It’s hard to look at Peter Schiff with anything other than awe.

After all, the 44 year-old president of Euro Pacific Capital was mocked on networks like CNBC and Fox for predicting “wild” things like a real estate bust, a credit crunch, and a deep recession. Two years later, and Schiff’s original prophecies have come true.

That validation has been earning Schiff some much-deserved credibility in the financial world, where until now he’s been dismissed as overly pessimistic.

But does Schiff really deserve the acclaim he’s recently found?

While Schiff has proved himself as an economist, his ability to parlay those predictions into profits for his clients was questionable for 2008. For the last few years, he’s been betting big on overseas investments and precious metals – two areas that got hit as hard or harder than the S&P last year.

According to Morningstar, the average international equity fund performed 7% worse than the average U.S. stock fund in the last year.

Just look at the iShares MSCI Belgium (EWK), the worst performing ETF last year according to SmartMoney.com, or the iShares FTSE/Xinhua China 25 ETF (FXI), which lost 49% in 2008.

Another of Schiff’s investment strategies has been to exit the U.S. dollar in favor of more fundamentally sound currencies. This too has proved untimely since anxious treasury investors have driven up the dollar in the last year.

Just because Schiff’s favored investments didn’t do well doesn’t mean that others’ investments didn’t. Just look at former hedge fund manager Andrew Lahde, whose real estate fund made 866% last year by betting that defaults would rise. Schiff was an early investor in the fund, but even that play couldn’t shake the losses on his other picks.

Some of the market’s other doomsayers, like Nicholas Nassim Taleb, banked gains for the year, so why couldn’t Schiff?

Likewise, a lot of individual investors did well in 2008 by betting against the market. But if you’re still trying to decide where to put your money in 2009, you’re not alone. While the market is a lot less volatile than it was six months ago, it’s still wild enough to give pause to even the most decisive investors right now.

Now, I don’t think Schiff should be written off – he took a risky stance against CNBC’s perpetual bulls, and it paid off. He’s also helped to bring attention to some of our country’s very real financial problems. That’s something he should be congratulated for.

We’ll see where his investments go in the future, but it doesn’t look like his opinions are wavering for the time being. “…My problem has always been that I see things too clearly and too far in advance,” he said in the Fortune article, “Other people don’t understand what I do, so the markets might not validate what I’m saying right away. But they will eventually.”

Cheers,
Jonas Elmerraji

February 26, 2009

Jonas Elmerraji

Jonas Elmerraji is an editor of Penny Stock Fortunes and a frequent contributor the Penny Sleuth. Jonas also occasionally writes for financial publications like Forbes, TheStreet.com, and Investopedia. He has been quoted as an investment expert in Investor’s Business Daily, Consumers Digest, and Bankrate.com among others. Before joining Agora Financial, Jonas’s held positions at an investment firm and at a “Big 4″ public accounting firm. He holds a degree in Financial Economics.

Special Report: HOW YOU COULD TURN $200 INTO $1.2 MILLION!

View articles by Jonas Elmerraji