Monday, January 10, 2011

The 87 Year Old Dean of Investment Newsletters Retires with a Warning

Harry Schultz, after a remarkable 45 year period of publishing the International Harry Schultz Letter, has retired. His final letter, just out, included this warning:
Roughly speaking, the mess we are in is the worst since 17th century financial collapse. Comparisons with the 1930’s are ludicrous. We’ve gone far beyond that. And, alas, the courage & political will to recognize the mess & act wisely to reverse gears, is absent in U.S. leadership, where the problems were hatched & where the rot is by far the deepest.
Peter Brimelow writes about Schultz:
I named him Letter of the Year in 2008, because he indisputably predicted the Crash (a “financial tsunami”) thing is clear: In recent years, HSL has done brilliantly. It’s the third-best performer over the last past 12 months, up 39.65% by Hulbert Financial Digest count, versus 17.16% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. Over the past ten years, the letter was up an annualized 8.94%, versus 2.5% annualized for the total return Wilshire 5000.

To put into context what is currently going on in the United States, Schultz wrote in his final letter about former Reagan Office of Management and Budget Director David Stockman:

Stockman replied (to my huge surprise, coming from a former top government official) ‘Get some gold, beans, water, anything that Bernanke can’t destroy. Ron Paul is right. We’re entering a global monetary conflagration. If a sell-off of U.S. bonds starts, it will be an Armageddon
And Schultz on what is and isn't a bubble:
For gold to match the growth in US M1, M2, public debt & budget deficit, gold will have to reach $1,800, $2,400, $7,800 & $13,200, respectively. While I can’t imagine gold going to $13k, these numbers tell me that calling gold a bubble is a bit premature. In my view, money supply, public debt & the budget deficit are in a bubble, not gold, not yet.
Once when I delivered a speech in Switzerland, Schultz attended and gave me positive feedback after the speech. He is a pioneer in non-mainstream, but accurate forecasting, mixing economic theory with sound practical investment advice. I was honored that he attended the speech and the time he spent with me after the speech.

Harry Schultz’s final words in his final newsletter: “Good luck to us all.”

No comments:

Post a Comment