The Peter Schiff portfolio: an evolutionary offshoot of the PP

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Smith1776
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The Peter Schiff portfolio: an evolutionary offshoot of the PP

Post by Smith1776 » Fri Jun 28, 2019 10:58 am

I've been revisiting some of the books of Peter Schiff and noticed he had some portfolio recommendations. Many of the recommendations seem to have a PP kind of ring to them. I thought this would make for some interesting PP fodder.

Schiff is a libertarian, much like Browne was. However, unlike Browne, he doesn't buy so much into the premise that one cannot predict the future. He does hedge his bets somewhat though. He has a staunch belief that the spendthrift, money printing, bloated government entity that is America is going to experience economic doom in the form of strong inflation. In the process, emerging economies are going to eat America's lunch. This is reflected in his portfolio recommendations.

He likes gold, gold mining stocks, foreign bonds, and foreign equities. The only U.S. assets he'll hold are cash itself for liquidity purposes.

There's isn't any single place in his books where Schiff has laid out a table for an overall allocation, as he seems to prefer long form explanations. However, by combing through his material you can see he makes allocation recommendations in a piecemeal fashion. As such, I've managed to piece together a "Peter Schiff Portfolio" as follows:

25% - Domestic cash - VGSH
25% - International bonds (unhedged) - IGOV
37.5% - International dividend paying equities (unhedged) - VYMI
6.25% - Gold - GLD
6.25% - Gold mining equities - RING

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I've taken the time to pick some ETFs that I thought would be the most appropriate and representative of his recommendations. Portfolio Visualizer doesn't have the data for some of these assets, so backtesting is limited. However, we can get some limited information using the return data of the underlying funds themselves.

Overall, not a crazy portfolio. It looks a lot like the PP but with a bias against the U.S. and an inclination towards dividend payers. The gold mining stocks also give the portfolio a leveraged bet on gold. I personally wouldn't be too comfortable having no exposure to the U.S. markets. However, if a small allocation to U.S. stocks were included in the equity portion I wouldn't have big qualms about the portfolio.
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Cortopassi
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Re: The Peter Schiff portfolio: an evolutionary offshoot of the PP

Post by Cortopassi » Fri Jun 28, 2019 11:13 am

Used to be into Schiff a long time ago. Until I got completely tired of his gloom and doom and how everything is going to crash -- quite a lot of crash books in his writings. He's been wrong for a long time.

Not saying his investing ideas are bad, just tired of the doom aspect he projects.

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Re: The Peter Schiff portfolio: an evolutionary offshoot of the PP

Post by pugchief » Fri Jun 28, 2019 1:47 pm

Right. Schiff could be 100% correct, but in what time frame? We could all be dead before his gloom comes to pass.
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Re: The Peter Schiff portfolio: an evolutionary offshoot of the PP

Post by europeanwizard » Fri Jun 28, 2019 1:55 pm

Nice work recreating that portfolio!

Schiff has a nice YouTube channel and podcast. He has zero faith in the political and monetary situation of the US, that's why he's called a permabear. One day he'll be right, but then we could all be dead.
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Re: The Peter Schiff portfolio: an evolutionary offshoot of the PP

Post by ochotona » Fri Jun 28, 2019 2:04 pm

All the US Dollar needs to do is keep parity with other fiat currencies. That's like defending yourself against a grizzly bear with a .22 - shoot your hiking companion in the knee with it, then run.
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Re: The Peter Schiff portfolio: an evolutionary offshoot of the PP

Post by pmward » Fri Jun 28, 2019 4:10 pm

My thoughts on Peter Schiff... even a broken clock is right twice a day. The guy has been saying the same thing for decades now. Eventually he will be right. Those that have followed his advice thus far would be broke though... I personally just think he uses his status as a way to make money. He certainly is a master in the art of creating drama, stirring up controversy, generating clicks, sell books, etc. I don't think he has any real skill beyond that though. After all, the fastest way to get rich is to write books about how to get rich, haha. I wouldn't listen to a word he says personally.
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Re: The Peter Schiff portfolio: an evolutionary offshoot of the PP

Post by Smith1776 » Fri Jun 28, 2019 4:45 pm

I check out Schiff's podcast occasionally. I, too, am kind of fatigued at the constant doomsaying.

However, I've got to give credit where credit is due. While he has a general air of economic doom about him, it hasn't always been exactly the same spiel.

In the 2006 timeframe he was giving speeches that didn't just predict the 2008/2009 debacle, but he pinpointed the precise mechanisms that would be underpinning it.

Some of his stuff was scarily accurate. Someone was nice enough to make a highlight reel of his speech at the Western Regional Mortgage Bankers Conference in Las Vegas in 2006.

https://youtu.be/h2Gj5snyn_M

Edit: P.S. If we want to talk about gloom and doom porn, the real king of that kinda schtick is James Rickards... ha!
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Re: The Peter Schiff portfolio: an evolutionary offshoot of the PP

Post by Kriegsspiel » Fri Jun 28, 2019 7:06 pm

Peter Schiff only holds 6.25% gold? That's surprising.
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Re: The Peter Schiff portfolio: an evolutionary offshoot of the PP

Post by Smith1776 » Fri Jun 28, 2019 11:32 pm

Kriegsspiel wrote:
Fri Jun 28, 2019 7:06 pm
Peter Schiff only holds 6.25% gold? That's surprising.
It's a best estimate based on his collective writings.

The ratio of gold and gold related investments to equities was explicitly stated, for instance. The proportions of the portfolio to be dedicated to cash and bonds were implied, but not quite so specific.
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Re: The Peter Schiff portfolio: an evolutionary offshoot of the PP

Post by Smith1776 » Sat Jun 29, 2019 12:13 am

What I find interesting about the Schiff Portfolio is the idea that gold mining stocks are effectively a leveraged bet on gold prices.

Theoretically, you might be able to get similar exposure to gold as the 25% allocation in the PP without actually committing that specific number of dollars to it. Say, you could have 7.5% in gold and 7.5% in gold mining equities for a total of 15%. This 15% allocation may give you all the appropriate volatility you'd get with a 25% allocation to gold bullion alone. You could then take the 10% you "saved" and put it towards something else.

Highly theoretical, and definitely just water cooler talk, but still an interesting line of thought nonetheless.
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Re: The Peter Schiff portfolio: an evolutionary offshoot of the PP

Post by Ad Orientem » Sat Jun 29, 2019 11:49 am

Smith1776 wrote:
Fri Jun 28, 2019 11:32 pm
Kriegsspiel wrote:
Fri Jun 28, 2019 7:06 pm
Peter Schiff only holds 6.25% gold? That's surprising.
It's a best estimate based on his collective writings.

The ratio of gold and gold related investments to equities was explicitly stated, for instance. The proportions of the portfolio to be dedicated to cash and bonds were implied, but not quite so specific.
It's been a longtime since I paid any attention to Schiff, but he used to advocate 20+% and I remember him saying in an interview that less than 10% was inadequate.
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Re: The Peter Schiff portfolio: an evolutionary offshoot of the PP

Post by Smith1776 » Sat Jun 29, 2019 12:28 pm

Ad Orientem wrote:
Sat Jun 29, 2019 11:49 am
Smith1776 wrote:
Fri Jun 28, 2019 11:32 pm
Kriegsspiel wrote:
Fri Jun 28, 2019 7:06 pm
Peter Schiff only holds 6.25% gold? That's surprising.
It's a best estimate based on his collective writings.

The ratio of gold and gold related investments to equities was explicitly stated, for instance. The proportions of the portfolio to be dedicated to cash and bonds were implied, but not quite so specific.
It's been a longtime since I paid any attention to Schiff, but he used to advocate 20+% and I remember him saying in an interview that less than 10% was inadequate.
I believe it.

To make the muddy waters more murky, it seems to me that it's not clear what Peter Schiff is referring to when he says something like "20% of your portfolio".

In his writings, he seems to imply that stocks, gold, and gold mining equities constitute your investment portfolio. That's how I got specific percentages there. However, it seems he often treats both cash and foreign bonds as part of a liquidity reserve, as safety against turmoil -- not as part of the portfolio.

So does, say, a 20% allocation to gold investments refer to just the gold + gold mining + stock portion of your wealth? Or does it include both the cash and bonds? Difficult to ascertain, at least for me, based on his writings. If the former, then our observations on Schiff agree. If the latter, then maybe he changed his tune.
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