Monday, September 20, 2010

Harry Schultz Retires With a Bang: Warns of Hyperinflation; Says World War 3 is Over

The dean of investment newsletter writers, Harry Schultz, age 87, has announced that he is retiring at end of the year and closing down his letter, The International Harry Schultz Letter. Once in Switzerland when I delivered a speech, I didn't realize Schultz was in the audience. After the speech, he was kind enough to come up to me and tell me he liked what I had to say.

Schultz has always been an original--way ahead of the pack. Decades before anyone ever heard of Twitter, Schultz wrote his newsletter with an abbreviated spelling and he told us all that it would be the wave of the future. He used "u" for you and "c" for see, among many other abbreviations. Decades ago! Huh, I though he was off on that one.

He was also one of the original promoters of the multiple-flag life style: Live in one country, work in another, be a citizen of a third.

Peter Brimelow writes:

Schultz’s long and colorful career certainly appears to be ending on a high (albeit superbearish) note. Over the year to date through August, IHSL is up 11.7% by Hulbert Financial Digest count vs. just 0.7% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. Over the past 12 months, IHSL is up 39% vs. 14.86% for the total return Wilshire 5000. Remarkably, the letter is up 6.63% annualized over the past ten years, vs. a miserable negative 1.07% annualized for the Wilshire.

According to Brimelow, here are the forecasts that Schultz is making as he prepares to ride off into the sunset, wherever that maybe:
Schultz specializes in big ideas. Currently, he is fascinated by the possibility that hyperinflation might be triggered quickly, by a sort of global financial traffic accident...

Schultz describes this scenario as “a genuine risk” and comments:

“Hyperinflation can be triggered in several other ways. Trustfailure (my new word) is the controlling element, which triggers Fearflation (another new word). E.g., a Comex gold delivery default or a major Too-Big-To-Fail bank failure or a self-propelling domino bank-run are all possible triggers. A bond market implosion will result from any of the above, even if it isn’t itself the trigger.”

Schultz believes in active trading and his recommendations are often dauntingly complex and conditional. He seems to be expecting gold to stall, temporarily, writing “Wait to re-buy strength after a dip that clearly holds 1200.00-1182.00.” Although he recommends only an 8%-10% exposure to non-gold stocks, he allows for “a potentially fiery rally leg --which would hint today’s deflationary forces may succumb “directly” to future (high-speed) inflation. i.e., the resulting debasement of the dollar could manifest itself via a rising “nominal” value of the stock market.”...

Schultz also recommends an asset allocation of 30-45% gold stocks; bullion; 20-30% notes/bills/bonds in diversified denominations; 20-25% commodities; 1-5% cash in hand (“stored privately”); 0-5% bear stock market protection in a variety of 200% inverse Exchange Traded Funds like ProShares UltraShort Dow30...

Schultz may be worried about his health but he has not lost his knack for eccentric, possibly prescient, edginess. He leads his current issue:

“I’m happy to announce the end of World War 3. The Iran war, which triggered World War Three, planned by the Pentagon and Mossad, has ended, actually before they began. It’s a first in history!

“How do I know this? Follow the money, not the propaganda. Four US banks are to open branches in Iran!...Citibank and Goldman Sachs are among the first applicants! Since Goldman Sachs is the alternate, or behind the scenes US government, as we all know, that name/news assured me of the good news.”



  1. An oldie but goodie: "When goods don't cross borders, armies will."

  2. Who did Citibank and Goldman apply to? Was it Ahmadinejad or the global mechanism that will run Iran post pummeling?