Crash Proof 2.0
Some people like to claim “I hate to say I told you so” — Peter Schiff is not one of those people. Peter, however, has earned the right to say that to his many critics. Crash Proof 2.0 is a revised edition of Schiff’s 1997 Crash Proof. This version leaves the original text intact and adds updates to the end of each chapter.
The title “Crash Proof” is a description of an investment portfolio which is built using Peter’s financial advice. Schiff forecasted, in 2007, that the U.S. was headed into a terrible depression. At the time, the vast majority of well-known financial analysts laughed off Peter’s warnings. The few investors who listened protected and expanded their fortunes during the recent crash.
This isn’t the end of the story though. Peter believes, as do I, that government efforts to manage this downturn have merely delayed it, at the cost of making the inevitable crash far worse. Peter believes that what we have seen thus far is only the beginning of the crash, and that we will almost inevitably see the economy become significantly more distressed.
Schiff is a long-term analyst. To people in that specialty, the events of the last couple of years represent little more than a blip. The long-term forecast for the American economy is extremely bleak. High taxes and the crushing burden of government regulations have crippled the U.S. economy and there is no political will in the United States to repair that damage. Instead, the kleptocrats in the U.S. government are saddling our grandchildren with trillions of dollars of debt — and then funneling the money to their cronies in big business.
Clearly this is not a recipe for success in the new global economy. To succeed as a nation, we must encourage hard work and savings. Instead, our tax structure discourages work and encourages spending. We’ve destroyed the trade surpluses and capital built by many generations of our forefathers. We’ve gone from being the worlds largest creditor nation to the worlds largest debtor nation. We’ve gone from being the worlds largest exporter to becoming the worlds largest importer. These are not issues that can be repaired in a single election cycle.
Schiff is not without hope, however, for individual investors. Schiff lays out a very conservative investment strategy which is sure to fare reasonably well under almost any market conditions. He recommends buying stock in large foreign companies. He likes utility companies because they are stable and because they tend to pay dividends. He also likes them because they serve local customers and do not earn significant revenue from exporting. Any foreign business that serves mainly customers in the United States will be very sensitive to the coming economic decline of the U.S.
The weaknesses of the book lay in Schiff’s arguments. Although I agree with much of what Shiff concludes, it appears that he tried too hard to make the book readable by a wide audience. As a result, the arguments are weak and ineffective. Many of them in the first part of the book remind me of Sunday school lessons.
The reason to buy the book is in the second half. Schiff lays out details of how to invest in foreign stocks and in commodities like gold. He describes common errors which could significantly damage the value of your investments. He explains quite well that it’s not only what you buy, but how you buy it. I won’t give away those secrets, you’ll have to buy the book.
Here’s a quick video with Peter promoting the book:
