Investor Peter Schiff believes both the S&P 500 and the U.S. dollar are fundamentally overpriced.
For Schiff, a long-time dollar critic, this “valuation gap” creates an illusion for investors who interpret rising equity markets as a sign of wealth creation.
This trend is the “nominal mirage.” Investors see portfolios rising, but fail to account for the dollar’s declining real value. Thus, Schiff argues the worst mistake is not overexposure to equities, but hiding in cash. Holding U.S. dollars during a period of structural devaluation guarantees a loss in real terms, even if account balances appear stable.
Instead of a retreat, he advocates for repositioning – pivoting toward assets that resist currency debasement, namely gold and foreign equities.
“The biggest mistake U.S. investors can make is holding too much cash. Sure the U.S. stock market is overpriced, but so is the dollar. A weakening dollar, and the monetary and fiscal policies that will drive it lower, will support nominal stock prices. Own gold and foreign stocks,” he wrote on X.
This post was originally published here