Now naive folks like me subscribe to the fantasy that a reputable newspaper maintains a church/state separation between its editorial pages and its news section. And then we have the Wall Street Journal as a telling counterexample.
Last week, the Journal ran a op-ed piece by one Peter Schiff, a rather vocal libertaran and goldbug whose claim to fame is that he foresaw the economic downturn. He also runs a broker-dealer called Euro Pacific Capital.
A mere three days later , blogger Michael Shedlock in “Peter Schiff Was Wrong,” savages Schiff on his frequent claims to having made good trend forecasts and positioning his clients “accordingly.”
Shedlock examines Schiff’s investment thesis, marshals considerable evidence to show that most of the key elements were way off. Shedlock also provides a screenshot of a Schiff account statement (scary) and reports from selected investors in managed accounts of horrific losses in the last two years (60% to 70% range), a stark contrast to his alleged foresight about the developing crisis. (I must note that the first 3/4 of Shedlock’s post is factual and pointed, Shedlock has an overly long section at the close touting his firm’s results, which undermines the solid work that precedes it).
So what do we see today? A Wall Street Journal article rationalizing, as best it can, Schiff’s performance: “Right Forecast by Schiff, Wrong Plan?” Although the second sentence is punchy (“The bust-up he didn’t foresee was the one that made mincemeat of investors who took his advice in 2008”) and the article does make clear that most Schiff accounts underperformed the S&P 500 handsomely in 2008, there is too much stuff like this:
Such losses came as something of a surprise. Mr. Schiff’s prescient call for the collapse of the U.S. housing market and the weakening of the financial system helped him gain fame as an economic guru and savvy investor who promised shelter from the financial storm.
This verges on pandering. Schiff as an economic guru? Please.
In fairness, the article does contain specific, and quite negative information about Schiff’s 2008 results, and suggests that investors taken with the the aggressive promotion of Schiff’s message, piled into his firm at the worst possible moment.
Even though the article does tell both sides of the story, there is too much real estate devoted to Schiff’s defense. I counted 13 neutral or Schiff friendly paragraphs versus 7 unfavorable. By virtue of contrast, see the article on storied investor Bill Miller’s fall from grace, with a record 15 years of outperformance followed by 58% losses in 2008. Even with a very long backstory of his rise, which is legitimately postive, the article is close to even on favorable/neutral paragraphs versus unfavorable, and the negative ones are often very cutting.
Any media outlet that didn’t have an existing editorial relationship would have taken the same fact set and played up the angle that Schiff does not live up to his PR and delivered dreadful returns at what should have been his moment.
Now I cannot blame the reporters given the genesis of this article. A hot potato landed in their laps and they dealt with it as best they could (and who knows how much of the softening came in the editing process).
If nothing else, the existence of this article, even though it makes no reference to the Shedlock post, was clearly prompted by it, and is thus a backhanded acknowledgment of his reach.