Peter Schiff feedback - 2008-12-31

I listen to Peter's Schiff's weekly podcast and there is usually a lot of good information there. Sometime I hear ridiculous things, so here's my feedback.

10:25 "... November [2007] to November [2008] retail sales in China were up 22%... I mean the Chinese, among their top five hobies...  shopping is up there, I mean it is probably number four, right up there with ping pong and gymnastics."

http://www.today.ucla.edu/portal/ut/PRN-china-s-economic-stimulus-is-good-71857.aspx

Response:

23:00 "... the government is taking away jobs and funds from the free market... so you should get as much education as you can while the money is cheap."

This line of thinking missed the mark in a few ways. In the long term, we can expect the market to become rational; but now there are lots of inefficiencies out there you should be aware of:

1. Real wages are high right now
2. Additional government intervention will cause good, sustainable jobs to diminish
   
3. Education costs are propped up by availability of government credit, and could fall precipitously

So would you like to be looking for a job now, or deferring until later? (The assumption here is that you are a US citizen who does not plan on expatriating in the near future)

23:00 "... for us it's okay if the market goes sideways... if we can hit 9% or 10% in dividends consistently they is pretty much going to beat any money market we can be in..."

This point was made several times throught the podcast. I just need to point out that through an application of the Modigliani-Miller theorem, dividends mean nothing. A good company that pays dividends is equivalent to a good company that does not.