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Bull Moves in Bear Markets by Peter Schiff

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Bull Moves in Bear Markets by Peter SchiffBull Moves in Bear Markets by Peter Schiff is admittedly a very pessimistic book. It’s pessimistic with good reason, Schiff “predicted” the collapse in early 2007 when he published Crash Proof: The Coming Economic Collapse (a point he mentions frequently). However, rather than just repeat doom and gloom, Schiff outlines multiple ways to take advantage and build wealth in what seems like a wealth-destroying environment. When I say outlines, I mean he explains to you step by step, with no assumptions about your experience, exactly what you need to do to invest in the things he’s talking about. In addition to explaining the “how” aspect, he explains the tradeoffs among the various options, tradeoffs you probably didn’t even know were tradeoffs.

In summary, this is a pretty good book and definitely worth reading (and buying) if you want to know what your options are outside of the stock market.

Let me give you an example of something he discusses in the book. He rails against cash and bonds because they’re pegged to fiat money, that is money that in and of itself has no value. US Dollars are, and haven’t been for quite some time (there’s a bit of history to this that is worth reading if you’re interested), not pegged to any hard assets – like gold. This allows the Federal Reserve to adjust interest rates by increasing or decreasing the flow of money into our economic system. The result of this is inflation (when the Fed increases money, as it does when it lowers its target federal funds rate), making the money you have in cash and bonds worth less and less. The answer? Invest in commodities that cannot be artificially inflated or deflated so easily, commodities like precious metals.

Here’s where Schiff gives you the good stuff. Some authors would leave you like that at the altar… they make the case for commodities and then tell you to go out and buy some, without actually talking about how you go out and buy some. Schiff explains the six different ways you can invest in commodities:
Direct ownership through futures contracts (advanced investors):

  1. Nondiscretionary individual account
  2. Managed (discretionary) account
  3. Commodity pools

Indirect ownership (average investors):

  1. Index funds
  2. Stocks of producing corporations or companies providing related services in resource-rich countries
  3. Dividend-paying stocks of other corporations in resource-rich countries

Then he goes into each example and discusses the advantages and disadvantages of each. It’s really good stuff.

There’s way more to the book than a discussion of investing in commodities but I felt that was the real meat and potatoes of his discussion and where investors, seeking to find opportunities, would derive the most benefit. There’s further discussion about other issues, such as frugality, emerging markets, and the deterioration of our service economy, but I think that takes a back seat to the commodities discussion.

If you’re trying to find a book that gives you a good road-map on how to navigate this investment environment, this book should be on your list. While Schiff is a hugely bearish on our economy, he backs it up with a good plan forward for your investments.

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3 Responses to “Bull Moves in Bear Markets by Peter Schiff”

  1. Dave says:

    Mr. Schiff reminds me a bit of Howard Ruff. I still have Mr. Ruff’s book “How To Prosper During The Coming Bad Years” from 1979 to remind me that the pendelum swings both ways and not to put too much stock in the gloom and doomers. That was when inflation was running rampent and the stock market hadn’t moved in 10 years. He advocated buying bags of gold and silver, moving to a rural area where you could grow your own food and dehydrate it so it would last, stock up on toilet paper and hunker down to ride the inflation train. Of course, a year or two later, the stock market has its best bull run of all time ending in 2000. Seems to me, a good contrarian would use these “signs” as reasons to load up on good stocks via index funds.

  2. Russ says:

    Except Peter Schiff has been right lately moreso than your typical Wall Street pundit, and he gives reasons why.

  3. jim says:

    Whether you end up being right or wrong, justification is crucial and Schiff gives you that. He also gives you what to do next, which is something a lot of other pundits don’t. Will runaway inflation really be what happens in the next five years? Maybe, maybe not, but at least you can act on it if you believe him.

    If you ever take anyone elses’ advice without putting it through your own filter, you’ll fail regardless of who that person is. If you analyze it yourself, then believe it, then be thankful if that person explains how you can take advantage. I don’t know if Schiff is right, but at least if I believe him I can act on it.


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