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Euro Pacific Capital’s Peter Schiff on the impact of the market’s performance and trade issues at Knight Capital and PFGBest.
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The flash crash the FaceBook IPO follow -- to put it mildly.
And now the bad trade buying Knight capital lot of investors have lost confidence in the markets -- the company now from Connecticut Peter Schiff with Euro Pacific Capital -- by the -- is now at three dollars -- -- it has opened for business this morning.
But it's way way down.
-- data welcome back to the program.
My point is investors don't trust stock trading I'm not -- about stock prices I'm talking about the stock trading system.
They think it's it's corrupted by the big guys.
And technology is not reliable -- see it seems to me then moving away from the stock market as an investment vehicle what do you -- I don't think it's about fear of trading I think it be more about a reflection of performance if you look at where a lot of individual Americans got invested in the stock market.
They got attracted to the market in the late 1990s in the tech bubble.
And here you are twelve years later and many of the stocks are well below their -- about level meantime the price of everything that Americans -- Food gasoline has gone up dramatically.
So stark stocks have significantly underperformed over that period time.
So I think if the performance that has got investors frightened.
Not some of these high profile events like the prop flash crash or what happen when -- -- remember there was lot of opportunity in the flat -- If if you take advantage of that you were able to make a lot of money buying some stocks -- very cheap prices do you think Italy days -- Obama for the stock market.
Now I I think the glory days are over for the bond market I mean maybe they're not over today I've been saying this for awhile dislike I I was warning early on the housing bubble but.
I think more investors who have sought out bonds as an alternative to the weak performance in stocks.
I think that's where the next step catastrophe is going to be as far as catastrophic losses in in bonds and not just treasuries I think.
Any long term debt instruments denominated in dollars.
Is gonna go down but particularly.
The sovereign credit that people people perceive it as being so safe but.
-- look at it there's only two alternatives for bondholders either they lose due to default where they lose due to inflation.
And the default risk even includes tractors.
Okay if you don't like bonds -- -- that's the sights the venue of the next catastrophe.
Had a -- take advantage of that what what do you think goes -- when this is crashing.
Well I think the dollar is going down and instill any it would goes -- is everything else gold silver I think stocks will go up but I think you've got to be careful which stocks to buy because the environment will not be favorable all stocks.
I have preferred foreign stocks for quite some time they've actually underperformed in recent years although over the past decade.
You'd be much better off had you invested abroad than in the U -- and I expect that long term trend to resume and there are a lot of countries to have much sounder -- economic -- and monetary policies and we do so there are safe havens around the world.
They've been a little rocky over the last year or two but I think ultimately.
They'll provide good returns in the meantime there's a lot of dividend yield.
There's a lot of stocks around the world that are paying very high dividends and for Americans who are starved for yield because they can get very little in the bond market and even US stocks there's not a lot of dividend yield there you believe you people if investors look abroad making get much more income.
Two to cushion any volatility short run and ultimately give them a hedge against inflation and a -- the -- market.
-- real fast it seems to me that the cheapest -- weather is the most value these days would be a single family home in a good neighborhood in America.
Are you gonna tell -- -- flat out.
Wrong.
The you know the only reason to buy -- house is to take got a thirty year fixed rate mortgage and win based on having your debt wiped out due to inflation I don't think the real value of -- homes is going to rise I think it's gonna continue to fall and you have to realize that.
Real state right now is being propped up by record low mortgage rates and huge government subsidies for the housing market.
In the tune of Fannie and Freddie FHA eventually that was props are gonna be knocked out from beneath the market and prices are -- are are gonna fall down.
And if we don't get the runaway inflation if we get a more responsible fed.
That aggressively -- raises interest rates that you even have the risk of a big nominal drop in home prices so I would not be looking at real estate as an investment -- -- if you need a place to live and you can't find something good to rent.
But don't don't look for a return to the day in the eighty's and ninety's -- the 2000.
Where people made money off their home the home as a liability it's a depreciating asset you -- like a car or boat.
Don't expect to get rich by if you want to enjoy it but you're spending money you're -- the home is not gonna pay for itself you're gonna have to work harder to afford it.
Peter Schiff will remember this interview because you said the coming catastrophe is in ball -- -- back on the want to.
Thanks so much freedom always a pleasure thank you.
