Tuesday, January 27, 2009

On Mike Shedlock, Mish

Mish's blog has really vaulted to the top of, not just my reading list, but that of most web-literate market savants. His posting is original, high-quality, and so frequent that one wonders if there's an ignored woman/life-partner in the background.

Yesterday's post Peter Schiff Was Wrong was a veritable fount of edification. Not only did I take the time to read his *most lengthy post ever* but I also meticulously read all 476 comments.

Now don't misunderstand. My praise for this post is not rooted in *piling on Peter Schiff*. I happen to disagree with Mish's verdict. Schiff was right for many years before he was terribly wrong last year. Everyone, except possibly Mish, who's in this business knows darn well that's how it goes. Buffett, Soros, Jim Rogers, Goldman Sachs,....even the savviest of all-time are occasionally spectacularly wrong - as Mish will (if he hasn't already) be one day soon enough.

After Mish rips apart Peter Schiff, he proceeds to toot his own horn; he brandishes his funds' ("Hedged Growth" and "Absolute Return") recent performance:

Yeah, that's right, a man with *over 20 years* in the business is touting his 3.5 year returns - returns he's only comparing to those of the S&P 500. And note that his returns only look *good* in the wake of 2008, an outlier year for the markets.

There ain't nothing like pumping short-term returns, against a low-hurdle benchmark, AND against a man like Peter Schiff who had a terrible 2008!

From my trader's perspective, Mish's *absolute* returns suck and scarcely warrant braggadocio.

He's acting like a third or fourth year trader who, from the perch of a *breakout year*, thinks they've finally commandeered all the nuance of fluctuating securities' prices.

See also my prior post Marginaling Mish.


Taylor Conant said...

Haha awesome, a unique and truly Captious angle I hadn't considered or read elsewhere!

Tim Swanson also made some reply to Mish's post on his blog (just google him) and came at it from the "China is actually doing okay" angle. And then some other guy who runs the EBJ blog, if I remember correctly, Economic something Journal... oh bother, just search Bob Murphy's blog's latest posts where he has a link... anyway, this guy also defended Schiff, but he was a bit less artful, nuanced and even literate-sounding about it.

As for me, well, my portfolio has been hammered, but I realized long ago that EPC isn't an advisory firm but rather a brokerage house with access to special markets... you'd be an idiot to take advice on where to invest from your Smith Barney advisor, and I've learned you'd be the same/worse idiot to take advice from EPC.

Do your own research, that's how the story goes, right? THAT must be why teachers in school or so against plagiarizing!

By the way, with my earlier work on my blog about Schiff, would I qualify as someone who pre-emptively defended him? The Bush Doctrine, applied to investment guru pugilism?

Of course, mine wasn't actually a defense but an attempted explanation, but that didn't stop most of the people who read it from thinking it was one.

CaptiousNut said...

Obviously, since I am reading his stuff, I'll be launching more of my own grenades Mish's way!

I am going back to add the link to the first time I jabbed him.

JReality said...

Do you think that when Mish eventually gets his turn to be "spectacularly wrong", in one (or more) of his predictions, that his clients will take a beating the way Schiff's did in 2008? As long as Mish's clients don't take a beating then he's ahead of the game compared to Schiff.

I agree that Mish should post 20 years worth of returns, and not just 4 years though.

I agree that Mish's "absolute" returns are not all that exciting, but at least he saved his clients from taking a major beating in 2008.

stocksystm said...

Mish's recent returns are pretty good in my opinion. But you are correct in pointing out that 3.5 years is not sufficient time to determine if he's onto something. However, I would give him my money before Schiff. I heard a bit on the radio where Schiff was defending himself by explaining to someone whose account was probably down 50+% that they hadn't lost anything because they hadn't sold yet.

CaptiousNut said...


Look at it this way, when Mish is *spectacularly right* do you think his returns will touch those of Schiff when he was on a roll? I don't.


And if Mish's clients haven't *sold*, then they haven't *made* anything yet, either.