Posted by: coastcontact | April 6, 2016

Peter Schiff and other Doomsday Stock Market Predictors

Peter SchiffThis advertisement has been appearing on many of the web sites I visit. Included is my daily visit to where it prominently appeared in two locations of the site’s main page.

There is a flourishing industry of financial doomsday predictors who make their living preying on the fears of smaller investors who fear losing their hard earned estate that provided them (or will provide them) a retirement nest egg.

Before you respond to the doomsayers it would be worth your time to investigate their backgrounds. Thus I researched and found the following about Peter Schiff simply by entering his name in a Google search. The first option that appeared was “peter schiff track record on predictions”

The first item:
in part the web site reads as follows:

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

The second item:

This youtube video is a compilation of Peter Schiff predictions. As you watch look at the dates that appear on screen.
Published on Nov 10, 2014

In 2009, Peter Schiff started predicting gold would go up to $5000 an ounce. At the same time, he predicted gold & the Dow Jones would soon be at the same level (eg, gold $5000, the Dow 5000.) Gold hit a record high of $1900 in August 2011. A year later, gold prices started plummeting. Schiff completely failed to foresee gold prices would eventually drop by over 35%.

For some context, on June 9, 2010 gold was $1257 an ounce. More than 4 years later, on November 10, 2014, gold was $1151 an ounce. During that same period, Dow Futures went from 10,674 to 17,613. Yet, all throughout, Schiff continued telling investors to buy gold & was very critical of any investment adviser who didn’t questioned his track record on gold prices.

During his TV appearances Schiff often tells people to go to YouTube to check his record. So here’s a compilation of Schiff’s various predictions over the past 5 years as gold prices were rising & falling & stock market prices fell, then soared to record highs.

The third item:
Market Forecasts to Ignore in 2015
in part reads:
Stock-Market Crash: There have been so many erroneous calls for a stock-market crash that it’s hard to choose which deserves special mention. But I am going to give you two that merit attention: The first comes from Chapman University professor Terry Burnham, who predicted Dow 5,000 before Dow 20,000. He technically hasn’t been proven wrong yet, but during the years he has repeated this forecast, the market has gained about 40 percent. That makes him wrong enough in my book. The second was this article in Fortune, “Why the bull market could end tomorrow.” It was filled with forecasts explaining why “smart prognosticators” and “market timing precisionists” believed the top was just about in. That was some 2,000 points ago for the Dow Jones Industrial Average and 200 points for the Standard & Poor’s 500 Index.

Gold: I almost feel bad pointing out how awful the gold forecasts have been. But special mention must go to the loudest and highest forecast, and that means Peter Schiff of EuroPacific Capital. Last April, Schiff made the bold prediction that the “Federal Reserve’s quantitative-easing program will push gold to $5,000 an ounce.” How did he do? The shiny yellow metal began the year in the low $1,200s, rallied to $1,400, before plunging to $1,150. It closed 2014 just under $1,200 as the Fed’s program of QE was ending. Gold remains 80 percent or so lower than Schiff’s target.


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