The year 2008 produced horrific investment returns for nearly every investor. Although I have never made any assertions that Euro Pacific Capital clients avoided the pain, the Journal took it as newsworthy that some who had adopted my more aggressive strategies early last year had losses that outpaced the drop in the Dow (“Right Forecast by Schiff, Wrong Plan?,” Money & Investing, Jan. 30).
My central investing premise, a weakening dollar and safety in gold, commodities and foreign stocks, didn’t materialize in 2008. But all the ingredients were (and remain) present for those movements to occur. Over the past year, market reactions that I didn’t foresee — massive global deleveraging, a knee-jerk “flight to quality” into U.S. Treasurys and a sharp countertrend rally in the U.S. dollar — have kept the scenario from playing out.
Throughout my career, I have never claimed great ability to time markets. I was against tech stocks in 1998, and homebuilders and financials in 2004. These stands cost me (and my clients) short-term profits. In contrast, my record of long-term forecasts is well above par and has produced solid long-term results. My clients understand this and, backing their belief with their dollars, have largely remained invested.
It isn’t insignificant that while U.S. markets are testing new lows, the dollar is no longer rallying, gold and other commodities are rising, and many foreign exchanges are well off their 2008 lows.