There's been a lot of buzz around the internet recently concerning a defective attempt by a small money manager and small man to discredit Peter Schiff because of some things he alleges Schiff missed for his clients, effectively costing them a lot of money. There were even implications from the financial midget that Schiff was a fraud. It's hard to believe this little person is actually allowed to manage people's money. I won't mention his name so he doesn't get any more attention.
What this small time clown did was accuse Schiff of missing a number of assertions he made, making it look like he was so far off he was either a fraud or incompetent.
Of course the usual few disgruntled investors that lost money over the short term are doing their whining and complaining that they should have kept their money in some type of safer investment. But if anybody has done even their basic homework, or did due diligence on Schiff, they knew he's in things for the long term, and those investing with him should take that into consideration when employing his services.
Look for example at Warren Buffett and Berkshire Hathaway (
BRK-A). In the middle of September 2008, the stock surged to over $147,000 a share, and as I write was only a little over $89,000 a share. That's a huge loss of $58,000 a share in a very short time. Does that mean that Warren Buffett has no idea what he's talking about, or that his long-term philosophy of investing is faulty? No one with half a financial brain would say that.
The same is now happening with Peter Schiff, because he has in the past correctly identified the problems of undergirding the U.S. economy and its horrible government interference which undermines its strength. That infuriates those that hold to the goverment as a religion, and certain dectractors then dishonestly and desceptively put together fairy tales and half truths to make people like Schiff look like they're incompetent and frauds.
Here's how Schiff obliterates the midget:
"The crux of the blogger's arguments are that my beliefs in "decoupling, hyperinflation, and that the dollar is going to zero" have been completely discredited by the events of 2008, and that the resulting investment losses suffered by my clients last year confirms the fatal flaws in my approach.
"In addition to mischaracterizing many of my beliefs, he also is confusing short-term market fluctuations with long-term economic trends.
"First of all, the hyper inflation issue is a straw man at best. While I often talk about the possibility of hyper inflation, I have always said that it would be a worse-case scenario that would play out over many years. The fact that it did not appear in the first year of the economic crash (2008) does not invalidate my position. I have always maintained that this worst-case scenario will likely be avoided by what will ultimately be a dramatic shift in policy once our leaders come to their senses. However, until then the dollar will likely lose a substantial portion of its value.
"Second, I never said that the dollar would go to zero, either in 2008 or any year thereafter. I have said that in the event of hyper inflation the dollar's value would approach zero. My actual forecast in my book "Crash Proof" was that the Dollar Index would fall to 40 (currently about 85), with a realistic worst case scenario, assuming very high but not hyper inflation, of 20 or lower.
"Third, the blogger points out that because the decoupling theory (foreign economies improving while the U.S. falters) that I wrote about in 'Crash Proof' has yet to occur, that the theory itself was ridiculous. In my book I wrote that this process would not occur overnight, that initially our creditors would come to our aid, and in so doing our problems would become manifest abroad. I wrote that it would take time for the world to realize that what had been decoupled from the economic train was not the engine but the caboose. In fact, that is precisely the way it is playing out."
In the end, most of this is dealing with the long term investing horizon that the real successful investors employ. The other stuff is a smokescreen, as Schiff has shown.
I read the hit piece floundering financial advertisement by the financial midget, and found that that's all it was - an advertisement using Peter Schiff as the subject to draw attention to himself. In that sense he was successful. Maybe he should go into marketing rather than financial advising, as his short-term horizon will be a disaster for those following his pathetic "advice."
What he said was Schiff should have done better even though his assertions were correct. In other words, he was trying to say Schiff (and evidently himself) should have been a better market timer; something Schiff has repeatedly said he isn't.
This is the similar mentality of those wanting to bailout every poorly run sector in the U.S., saying they're too big to fail.
People that attack long term investors and outlooks, are those that falsely believe there should be no such thing as a bad year, and those advising clients need to make that happen.
But Warren Buffett has proven over his long investing career that holding to a long-term investing outlook far outperforms those that go in and out of a market, giving the illusion their clients are doing well because they may occasionally outperform their long-term counterparts over the short term.
Remember those laughing at Warren Buffett during the dot com era? Do you hear them laughing now? Buffett was again exonerated for his long-term outlook and understanding of what he was doing.
As Schiff says, this financial midget is only trying to make a name for himself by focusing on the little short-term gains some of his clients may have made in contrast to Peter Schiffs' clients.
In the end, Schiff will be the one laughing, and those people made out to be the ignorant people they are.
