Rough week for Peter Schiff. A few days after competitor and blogger Michael Shedlock ripped his firm’s performance, the WSJ comes to the story and writes pretty much the exact same thing. Of course you know how it goes: Schiff saw the collapse coming, but he also thought that commodities, gold and Asia would do well — thus despite his negative prognoses for the US economy, his clients got whacked this year.
The story includes anecdotes of people who put their money with him, specifically because they were worried about the health of the economy. Of course, it’s not pretty:
Early last year, Richard De Gennaro, a retired Harvard University librarian, put $100,000, about 15% of his assets, into a Euro Pacific account that included Canadian Oil Sands Trust, which focuses on crude-oil projects in Canada, and the India Capital Growth Fund, which holds investments in companies that do business in India.
Both investments took big hits in 2008, compounded by the fact that the Canadian dollar and the Indian rupee fell 18% and 19%, respectively, against the U.S. dollar. The 83-year-old retiree’s account is now worth about $37,000, a 63% plunge. Mr. Schiff “goes around saying that he was right,” says Mr. De Gennaro. “He was right about one thing and wrong about everything else.”
Among investors who turned to Mr. Schiff’s firm just as his strategy began to falter, Brian Kullberg, a design engineer in Portland, Ore., says he started to worry about the state of the U.S. economy in early 2008. He put $70,000 into a Euro Pacific account, hoping it would benefit as the U.S. economy and the dollar weakened. By late January 2009, his investment had shrunk to about $25,000.
Schiff, of course, offers the defence that these are short term moves, and that the long-term prognosis remains intact and that investors who can say solvent will be rewarded. But these are serious hits to overcome.
If there’s anything odd about the WSJ piece it’s that it doesn’t even mention how this whole brouhaha got started, with the post from Shedlock, as if the paper just decided this week to look into it, with no provocation at all.
In an attempt to blunt the fallout, Schiff has written a long defence of his viewpoints and performance, posted over at SeekingAlpha:
My popularity on television and the internet has led a very small money manager to use his popular financial blog to promote his fledgling business by attacking the recent poor performance of my long-term investment strategy. The post is causing quite a stir and compels me to provide some badly needed context.
To achieve his ends, this individual has distorted much of what I have been saying and writing, and has twisted the facts to support his own preconceived conclusion. In essence, his piece is nothing more than an overt advertisement (and a highly deceptive one at that) to use my popularity to advance his career. In so doing he has given my critics, particularly some who have been embarrassed by their roles in the “Peter Schiff was Right” video, their moments of retribution. In addition, some members of the press who have never been among my greatest fans are seizing the opportunity to discredit me as well. Read the whole thing >
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