had been "right," and we'd say so correctly.

Again, you only lost if you sold at the bottom, in which case you always lose if you sell at the bottom. You cannot bank on buying a stock at the absolute bottom that will only continue upward from there. Everytime you buy a stock, it goes down. Unless you time it 100% correctly, you always have a stock go below your entry point. So how could he be wrong in scenarios you're suggesting that he never advised people to do?

You are confusing yourself by trying very hard to bring in this issue of realized vs. unrealized gains as some sort of trump card, as if its existence somehow helps Mr. Schiff. It doesn't. This issue is not unique to him. He is not somehow on the side that understands and profits from the existence of realized vs. unrealized gains/losses, while I am on the side that doesn't and doesn't. It's just ludicrous. You're trying to confuse people who may not understand all these issues very well by simply spewing out words to misdirect attention.

"It's not fair to say that the stock market went up 29% last year, because it only went up if you sold! It's not fair to say that Peter Schiff's customers' portfolios went down 40% in 2008, because it only went down if you sold!" Both of these statements are equally ridiculous.

 

[helmuth_hubener]

Don't look now, but emerging markets whooped every index for 5 consecutive years:

http://www.callan.com/research/download/?file=periodic/free/655.pdf

2003: 56%
2004: 26%
2005: 34%
2006: 33%
2007: 40%

You make a good point. I do wonder if the MSCI Emerging Markets fund bears any resemblance to Peter Schiff's recommendations. And I think that it probably does not. But I do applaud you for using using some actual data, linking to it, and then not even totally misrepresenting what it says. Bravo. If only you could reach such high standards for your treatment of my posts, we would have had so much more productive and enlightening of a conversation. We both might have had valuable insights and thoughts to share with each other.

5 years running. Looks like Schiff was right.

Well, here you make a somewhat unwarranted conclusion. Does the MSCI Emerging Markets fund bear any resemblance to Peter Schiff's recommendations? Please let us know.

And you're bragging about 25% of a 22.5% gain in LT government bonds with a 3% coupon for one year?

I would say that bragging is too strong a word. But I have expressed appreciation for the performance of the Permanent Portfolio during 2008. This was appreciation for the entire portfolio, as a whole. Looking at the components separately is missing the point. The Permanent Portfolio is a package.

75% of the "permanent portfolio" yields 0% dividends/interest.

That's very true - if were to you change 75% to 25%. That would be a very accurate statement. So, you were very close. I applaud you coming very close to making an accurate statement.

Just a few percentage points off.

That's horrible.

I don't see why.

My only upside to the permanent portfolio is solely on capital gains? You DO realize upwards of 80% of all the gains on the S&P over the last 50 years has been in dividends, right

Oh, you are so sure of yourself. If only you could take a deep breath and listen to something outside yourself. Your statement is false. The different assets gain in different ways. Interest, dividends, and capital appreciation all play a role.

Meanwhile, Peter Schiff has advocated investing in high-dividend paying foreign stock. Companies that spit out 6-10% dividends in foreign currencies that will rise as the Dollar depreciates, so it's a double-whammy. Meanwhile, the permanent portfolio says buy 25% into gold (no dividend), 25% into cash (no interest), and 25% into bonds (no yield). The other 25% into stocks, but of course, most stocks don't pay a dividend. Many that do on the US exchanges pay on average of less than 2.5%

The stock market went up more than 29% this year. How much did Peter Schiff's recommendations go up?

These individual foreign stocks have the potential to outperform the US stock market. But anything that has the potential to outperform also has the potential to underperform. This risk is not all plus and no minus. It works out if Peter Schiff is right. It fails if he is wrong. I personally don't know which one will happen this year, nor this decade, nor this lifetime.

Do you?

Such an imprudent portfolio. When interest rates rise, bonds crash so there goes 25% of your portfolio. If real interest rates rise above 0%, then gold is hammered with the cost of carry. If interest rates rise, your other 25% in stocks will be clobbered as the cost of capital rises for companies restricting and limiting marginal NPV projects, so less value is created for a business resulting in less enterprise value.

If interest rates rise, bonds will do poorly and gold will do very well. The good performance of your gold will outweigh the bad performance of your bonds.

That's the theory anyway. And for the last 40 years (as well as all the historical back-testing Browne did before recommending the system): it has worked. So it's been a very successful theory.

So you're left with cash, which does well with higher rates.

Actually, cash is a loser during a time of high interest rates -- that is, during a time of high inflation. Your cash could be losing quite a bit of value due to inflation.

But what kind of cash? I do wonder. Do you own the US Dollar? Even with higher rates, what if the US Dollar crashes? So there goes your final 25% of your portfolio. Sure, you could say if the Dollar crashes your value in gold skyrockets, but only in Dollar-terms. That's like saying you own a billion shares of Pets.com, but does that really mean anything? It's a bankrupt company. Likewise, if you own a billion dollars worth of gold, but those dollars are worthless, then the question becomes how much gold do you own relative to other currencies, and what are the costs to convert and hold those currencies?

If there is a Catastrophic Event (which you seem to think is inevitable and imminent, but I am not convinced of your 8-ball's reliability), then gold will go dramatically up in real terms. There are very good theoretical reasons to believe this. But, as the US dollar has never completely crashed and ended in oblivion before, I cannot guarantee nor prove that it will work out this way. But I think there are good reasons to believe that it will.

So the permanent portfolio does okay in a low interest rate environment. Surprise! Everything other than cash does well in a low rate environment! The true test is how the portfolio performs during an environment with rising rates. Where values are discounted away and market caps, debt, and cash can all collapse relatively easily.

For its entire history, the Permanent Portfolio has performed well during every type of economic environment it has encountered, except for brief periods of recession. This is exactly as planned and designed. And even during recessions, it has performed relatively well compared to other portfolio strategies, because the cash smooths out the bump and carries you through. Nothing reliably does well during a recession, so the best thing that we can do is to just wait it out, and by hugely, dramatically, terrifically decreasing volatility, the PP allows real, live investors to do exactly that.

Suppose the US government defaults. 25% of the portfolio is gone. Poof. Now you're at 75%. Chances are if that event occurs, there will be a run on the Dollar by countries redeeming it. So now you have a deluge of dollars entering the US borders. Poof, another 25% chunk gone. Now you're down to 50%. Oh, but gold will do well! Even if it did, it would have to double just to break even. And if the dollar collapses, one would assume equities would do fine, right? In Zimbabwe they did...nominally. But there will be plenty of companies that get washed away in the flood. So, say your 25% chunk in stocks drops to 20% because the 5% collapsed. Probably more than that as most of the economy depends upon the current model to survive, and the chain reactions that occur. So now a majority of your assets are either worthless, or have diminished so much in value that your ultimate hedge is: gold. 25% in gold.. whereas if you took Peter's advice and bought foreign stocks, you very likely would have great companies with great balance sheets still chugging' along.

I personally believe that almost everything about your analysis of this scenario is wildly unrealistic and completely wrong. The US stock market is going to collapse into chaos, but the foreign emerging markets are not? That requires a preposterous misunderstanding of how the world works. These foreign stocks are not divorced from what happens in the US.

But yes, in a Catastrophic Collapse Situation, "your ultimate hedge is: gold." That is an accurate statement. I applaud you for making an accurate statement. Bravo.

May you make many more.

 

[Madison320]

1) Peter Schiff frequently claims, proudly and loudly, to have been the man who correctly predicted the 2008 crisis.
2) His advice lost his clients lots of money during 2008.
3) If his prediction really was correct, if he had really known what was going to happen, then why did he give advice that would fail so badly?

Schiff was expecting the dollar to crash shortly after the stock market and housing market crashed. He admits all the time that he was wrong on the timing. But he still thinks that the dollar crash is coming and as a long term investor it won't make much difference that there's a lag between the initial crash in 2008 and the coming dollar crash.

As usual you are cherry picking one small time horizon where Schiff's strategy did worse than the "normal" strategy and ignore the other 90% of the time. What's up with that?

I think the "permanent portfolio" works great under certain scenarios where all the investment categories are going up and back down. But I think that strategy is not going to work if we get many years of high inflation without a correction (deflation). The "permanent porfolio" worked in 1980 because a miracle occurred and interest rates were raised to 20% to save the dollar. That won't happen again, it's impossible with our current level of debt. I think it's a near certainty that the dollar is going to experience a huge and permanent loss of value. How would the "permanent portfolio" have worked in Italy before the lira collapsed? Greece before the drachma collapsed? Argentina before the peso collapsed? Venezuela? Zimbabwe? Etc? Etc? It seems to me you'd have a few scraps of gold along with a mountain of paper if you used that strategy in any of those countries that experienced a collapsing currency.

You always say that you can't predict the future and I would agree most of the time. However I don't think this a normal situation where it's tough to make a prediction. This is an extraordinary situation. Our levels of debt, trade imbalances and money printing are off the charts. It's not like I'm predicting a 50% of rain for this weekend. That's tough to predict. This is more like having a Cat 5 hurricane heading straight for you. I feel safe in predicting high winds and lots of rain when you're about to have the eye of a hurricane pass over you.