Sunday, August 22, 2010

How Much of a Politician Will Peter Schiff Tun Into?

Will he tell his supporters to hold their nose and vote for Linda McMahon?

The CT Post reports:
During her primary victory speech, McMahon, who had criticized Simmons as a career politician and ignored Schiff, praised her opponents and called for unity.

"At the end of the day we are all part of the Republican family ... Families don't always get along and they don't always agree, but in the end they do stand together," McMahon said. "I think I speak for every Republican in this state in inviting Rob and Peter to join us as we fight to win this seat for all of the people of Connecticut."....

Scott McLean, associate professor of political science at Quinnipiac University, said McMahon needs a unified Republican Party to have a shot at defeating [Democrat Richard] Blumenthal...

Schiff spokesman Jennifer Millikin one week ago said the candidate had huddled with senior staff to "understand what his options are going forward." She said one obvious step would be for Schiff to encourage his supporters, including "libertarian minded independents" to back McMahon.

"I don't think that's a big ask," Millikin said. "Who else are they going to support?"

But Schiff's campaign has yet to issue any such calls.
The only reason Schiff would make such an endorsement is if he was thinking about his political career long term. He knows that if McMahon is any different from Blumenthal, it is only be a small degree. On the other hand, if he fails to endorse McMahon, Republican mainstream will remember down the road that he didn't "circle the wagons" against the Democrats.

I don't have any ideas what he is going to do, but I think he is beginning to realize making political choices is a lot more difficult than picking stocks.


  1. Unfortunately he hasn't done a super job of picking stocks, either.

  2. @Taylor - Is that a careless stab at Schiff or do you have actual information that supports your comment? I have no dog in the fight whatsoever, but I'm annoyed by people who take stabs at others with no certifiable evidence to support the claims.

    I'm also annoyed when 'Austrians' take stabs at other Austrians. Schiff has taken a years long beating, furthering the principles of sound economics and criticizing openly the Bush Admin, Greenspan/Bernanke, the banks, etc. He singlehandedly brought countless people to the Austrian view and should be appreciated for this. 'With friends like you, who needs enemies' is what I'm thinking.

    Schiff has made some great macro calls and has generated a lot of buzz...and has always steered clients away from US stocks...and toward gold/silver/other commodities and foreign, dividend-paying stocks that "pay you" while you wait for the collapse of the dollar.

    EVEN IF Schiff's stock choices have underperformed by someone's measure (I have no knowledge either way), his recommendations may still be extremely viable considering the possible/probable collapse of the US dollar that is so well covered on this all important blog! Until that collapse, his picks (and other 'Austrian' advisors' picks) could be prematurely viewed as losers, and I don't think it's fair to criticize those picks just yet...and perhaps a sign of jealousy of Schiff's celebrity.

    I will also be curious to see of Schiff sells his soul or sticks to his "we don't have until 2012 to make the changes" mantra. I guess we'll all see shortly.

  3. seanod,

    As background to your questions, try this post I wrote some time ago:

    If you're interested in how it ultimately played out:

    Schiff has been right about a lot of things, and other comments he's made still have time to play out before he will be proven "right" or "wrong", but there are specific comments he made about specific stocks/class of stocks, over specific periods of time, that were not right.

    I'm not attacking Schiff. All I said was "he hasn't done a super job of picking stocks", which he hasn't. For every gold stock he recommended, there are 4-5 resource/foreign stocks he (or his firm, which he owns so it is "him" recommending it) that got crushed even worse than the US markets in the panic of 08/09, when he said/theorized the opposite would happen.

    I hope that helps.

  4. @Taylor,
    Good stuff. Very fair assessment on your excellent blog. I don't want to eat up too much more of anyone's time on this, but...

    I still think Schiff's calling of the collapse was nothing short of heroic, and earns him lots of leeway on specific stock calls...especially considering the unbelievable intervention of the FED and Congress. No one could have foreseen the complete lawlessness that we're still experiencing, and the massive rally in the US dollar that resulted (further stinking up Schiff's portfolios at least temporarily). I know you were very fair to address all this (and I recognize Schiff's various hiccups), but I still think this guy deserves more reverence from all of us Austrian thinkers who pontificate in the comfort of our much more intimate forums.

    Unlike a lot of Austrians - who made the same great assessments - Schiff was out there...on TV...taking the abuse from countless clowns who literally laughed at him on national TV and now have little to do with him...won't bother to have him on their shows. I have nowhere near the maturity to take what he took. And I'm guessing he wasn't making that much money until recent years compared to the various idiots that ridiculed him, which makes the beatings he took even more impressive.

    No need to respond (time!). I have great appreciation for your inputs so far, and will be visiting your site regularly.

    Sean O'D

  5. Sean,

    I will respond anyway.

    Maybe some people are Austrian pontificators but I, personally, am not. I'm not going to pretend I am the most hardcore, hands in the dirt person out there but I will say that this goes beyond theory to actual, "practical" application for me. I can't speak for others.

    I also can't claim that I didn't get run over in similar ways as Schiff. But maybe because I made some of the same mistakes Schiff did, I can recognize them better than those who didn't, do. One thing that has been glaringly absent from Schiff's repertoire lately is any kind of apology/admission of error on his part for the things he was incorrect on. I think to give the man full points for honesty and consistency he needs to do at least this much at some point. Otherwise, he is playing the role of "hypocritical politician" with an absent-minded view of his own past, a bit too well.

    As for Schiff's media appearances I think you ought to consider some timelines and mechanics of the media here. Part of Schiff's frequency as a guest on, say, CNBC, and many other media outlets, has to do with his desire and personal PR efforts to appear. At the time, Schiff was actively building up his little foreign brokerage company and was using his media appearances as advertising, of sorts. Now, he's got some steam and a reputation of his own so he doesn't need to be out there with his name and his company as much.

    Furthermore, he recently began his serious bid for political glory. I would imagine the demands of that endeavor required a relative relinquishing of time spent on financial media appearances-- his priorities changed from "getting the truth out" about finance, to getting the word out about supporting his campaign, which at this point is much more "local" than "national" and so his media priorities changed accordingly.

    Schiff has done a lot, he's been right on a lot, but he's also been wrong on a lot and in a sense, "hasn't done enough" because he necessarily must compromise on various Austrian insights to further his career. You'll say, "Well, but he's human! What do you expect?" and I say, "Precisely, which is why we should be mindful to always keep a critical eye open rather than close it and assume we can risklessly bask in the enlightened glory of a god."

    I am not saying you're worshipping, but I am saying that a man's propensity to make mistakes is exactly why he should never be thought to have earned a "free pass"-- the moment one is granted is the moment that person tends to start slipping. Next thing you know, you're blindly following and supporting some guy who isn't even half the man he used to be, just like everybody else.

    All that being said, I still haven't really said anything disparaging of Schiff so I hope it's clear at this point I am neither friend nor foe, at this point.

  6. I don't think TC has gathered enough information to say anything about Peter Schiff.
    If TC was curious, he could listen to the archives at of PS' Wednesday call-in show. Listening to the past two weeks, TC would find:
    - Financial regulations don't allow PS to give detailed public disclosure of his clients' account performance;
    - PS stock recommendations aren't actually such, they are just tossouts required by the programs;
    - There's been a concerted effort on YouTube by the dummies exposed on the "Peter Schiff Was Right" videos to cherry-pick the tossouts wrt to periods of performance;
    - CNBC/Fox/other financial shows have shut PS out during his campaign, repeatedly canceling scheduled appearances;
    - WSJ and other media have spiked PS stories during the campaign;
    - and more.

    And I'm not even a PS fan. So TC, give up two hours to listen and report back.

  7. Hi price,

    I would appreciate if you and any other critics of mine would do your own homework before criticizing my comments or assuming I am speaking out of ignorance-- I am not.

    I have intimate relationships with multiple individuals who are either current EPC clients, EPC employees or close personal friends of Peter Schiff's. I am well aware of what the organization is up to, what they've recommended, what they recommend, what their business model is built off of, what Peter Schiff is after, etc.

    I've listened to more of Peter Schiff's personal and EPC-related podcasts than I am proud to admit in retrospect because I definitely passed the point of "diminishing returns" in doing so.

    Instead of people challenging me to provide evidence that Peter Schiff made a few bad calls (which is all I have asserted), why don't you and anyone else considering "taking me on" on this topic go ahead and bring YOUR evidence that the man did not mess up with many of his recommendations. In other words, don't sit here and tell me to go listen to hours of podcasts to mine them for 1 or 2 recommendations he made that were good-- filter that down for us and provide us those nuggets yourself, before anything else.

    Oh, and meanwhile, the man was wrong, just plain old wrong, on his macro thesis about decoupling. His only escape valve (as I've mentioned in my previous writings on the topic) is he didn't specify the time horizon over which he expected his prediction to come true. However, it's quite clear from his previous announcements that if one were to take a stab at a timeline, it should've happened by now. The world simply did not decouple from the US during crisis-- in fact, it was in many ways even worse off with crises of its own. It still might decouple at some point in the future, but how long and how many paper and actual losses will Schiff's followers incur in the meantime?

    I will not respond to further provocations like this. If anyone else wants a response, bring your homework completed and signed by mommy.

  8. Okay, I'll skip his tossout stock "picks" given on CNBC as they aren't really serious recommendations for his clients. I'm not a EuroPac client, so I'm not privy to any particular stocks that Peter Schiff wanted clients to buy or sell at specific times.
    There is one, Endeavour Silver, EXK, EDR.TO, a junior silver and gold producer in Mexico, that I had owned for 4 years (and still own) before they did a private placement with EuroPac in December 2008. The terms were $1.30 CA per share with a five-year full-share warrant exercisable at $1.90 CA.
    EDR.TO closed yesterday at $3.48 with a 52-week range of $2.07 to $4.57. Even the most panic-stricken EuroPac client couldn't have lost anything with Endeavour Silver. I bought more shares earlier this week on price weakness.
    Another one, Capstone Mining, CS.TO, a copper producer in Canada and Mexico, was one that I owned for 2 years and sold for good in early 2008. I heard through the grapevine that EuroPac clients apparently were recommended to buy CS.TO sometime during 2007-2008.
    It would be up to each individual EuroPac client as to whether they are in the red or black with Capstone Mining. The highest CS.TO price was in May 2008 at $4.44 CA, and the lowest was in November 2008 at $.68. It closed yesterday at $2.47 CA.
    I know I wouldn't be in the red if I had decided to keep owning CS.TO shares. When I buy a stock, I diversify in price, and draw up a plan of at least 20 price points to enter the stock, buying more as the price decreases. With CS.TO being a junior stock, that range would have extended to $.01, so I would have been making the largest buys into price weakness.
    My conclusion is that anyone who blames Peter Schiff for their poor financial choices needs to look in the mirror.
    For disclosure, my 15-year old is a Peter and Andrew Schiff fan. He was real enthusiastic after reading "How an Economy Grows and Why It Crashes". The book probably has a big potential audience, even for kids who have heard Austrian economics material before.

  9. price,

    Thanks for admitting you are the one who is actually ignorant about Schiff and his stock picks, even though you first felt fit to accuse me of basing my comments on no special knowledge (which, in fact, I do have).

    Just to be clear, you are now discussing whether Schiff lost his clients money or not. I don't think I ever discussed that explicitly although I can see how you might have inferred that from what I said.

    I don't blame Schiff for my financial performance (poor or otherwise) and I don't think anyone else should, either.

    An individual client can make money or lose money based off of Schiff's advice and the timing. That was not my point. My point was, very simply, which is why it leaves me truly, breathlessly, exasperatedly confused as to why I've had to write 3 or 4 responses now "defending" myself:

    Schiff didn't do a great job on some of his stock picks. And he blew it on his macro thesis about decoupling.

    That's it! Somehow, I point out the matter-of-fact obvious and everyone is getting their panties twisted, "How dare you criticize Schiff, do you even know what you're talking about? He hasn't lost his clients money and if they did, it's their fault" etc. etc. etc., all of which is an interesting debate but not what I am talking about.