Thursday, January 08, 2009

Doomsayers who got it right

Often mocked for predictions that seemed outlandish at the time -- big banks will fail, Fannie Mae will go bankrupt -- a few of these outliers, including money manager Jeremy Grantham, mutual-fund manager Bob Rodriguez and brokerage-house owner Peter Schiff, were among the first to describe key parts of the U.S. financial meltdown.

Still, they say the worst may be ahead.

Jeremy Grantham
As early as 2000, Mr. Grantham, co-founder of Boston money-management shop GMO LLC, was warning his shareholders that "a sensational bust" was coming. That made him more than a half-decade premature.

Bob Rodriguez
Mr. Rodriguez manages the FPA New Income fund, which was up more than 4% in 2008 due to some notable shifts in the investment strategy in recent years. He saw storm clouds gathering in 2005 when newly minted pools of supposedly high-quality "Alt-A" mortgages began acting oddly: Delinquencies and foreclosures were surging on mortgages just nine months old. (Alt-A mortgages, sometimes called "liar loans," were widely used by borrowers with high credit scores but undocumented income.)

Peter Schiff
Since at least 2004, as president and chief global strategist at EuroPacific Capital, a broker/dealer in Darien, Conn., Mr. Schiff has routinely peddled warnings that the housing market was a house of cards and that stock values were artificially inflated by Federal Reserve and White House policies that, he says, "were working against market forces."

Full WSJ article

1 comment:

mike said...

Watch this hot new Schiff video to see how he got it right