Starting in 2006 Peter Schiff goes prescient. He nails the current crisis in detail. The other talking heads can’t get the bull [market] out of their mouths fast enough. They’re even laughing him off. My favorite moment is when Ben Stein says Merrill is a super bargain at $79. “It’s a joke it’s so cheap” he says. MER closed today at 13.80. Here’s the MER chart from August 17, 2007 — the day Ben Stein called it. Bueller…Bueller?
Bradeon 14 Nov 08
Way to hang in there, Pete.
Also, WTF is Ben Stein doing doling out investment advice??
Swami Atmaon 14 Nov 08
Very good find.
Tom von Schwerdtneron 14 Nov 08
@Brade: He writes for Yahoo Finance, but I don’t think there is anything related to finance in his background and IMO his advice doesn’t seem to be too good.
Alexandre Simardon 14 Nov 08
Nice find. Thanks! Related: Michael Lewis’ (of Liar’s Poker fame) piece on The End of Wall Street. Prominently featured is Steve Eisman, a fund manager who was shorting Merrill Lynch and Lehman Brothers in early 2007. The whole article is actually quite scary.
Ivanon 14 Nov 08
Fantastic! Did Laffer pay him his penny? Most of these pundits are so wrong that they should be benched for good.
Jacob Aldridgeon 14 Nov 08
He who laughs last, laughs best.
I can only hope that on a news network somewhere there’s an analyst being laughed at for being wildly optimistic about a turnaround, and that we’ll see his video here in 18-24 months’ time.
Tom H.on 14 Nov 08
That’s the deal when you put your comments out there for all to take a swing at. You win some and you lose some. The guys that don’t like you will take your losses and try to make you look stupid while those on your side ignore it. That’s the game.
There isn’t a pundit in any discipline that can’t be nailed on this stuff. Pundits aren’t prescient… you’re bound to be wrong sometimes.
Nivion 14 Nov 08
Thanks Jason, can you clarify your post? Do you like his explanation or his prediction or something else?
This seems like a case of “fooled by randomness”. Peter was “prescient”. So are monkeys at keyboards once in a while.
Up markets always go down. Down markets always go up. Predicting this will happen is no big deal.
Predicting when it will happen with enough accuracy to achieve supra-normal returns is the skill we’re looking for and I don’t know if it exists.
Ivanon 14 Nov 08
Market timing is a pseudo science. Schiff is a follower of Austrian Economics. They nail the major trends. They understand the business cycle. If the collapse happened now or had happened next year is in the bigger picture irrelevant.
The hard part is to stay disciplined and know that economic fundamentals cannot be changed. Witness this video, all these pundits have no idea about the basics of business and economics.
As this blog shows in the posts, certain things never go out of style. On the Web: speed, ease of use, price etc. will never go out of style. Peter Schiff knows that personal savings, company earnings, the amount of debt will never go out of style for a financier working for clients. It is all about Discipline.
Andyon 14 Nov 08
I think Ben Stein has a degree in Economics. This obviously has little to do with the value of his advice, but it would qualify as “finance in his background”.
Seth Wagoneron 14 Nov 08
Nivi, one known master of picking when a bubble is about to burst is George Soros. Buffet can at least claim to have pointed out twice when the fundamentals were completely screwed up. Both of those guys have achieved long term supra-normal returns. But I agree that 95% of the time when someone picks the timing of the market, it was probably just a fluke, and you can’t really pay much attention unless they lay out their reasoning in detail and it all makes perfect sense, or they just keep on getting it right, as Soros and Buffet seem to.
I think in the case of Schiff you can listen to his reasoning in this clip and say he understood the details, and we can see in hindsight he got most of them right.
Whereas many of the other pundits are talking no real details at all, which means one can quickly assign them to the “pay no attention basket”.
Stein is also a prominent backer of creationism/intelligent-design. Enough said.
Brooks Jordanon 14 Nov 08
Fascinating video to look back with and see how clear Schiff is about what is going to happen and how one, two . . . five are all yelling and laughing him down.
What does it say about group-think: a lot.
Great to see him hold his ground.
Ben Bodienon 14 Nov 08
Brilliant find. How are those Bear and WaMu shares working out for Charles Payne?
Seth: I agree completely – Schiff was the only one in any of those discussions actually talking fundamental details, raising the issue of debt backed security risk. The others are just dismissing it out of hand with no justification to their arguments at all. Alarm bells should have rung on that alone.
Wolfgangon 14 Nov 08
I can’t believe how low the quality of fox news is.
“Experts” laughing about each other, I don’t know if that is called good journalism I’d rather stay with other news networks.
David Haywood Smithon 14 Nov 08
Great video! The question in my mind is: has this chap made a killing on short positions?
Danielon 14 Nov 08
There’s also this one, first broadcast October 14th 2007: Bird & Fortune: How The Markets Really Work.
It’s a sketch that’d be hilarious if only it weren’t so frighteningly prescient.
JFon 14 Nov 08
Was just informed that Peter has a weekly radio address/podcast called Wall Street Unspun. Thanks @baeck.
FredSon 14 Nov 08
MER did reach around $100 before it came crashing down.
Benon 14 Nov 08
Peter Schiff for Fed chairman!
Valon 14 Nov 08
@Tom H.: He is being pretty specific here, and mentions quite a few of the indicators that we are hearing about every day now. I’d say he was dead on. This is great.
nateon 14 Nov 08
Art Laffer is such a douche bag. He was on CNN opposite Schiff after the financials started tanking, spouting the exact same BS. Unbelievable.
GeeIWonderon 14 Nov 08
WTF is Ben Stein doing doling out investment advice
He’s quite highly regarded in some conservative circles, and was considered a prodigy in the Nixon white house.
Also, he’s not wrong about financials. They’ll be back.
One of two things will happen here.
1) The economy as we know it will survive, and the types of companies that make money will once again start to make money. Buying them at such low P/Es IS a steal, and planning to be well positioned for the recovery makes a whole lot more sense than buying a $2000 laptop that can fit in a envelope.
2) The economy as we know it will not survive, and we’re going to all be carrying clubs to hunter/gather our daily dinner. You can’t make a bad financial plan, because planning won’t matter.
Bet on #1.
Robon 14 Nov 08
Peter Schiff was spot on and wrote about this upcomming crisis in his book Crash Proof: How to Profit from the Coming Economic Crisis http://www.amazon.com/Crash-Proof-Economic-Collapse-Sonberg/dp/0470043601 Worth checking out.
Daveon 14 Nov 08
Peter Schiff has been consistently correct on the economy since well before 2006.
The scariest thing (now) is what he’s predicting about the upcoming Obama administration in his 11/6 podcast of Wallstreet Unspun.
Eric Andersonon 14 Nov 08
On one hand I agree with most of what Schiff says. On the other hand that is still no guarentee he was going to be right and with thousands of “analyst” making predictions some are bound to be right. Some are even bound to be right for the right reasons. As a previous poster said let us not be “fooled by randomness”.
Tom H.on 14 Nov 08
@Val: You’re right. Unfortunately I read the post and left my comment without watching the video… I didn’t have the ten minutes to spare last night.
I just watched the video… I was wrong. I think Peter nails it and I’m signing up for his podcast. It took a lot of intelligence to get it right and even more guts to buck the trend and say it out loud.
I was wrong… that’s what I get for posting without watching the video.
David Andersenon 14 Nov 08
“Stein is also a prominent backer of creationism/intelligent-design. Enough said.”
I’ll say, since it’s a complete non sequitur.
Jamie Tibbettson 14 Nov 08
They’re still laughing at him:
Fredon 14 Nov 08
Schiff was great, But: He recommended the GLD gold fund (etf) on December 29, 2007 (in the video). It is now (Nov 2008) in the low 70’s. Oops.
See the Bloomberg page for a graph. I think you need to register, but it’s free.
ALSO: Schiff predicted inflation, when we now have a problem with deflation.
So even the best, and he was the best of that bunch, don’t get it all right. And his investment advice wasn’t so sound. Better than buying Bear Stearns, though!
Jakeon 14 Nov 08
@Fred: There will be crazy inflation on the backside of this recession, which is why Schiff is suggesting gold. He has a longer term view on gold than you.
Daveon 14 Nov 08
@Fred – stock & fund picks aren’t necessarily “long term”, so it really doesn’t matter what price GLD is now. Peter recommended GLD in that video in December when it was $77. Four months later it was close to $100. Who’s to say that Peter wasn’t selling his GLD in mid-march?
Jason brings up a better (negative) example when Ben recommended MER, which consistently plummeted. Peter’s GLD gained 30% in the quarter after his pick.
Also, Peter talks about inflation in terms of the money supply which has gone through the roof – http://mises.org/content/nofed/chart.aspx?series=TMS – where do you think we’re getting the $850B to pay for the bailout? Not by taxing every citizen $2800. China’s not lending it to us. The Fed is printing it and inflating the money supply which lessens the value of every dollar you own.
Peter’s advise 3 months ago – get out of the dollar, stay away from bonds.
Mike Rileyon 14 Nov 08
You know a little known fact about this man is that he was the economic adviser to Ron Paul during his bid for the presidency.
This really goes to show how out of line everyone’s priorities are in the US imo, Ron Paul was snubbed out when he was the one candidate who had real genuine insight as to what is wrong with our economy.
Don’t get me wrong, I love Obama, but it’s just a shame Ron was never given a shot.
diywebhubon 14 Nov 08
People like Cavuto who were laughing at him and his viewpoint could gain some credibility back by having him on and offering a sincere acknowledgment of how wrong they were and how immature it was to laugh at an opposing viewpoint that way.
I don’t watch that show so maybe they have done this.
I suspect that program is probably more opinion and entertainment than news but acting like there is no way his predictions could be correct made them look silly regardless of what eventually came to pass.
gwgon 14 Nov 08
Ben Stein is now just another celeb who is cashing in his fame and reputation to pretend to be an expert on nearly everything. I’m sure that Mr. Stein is a very bright individual and has some significant accomplishments, but he’s started to overreach in a number of areas.
Grok2on 14 Nov 08
After looking at the video on your site, I visited Peter Schiff’s web-site and looked at a video there and into his site and it seems like though Peter was right on target, it might be that he had an axe to grind - he focuses entirely on foreign investment. So it seems to me that he wasn’t really prescient - he was merely interpreting the data the way it suited him best business-wise—like all the other talking heads were doing.
Bobbyon 14 Nov 08
@Brade Stein worked in economics for Nixon, and I think Reagan.
Andrew Vorobyovon 14 Nov 08
Guy was right in general – USA is in deep sh…t. But dollar didn’t fall but contrary. However it’s not for a long time. Inflation here to come.
StartBreakingFree.comon 14 Nov 08
I love how the internet has captures stuff like this ON THE RECORD. It makes it harder to be full of BS.
Also, Ben Stein is a complete idiot. Did you hear about his latest movie on intelligent design?
GeeIWonderon 14 Nov 08
China’s not lending it to us.
China is quite happy to continue lending to you, especially if you continue to spend the money on Chinese exports.
The US owns an impressive military. China owns the US.
CDoton 14 Nov 08
I found that deeply satisfying. Thanks you.
bowerbirdon 14 Nov 08
the guys who were completely wrong?
well, they should be discarded, entirely.
but t.v. will just keep soundbiting them.
Mikeon 14 Nov 08
All of the talking heads in this video reminds me of the Daily Show’s segment called “Who the F*&k is this Guy?” when talking about all of the campaign pundits. I really want to know who the Michael Bolton wannabe is.
Daveon 14 Nov 08
@GeeIWonder – I wouldn’t be too sure that China is still “quite happy” lending to the U.S.
As Peter Schiff pointed out yesterday – http://www.dailypaul.com/node/72830 – China may be ready to unload $600B to in U.S. Treasuries. China’s not stupid—they have no need to buy dollars (a.k.a. loan the US money) when the dollar is tanking.
Imagine the value of the dollar if the U.S. Fed prints billions of US Treasuries while China also unloads their US holdings.
As Peter Schiff said yesterday: [For China,] “Selling down their vast reserves of U.S. debt and using the proceeds for domestic infrastructure projects (or anything else for that matter) is a vastly superior stimulus mechanism than “lending” to Americans so we keep “buying” their products. When Chinese authorities finally figure this out the United States will suffer the consequences.”
GeeIWonderon 14 Nov 08
It’s unlikely. They have said as much.
The US is still the world’s consumer, including China’s. China has already aligned with what is effectively an economic NATO alliance of central banks to protect the US dollar/economy for this crisis.
What China wants, as they showed 3 years ago, is the ability to destabilize a healthy US economy by announcing they are about to start unloading dollars. Then they don’t need a military to do whatever they want. Why fight for Taiwan, oil or any other desirable assets when you can purchase it?
Spencer Fryon 15 Nov 08
Peter Schiff kills it.
Mikeon 15 Nov 08
Parts of what Peter Schiff said have come to pass, but his recommendations, as others have pointed out, have been horrible. Schiff is a firm believer in Reaganomics, and thinks Obama will do horribly because he wants to reinstate financial regulation. No doubt he will do well in this downturn, but, like a broken clock, he is only partially correct.
Seth Wagoneron 15 Nov 08
For an analyst/pundit who called the economic crash even earlier than Schiff, and with even more justifications that seem, in hindsight, to be fully aligned with reality, and who in my opinion has an even firmer grasp of the fundamentals and vastly more realistic suggestions of what ought to be done next, check out Nouriel Roubini.
Joshon 15 Nov 08
I have been following Schiff for about a year now. He completely destroys these fools on a regular basis. Schiff and Ron Paul have me hooked on the utter simplicity and common sense approach of Austrian Economics. www.mises.org. There are plenty of videos on youtube of Schiff and he also archives all of his TV appearances on his website. I’ve seen a great number of these. The reason that Schiff is so accurate, as well as the entire Austrian school, is because they understand fully that economics is a hard science, just like chemistry or physics. Certain actions yield certain consequences. History proves this. America does not operate outside the laws of economics, it’s arrogant to believe otherwise. Frederic Bastiat is also a very fascinating economist/philosopher from the 18th century.
Joshon 15 Nov 08
Bill Maher calls Laffer out on his bet with Schiff. I’d love to see Schiff get on this show.
GeeIWonderon 15 Nov 08
entire Austrian school, is because they understand fully that economics is a hard science, just like chemistry or physics.
Hmmm. Questionable. You don’t get to change the rules in chemistry or physics by lobbying politicians.
We’ve actually unlearnt how to deal with derivatives, for instance.
Also, if we’re continuing the (flawed) analogy, the challenging thing in economics is that you need use what are essentially models based around Newtonian regions to describe and anticipate phenomena in Quantum regions. It may be arrogant to believe you operate outside the rules, but it’s even more arrogant, and probably a sign of a fundamental lack of understanding, to assume the rules from previous crises or previously sample regions can anticipate cause and effect of each individual (even novel) components of future crises outside those regions.
We do it, because we need to though. Pretending there is some kind of absolute truth becomes dogmatic though, and that’s not hard science.
Bradeon 15 Nov 08
@GeelWonder, who says “hard science” means dogmatic 100% fact? Science is all about the best possible interpretation of the evidence. I’d say the Austrian school understands that…
GeeIWonderon 15 Nov 08
@Brade: Too long for here. Indeed, the notion that models fail is the second tenet of the ‘school’ mentioned, and statistical methods that may be valid in natural sciences do not likely apply.
The problem is, praxeology is just as suspect. And the methodology with which people calling themselves of the ‘Austrian school’ (rather than people using some of the key ideas) does share the interpretation and dogmatic elements of say, intelligent design.
A theory that, by design, cannot be proved wrong is not really very good science.
Bryan Sebastianon 15 Nov 08
This is an unbelievable video… especially the way these people are laughing at him. I really enjoyed the part when he said that real estate is not real wealth, that it is artificial wealth. I agree with that 100% and have alway considered my house to be a liability and not an asset. Especially since my home takes money out of my wallet (heating, costs, upkeep, etc) way more than it ever puts money into my wallet.
Arik Joneson 16 Nov 08
I love the storm radar on the bottom right. That is amazingly ironic. lol.
FIAT EMPIREon 17 Nov 08
Go to Peter Schiff’s site. Listen to his podcasts. #1 thing he predicts now is that the dollar is going to crash. Buy gold buy other currency. If you would like more information about why dollar is doomed see this video FIAT EMPIRE about history of our monitory system.
Frankon 17 Nov 08
Are you serious or are you practicing extremely subtle satire?
I don’t want to assume you are purposely misrepresenting Austrian Economics but, at the same time, I don’t want to assume you a pretending to be familiar with a school of economics that (if you were being serious) you obviously are not.
I’m hoping for satire because in 3 of your comments, you make factually incorrect statements. If you were being serious, let me know and I’ll point them out for you.
It’s disturbing/funny the way people that are incredibly ignorant about a subject still feel the need to comment on the subject. There are actually comments on this blog that discuss asset deflation as if it is the same thing as monetary deflation. I’m sorry but if you don’t know the difference, you probably shouldn’t be discussing economics.
As Murray Rothbard once said…
“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science’. But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”
GeeIWonderon 17 Nov 08
Proceed. It’ll be fun. But not here. Let’s use your blog.
This discussion is closed.