Peter Schiff: Investment Recommendations
by
, 01-18-2009 at 06:28 AM (26650 Views)
Peter Schiff has been heralded lately as one of the few who called this financial mess we've found ourselves in. He's been calling for a collapse in the dollar and housing markets for years now and in case you didn't know, finally had one of those predictions ring true. I recently read his latest book, The Little Book of Bull Moves in Bear Markets, and I must say I enjoyed it. Sometimes, I don't think he gets the credit he deserves. For example, everyone was calling for a rebirth of the secular bull at the top in 2007 yet in inflation adjusted terms we were 40% from the 2000 peak.
It's important to note that this book was published in June 2008, right around the point of ultimate gloominess, where inflation was off the handle and oil was making a run for $200 a barrel. The thesis for Schiff's argument is that the Fed will continue to print money until it runs out of ink causing mass inflation for goods while the value of real wealth in dollar demoninations continues to deminish as it nears it's final collapse.
I actually found most of Peter Schiff's advice to be good general financial advice, but some of it tended to be a little too extreme for my tastes. Unless invested in cash, I find it hard to believe that even Mr. Schiff's portfolio was spared from the market drop of 2008. I'll list his financial recommendations below and let you be the judge.
- Avoid all US stocks that are dependent on the US consumer unless they are in the Oil Services sector. Avoid the so called long term Healthcare/Biotech sector because when the dollar collpses, Americans won't be able to afford healthcare anyway. Instead buy foreign based dividend-producing stocks.
- Own commodities by way of direct ownership. This means managed futures, but for the average investor the agricultural basket ETF's could substitute. Commodities are not in a bubble.
- Buy Gold. If anything, buy gold and have 30% of your portfolio invested in in it. Buy gold bullion because it will always hold their value unlike the gold tracking ETF's which will go bankrupt when the dollar collapses.
- Invest in foreign economies through a broker who can buy stocks directly in foreign exchanges. If you must, ADR's and Mutual Funds are an alternative but not the same as owning direct stock in a foreign exchange. Some of his favorite nations are Australia, Canada, Singapore, Hong Kong and Norway.
- Begin buying stocks in Emerging Markets by way of a broker who specializes in direct investment. Emerging Markets will rise when the dollar collapses.
- Begin to stockpile food and other products such as tobacco, wine and liquor so that when inflation hits you'll be able to sell them at a premium. Buying a gun to protect your storage is not a bad idea.
- Enroll in automatic savings accounts with your bank, but don't use a savings/money market account. Invest that money in gold, foreign economies, or commodities, all of which will increase in value when inflation hits.
- Get frugal. Don't try to keep up with the Joneses. Learn how to live off your means and never use a credit card again. Begin saving money with automatic deductions from your paychecks. Never spend windfalls or bonuses on the spot. Instead, invest them for later.