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Bull Moves in Bear Markets by Peter Schiff

Bull Moves in Bear Markets by Peter Schiff [3] 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 [4] (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 [5] 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.