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Review: The Little Book of Bull Moves in Bear Markets

BullMovesBearMarketsCoverI recently finished reading Peter Schiff’s The Little Book of Bull Moves in Bear Markets. I found the book to be absolutely fascinating, even though (or perhaps because) I didn’t agree with everything in it.

For background: Peter Schiff is famous for predicting the collapse of the housing bubble and the calamity that came with it. He’s the president of Euro Pacific Capital (a broker/dealer in Connecticut) and is now running for Senate.

The premise of Bull Moves in Bear Markets is essentially that the U.S.’s deficit spending and imbalance of trade over the last several years have been fueled by inflationary monetary policies. Schiff makes the case that if the U.S. (both the government and its citizens) continues on the track it’s on, hyperinflation will be the result.

Schiff on Investing

Given Schiff’s belief that extreme inflation is likely to occur in the near future, his investment suggestions are no surprise:

  • Stay out of U.S. dollar-denominated fixed income investments,
  • Invest in gold,
  • Invest heavily in non-U.S. stocks–specifically stocks from emerging markets.

Something that I particularly appreciated about the book is that Schiff isn’t afraid to get into specifics. For example, he goes over all the different ways you can invest in gold (buy it directly, buy stocks of mining companies, buy commodities funds), and he runs through the pros and cons of each method.

My biggest hang ups with his investment approach are that:

  • He’s far more confident in an individual’s ability to successfully pick stocks than I am, and
  • He doesn’t really address the fact that many of his predictions should already be priced into current market values.

Schiff on Frugality

There’s an entire chapter in the book dedicated to the idea that frugal living is the best way to get through an economic downturn. This makes sense to me, and most of his suggestions are good, if not particularly original: look for ways to cut down on recurring costs, save/invest your raises and bonuses rather than spend them, etc.

Side note: I sometimes joke that the best investments for a crisis are not bonds but rather food, guns, and ammo. Schiff says exactly the same thing. The difference: I don’t think he’s joking. Immediately after suggesting that you stockpile cornflakes, Schiff says the following:

“It might also be a good idea to buy a handgun and lots of extra ammunition to protect your supply.”

Maybe that has something to do with why he’s sometimes called Dr. Doom.

Schiff on Politics

Schiff’s political views are quite different from my own–the presence of a back cover blurb by Glenn Beck should have been a giveaway–but I’m in agreement with his general premise that we can’t keep spending money we don’t have.

I think it takes a brave person to publicly state (while running for office) that a lower standard of living isn’t a problem to be avoided, but rather the solution to many of our problems.

Should You Buy It?

While I’m not entirely on board with many of Schiff’s suggestions, Bull Moves in Bear Markets is certainly a thought-provoking read. Added bonus: It qualifies for free shipping if you buy it together with my latest book. 😉

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Comments

  1. This fellow’s dad, Irwin, was a pretty well know tax protester. His claim was that no one was legally obligated to pay federal income tax. After a while, the IRS got pretty annoyed with the elder Schiff and I think he spent some time in the federal pen.
    Like father, like son?

  2. Schiff is no stranger to ridicule, and actually seems to enjoy it. But when you watch video clips from him several years ago he hit the nail on the head. I have a video of him on my blog addressing the mortgage bankers in 2006 (http://thebizoflife.blogspot.com/2009/09/peter-schiff-speech-to-mortage-bankers.html) warning of the impending economic crisis, and he just nailed it while the other mainstream experts look clueless in retrospect.

    His advice, quite simply, is to get out of the dollar until all the easy money from Washington and the massive federal deficits are corrected. He favors commodities, gold (as sound money), and foreign stocks (especially high dividend stocks and emerging markets) and foreign bonds. He believes the US government is deliberately debasing the currency and will have to continue debasing the currency to deal with the federal deficits. And anyone who leaves their assets in dollars will suffer the consequences.

    Has his investment advice been perfect? No, but who’s had a crystal ball lately. I think he has a point that all investors should listen to about diversifying outside the US. The dollar seems to be on a slow road downhill… why do you think other nations are making noises about a new reserve currency? Gold, groceries, guns and foreign stocks….. we may have staved off financial Armageddon, but the US seems to have entered a period of decline in wealth and world influence.

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