Forbes vs Peter Schiff: Petty Smackdown
Forbes magazine:
"Herein is a formula for making a lot of money as a money manager. Have a shtick, get known, wait for your sector to get hot. In the 1970s James Dines acquired fame and fortune by being a gold bug. In the 1990s George Gilder minted money as a fan of technology stocks. In the past six years Renee Haugerud's Galtere International Fund ( FORBES, Jan. 20, 2003) has grown from $1 million in client capital to $1.5 billion by being in commodities . . .
That was the reductio ad absurdum paragraph from what I can only describe as a really weird hit piece from Forbes on Peter Schiff. I'm not sure why they are took this route, but the column is rather unsatisfying in both its critique and its proof:
"Schiff's Chicken Little take on the U.S. economy--that it is on the brink of collapse--isn't new. He's been serving up the same spiel for a decade. But these days he's getting more applause than eye-rolling from jittery investors. He's also getting a lot of attention from financial media outlets, in part because he has mastered the delivery of three-alarm sound bites. ("The consumer is in great trouble!" "Things are worse than in the 1970s!")
Schiff perfected his rant in stock newsletters in the late 1990s, when few investors had heard of him or Euro Pacific. He posted commentaries on his Web site and started sending them to CNBC. His first big media hit came in April 2005, when CNBC asked him to appear on Squawk Box. Schiff faced a hostile panel when he said the dollar would lose half its value--which still hasn't happened. That first interview ended with the host, Mark Haines, saying: "I don't know whether to shoot him or shoot myself."
Now, if Schiff is really such a perma-bear who has been negative and wrong on US stocks for 10 years, that would be worth discussing. There must be 100s of examples of his bad calls if that's the case. But oddly, Forbes cites exactly zero examples online. (I haven't seen the dead tree version).
Such bald accusations make for poor journalism. If you are going to make that claim, then back it up. Is it asking too much to pull a few wrong trades as evidence? Can you show me the guy was Bearish on Tech in 1998, hated dividend payers in 2002, avoided firms Oil firms in 2003, sold industrials in 2004, dissed the miners in 2005, shorted exporters in 2006? Just imagine what a similar hit piece on Jim Cramer would have to include.
Anyone who works on Wall St. long enough should be able to pull a long list of pretty bad calls over the years. (My own list of market boners is extensive). If you are any decent at running money/doing stock or market analysis, however, the good ones should outweigh the bads ones.
What's so very odd about this whole affair is, at its core, a critique of a strategy that is making investors money. Weird.
I'm not looking to defend Schiff -- he's a big boy, and can do that on his own. My beef is with Forbes -- its a sloppy work.
What I was singularly disappointed with involved the lauding of George Gilder's 1990's success. What Forbes failed to mention was what came after: From 2000 forward, Gilder's readers lost 44%, then 43%, then 56% in each successive year (WSJ). Apparently, it was okay for George Gilder Newsletter to lose 89.4% of his readers money, because he was permanently bullish.
Oh, and one other thing: Gilder's newsletter is a joint publishing venture with Forbes, another disclosure also somehow misplaced in the column. Shame on Forbes for omitting that disclosure; if Schiff had done that, it would be worthy of an SEC/NASD investigation.
According to this article, making money by identifying risk is somehow not good, but losing nearly all of it by cheerleading the tech bubble is A-okay. That doesn't seem very much like the Forbes "free market" ideology I know from over the years. Then again, it is an election year.
Capitalist tool? The article makes them look more like capitalist fools to me . . .
>
UPDATE: February 23, 2008 9:29am
Schiff discusses the Forbes piece in a radio interview here.
>
Source:
Spin Cycle
Michael Maiello
Forbes, 03.10.08
http://www.forbes.com/forbes/2008/0310/072.html
Previously:
Where Are They Now: George Gilder
MARCELO PRINCE
WSJ, May 8, 2006
http://online.wsj.com/article/SB114433479738318882.html
George Gilder: So THAT explains it
Tuesday, May 09, 2006 | 07:15 AM http://bigpicture.typepad.com/comments/2006/05/george_gilder_s.html
Gilder Technology Report
Gildertech: "GTR is published by Gilder Publishing, LLC in association with Forbes Inc., 1996-2007"
http://www.gildertech.com/
Friday, February 22, 2008 | 06:42 AM | Permalink
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Spin Cycle--at least you can't argue that the piece is not aptly named.
Posted by: Scott Frew | Feb 22, 2008 7:13:41 AM
Pete Schiff's mantra is three-part
1. America's Manufacturing Base has been gutted
2. There is an inflationary printing frenzy going on
3. Put your money in commodities and non-dollar assets
Steve Forbes would tell you the same thing if this weren't an election year.
Posted by: Paul Jones | Feb 22, 2008 7:18:32 AM
Hands off Capitalism indeed.
My favorite story from the early 1980's was the one about Steve's Dad, Malcom and other movers and shakers lobbying the U.S. International Trade Commission to impose a 45% tariff on big CC foreign motorcycles thereby saving Harley. The "pack" loved their Harleys.
Harley then went retro and outsourced most of their parts to foreign manufacturers. They still claim to be American Made.
Forbe's claim of being a "Capitalist Tool" is utter nonsense. Just a bunch of Political shills.
Sour grapes from me. That'll teach them not to leave me off their 500 list last year...
Posted by: Ross | Feb 22, 2008 7:37:42 AM
Perhaps Forbes is just a little embarrassed about its own columnists and the fact nobody wants to hear from them...since they were wrong. Take that lovable Ken Fisher:
Most of the lackluster performance of my picks came from a very wrong decision in February to jump into housing stocks. Beazer Homes, my worst choice, was down 79%.
He states in his Jan 2008 explanation for his lame 2007 performance.
I guess Peter Schiff knows at least 3 things that Kenny boy does not.
The whole Ken Fisher mea culpa column is great BTW. Paraphrased..."It's all the yen's fault otherwise we'd be rich.
Posted by: American ZIRP | Feb 22, 2008 7:48:01 AM
They're just doing a hitpiece on him because he endorsed Ron Paul.
Posted by: Tex MacRae | Feb 22, 2008 7:58:17 AM
I disagree that our manufacturing base has been gutted. I'm a publisher of trade magazines for metalworking, plastics, screw machining, moldmaking, and composites. Our customers are doing quite well now and so are we.
Now, the nature of what is being manufactured and how it is being manufactured has certainly changed, but the U.S. still does a whole lot of very important manufacturing. We don't manufacture as many durable consumer goods but we do manufacture a whole bunch of aerospace and energy-related stuff (whether oil, new sources, or energy reduction plays). That part of manufacturing is booming right now. Machines manufacturers can hardly keep up with the capital requirements of manufacturers in these areas. As for workers in these areas, many of these manufacturers can't find people with high enough skills to run the large and complicated machines that make this stuff. Plus, because of the dollar, supply chain issues, and quality issues more and more of the old-line manufacturing stuff is moving back to the U.S.
Posted by: Steve | Feb 22, 2008 8:05:34 AM
Perma Bull vs PermaBear Bear....
I've never found Forbes to be useful, I get my Nonsense cheer-leading from that Girl on CNBC... Dennis somebody.
And Schiff can be so spot-on it's ridiculous... that guy Bats in the high .700 .
doesn't mean he can't miss
That story was definitely "Sour Grapes", Any time someone talks about having their money managed, there is no higher recommendation I can give than Europac.
It was fairly pathetic that a professional magazine would act like that... but not surprising.
Posted by: Eric Davis | Feb 22, 2008 8:08:13 AM
Can we make it capitalist tools instead of fools?
Posted by: SPECTRE of Deflation | Feb 22, 2008 8:11:32 AM
Why I quit reading Forbes years ago....
Posted by: Doug Harman | Feb 22, 2008 8:12:50 AM
Barry, take a look at Schiff's book Crashproof published about a year ago. I don't agree with his inflationist theories, but if you look at his investment advice, it has been bang on. Some of his prognosis: FNM and FRE will be in trouble (they now are), Canadian assets are a good bet (they have been), emerging markets will out perform and gold will rise (of course).
Anyone who followed his advice last year should be sitting on a pretty hefty return right now.
Posted by: gng | Feb 22, 2008 8:15:36 AM
Re: manufacturing base.
It's very true that what remains of our industrial/farming base is doing well... but that In my opinion doesn't exclude the thesis that it has been gutted.
We should see a rebuild of this base in our economy over the next 10 years.... Until it becomes overbuilt and is another bust cycle...
rhyme with Eventies anyone?
Just don't be the Farmer who takes out a big farm loan in may of 1981
Posted by: Eric Davis | Feb 22, 2008 8:21:26 AM
should it be surprising considering that idiot Dennis Neal on CNBC. This guy was an editor at Forbes. I wouldn't be surprised if CNBC has put the press on santelli to lighten up on the reality talk. Everyone keeps asking why the markets aren;t going down - it is probably a safe assumption that an invisibale hand is at work - originating at Treasury/Fed.
Posted by: k | Feb 22, 2008 8:39:32 AM
When I read things like below, I can't help being a schiff fan. Pulled this from an article in Bloomberg from yesterday:
"From 1984 through 2006, only 13 auctions failed, typically because of changes in the credit of the borrower, according to Moody's Investors Service. There were 31 failures in the second half of 2007, and 32 during a two-week period beginning in January. That compares with more than 480 failures yesterday alone, according to figures compiled by Deutsche Bank AG, Wilmington Trust Corp. and Bank of New York Mellon Corp."
Posted by: SPECTRE of Deflation | Feb 22, 2008 8:39:45 AM
First, this is a BP post on Forbes, not the merits of Mr. Schiff. Forbes lost its way when the old man died, and has drifted further into the abyss over time. The "journalistic" standards of a yesteryear have been replaced by mutual fund shill tactics and the occasional "Where'd that come from?" hatchet jobs. This latest one shouldn't be a surprise, but if you're looking for a higher standard, it does disappoint.
Posted by: Pollix Virdis | Feb 22, 2008 8:53:23 AM
It troubles me that such a intelligent group of blog followers here actually watch the "cheerleading" squad at CNBC. My taste is actually Bloomberg and/or Fox Business... You can catch all the thrills and spills of Peter Schiff at Fox quite regularly.
Posted by: Contra-Trader | Feb 22, 2008 9:11:38 AM
frankly the fact that dennis kneale (sp?)came out of forbes pretty much tells the story.
HOW THE HELL DOES HE GET FACE TIME EVERYDAY BEING 100% DEAD WRONG!
he must have sucked his way to the top. damn log cabin's!
Posted by: erik | Feb 22, 2008 9:27:08 AM
Contra-Trader, don't confuse amusement with real news. Many of us watch it for S & G if ya know what I mean. We only watch it for real when Barry is on! :>)!!
Posted by: SPECTRE of Deflation | Feb 22, 2008 9:29:24 AM
Erik, Damn Log Cabins...ROFLMAO!! It's Friday, so don't paint ugly pictures in our minds.
Posted by: SPECTRE of Deflation | Feb 22, 2008 9:32:36 AM
I canceled my Forbes subscription about 10 years ago, as I became tired of reading what I thought were good articles only to find some gratuitis slam at a Kennedy halfway through. I'm no fan of the Kennedy's but it became obvious that to "make your bones" at Forbes you had to be ideologically pure. Making money has little to do w/ideology. Interestingly enough, after subscribing for 25 years, I never go a followup letter, call, etc. I guess they must have sold some eggs.
Posted by: larry | Feb 22, 2008 9:43:04 AM
I read the article differently and got that Forbes was attempting to say that each decade produces a guy that is spot on and becomes somewhat famous, but that those same people are quite fallible and usually turn out to be one-trick ponies (which they all are).
Posted by: Andrew | Feb 22, 2008 9:45:19 AM
I read the article differently and got that Forbes was attempting to say that each decade produces a guy that is spot on and becomes somewhat famous, but that those same people are quite fallible and usually turn out to be one-trick ponies (which they all are).
Posted by: Andrew | Feb 22, 2008 9:45:36 AM
The market just opened. I don't want to see no stinkin' decline today unless it's only a buying opportunity. This Schiff fellow would probably love to see everybody make money today, except for doofus short sellers who will have to cover before the close.
A couple percent a week until summer, that's all we need. That's not asking too much. Everybody wins at this speed, if you buy today. It's not going any lower. You all understand this, don't you.
Buy today. Make money. Sell this summer. Buy things with the ginormous profits. That's all there is to it.
Posted by: cinefoz | Feb 22, 2008 9:47:18 AM
Fischer's excuse sounds like a 2 year old.
"market dislocation"
Reading most SEC filings you would think it was a pandemic of dislocations, and weather, and volatility, and anything other than poor day to day management.
Forbes still has a magazine?....
Ciao
MS
Posted by: michael schumacher | Feb 22, 2008 9:47:54 AM
What a multiple list of interesting comments.
1. Mfg: has been and is doing very well. Value-add in the economy has held up nicely, portion of GDP as well. What's gotten hit is the employment base as a) the base of the economy shifts (natural outcome of growth) to services and b)as mfg process & technology shifts to more sophisticated foundations - hence the shortage of skilled workers. Can you speall DNC/NC (numerically controlled machine tools). As investors we should all dig into and learn that stuff.
2. How can you not watch CNBC ? It's cheaper than Penthouse online (oops), women are prettier and far more intelligent, occasionally you pick something up and in any case it's as good a sentiment indicator as is.
3. Dennis Kneale - the operations were clearly successful, all of them. The lobotomy (Cuckoo indeed - where's my pillow),the branding (actually it's a gelding)and the pithing. If they'd put him out of our miseries who'd hold down that end of the curve ?
4. Forbes - btw believe the old man was not only a biker but a gay biker. After all he was a big Babs fan. Never much of a fan then and find it, not content-free, but content-rich. Unfortunately toxic content. But then we can compare and contrast the WSJ ed pages which have never recovered from supply-side and gold buggery. If they'll keep publishing Feldstein et.al. I'll read but not there stuff. Sadly.
Posted by: dblwyo | Feb 22, 2008 10:00:17 AM
Harley then went retro and outsourced most of their parts to foreign manufacturers. They still claim to be American Made
That might come as a surprise to the MANY Harley suppliers which are based in Wisconsin (e.g.) and which employ hundreds of Milwaukee-area workers.
Having said that, it's clear that Forbes is the last "respectable" name clearly endorsing Ayn Rand's philosophy. Look no further than his/their insistence on the "flat" tax vs. the "fair" tax.
Posted by: dad29 | Feb 22, 2008 10:02:13 AM
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