CHANGE IN LONGITUDE: Peter Schiff believes he’ll find more brokers who think like he does on the East Coast. Paul E. Rodriguez, The Orange County Register

THE WORLD ACCORDING TO PETER SCHIFF • U.S. assets – stocks, bonds and real estate – are wildly overvalued. • The dollar is in long-term devaluation. • Inflation is worse than the government is reporting. • The U.S. economy is headed for a long, painful downturn that will wipe out either debtors or both lenders and savers. • Schiff believes lenders/savers (especially those abroad) will probably bear the brunt of the pain for political reasons. “Most of them are foreigners,” he says, “and foreigners can’t vote.” • U.S. investors should get out of dollar-denominated assets and invest abroad in real-estate trusts, energy trusts, utilities, foreign bonds and stocks that pay dividends

By JAMES B. KELLEHER
The Orange County Register

He's the human equivalent of a Nor'easter, those powerful winter storms that slam into the eastern United States each winter. And he's just blown into New England.

Peter Schiff, the Newport Beach money manager whose gale-force opinions have helped shape the local debate about investment strategies and the economic outlook, has moved to New Canaan, Conn., to open an East Coast branch of his company, Euro Pacific Capital.

Schiff, who will remain chief executive and global strategist for the company, said the new office will put him closer to Euro Pacific's growing client base in the eastern United States and increase his company's visibility in the nation's financial hub, where he hopes to recruit more like-minded brokers.

"I'm looking for those few people who get it," Schiff says, "who understand the problems facing the United States and want to help their clients protect themselves.

"How many brokers out there understand the problems? Maybe 20 in the whole country. Well, if there are just 20 of them, chances are 15 of them are in New York, Connecticut and New Jersey."

TO THE EXTREME

Chip Hanlon, Schiff's partnerat Euro Pacific, will remain in Newport Beach, overseeing the company's 10-member team of investment advisers and providing a local voice for skepticism.

While Hanlon shares many of Schiff's misgivings about the markets, he's a more restrained spokesman for the bearish point of view. Hanlon has never compared Federal Reserve Chairman Alan Greenspan to Mr. Magoo, the blundering, nearly blind cartoon billionaire. Or Pinocchio. Or Henry Blodgett, Merrill Lynch's disgraced Internet analyst.

Schiff, 41, relished making such pronouncements – the more outrageous, the better. And the Fed chairman was hardly the only person whose nose he tweaked. Over the years, Schiff's likened America's export-reliant consumers to heroin addicts; he's predicted the United States was headed for a Great Depression-style downturn because of its gutted manufacturing base and low savings rate; and he's advised local college graduates to learn Mandarin and move to the mainland China because "that's where the freedom is."

"He's colorful," says Tom Lydon, the president of Global Trends Investments in Newport Beach and a man who has frequently found himself on the opposite side of Schiff in many investing debates.

"I think he describes things in an extreme way to make people think," Lydon says. "And on some of these issues – like the dollar and natural resources – he's been right."

THINK NEGATIVE

Euro Pacific was founded in 1996, when Schiff, a former Lehman Brothers broker, and Mark Anderson, his business partner in several Los Angeles-based brokerages, bought a Florida-based broker-dealer with no clients and reincorporated it in California.

For several years, Euro Pacific was based in Los Angeles. But in February 2000, Schiff bought Anderson's share of the company and moved it to Orange County.

It was a heady time in the stock market, with the Nasdaq nearing its peak. Schiff, a Connecticut native, was skeptical.

In the long months after the Nasdaqcrash, Schiff developed a reputation as an eminently quotable market analyst, a pessimist whose comments probably should have always been printed in capital letters so newspaper readers could get a sense of his emphatic verbal style.

While many analysts predicted a quick rebound, Schiff was dubious, saying the U.S. markets could be in for long-term bear runs.

So far, he's been right about that (the Nasdaq's still down 60 percent from its March 2000 high) and several other megatrends – from the dollar's weakness (it hit an all-time low vs. versus the euro Monday) to the rise of commodity prices, especially oil (which hit an all-time high of $55 a barrel last month).

Along the way, Euro Pacific has grown into a company with about 5,000 accounts and about $350 million under management, according to Schiff.

But he's made some bad calls, too. He has been predicting a collapse in house prices for years that has failed to materialize. (To his credit, Schiff has practiced what he preached, renting a 2,500- square-foot house in Newport Beach on what he says what a postage stamp-size lot for $4,700 a month rather than buy. In New Canaan, he says he's shelling out $6,900 a month. But because the house is twice the size of his old one and sits on 2-1/2 acres, he has no regrets. "It's way bigger.")

He's predicted that U.S. interest rates would spike as foreign investors stopped buying our financial assets. So far, that hasn't happened, either.

His only regret as he leaves Orange County? That he won't be here to buy houses on the Newport Coast for "5 or 10 cents on the dollar."

LIKE FATHER, LIKE SON

In gleefully advocating the unorthodox, Schiff is keeping up traditions.

Classmates at UC Berkeley remember him challenging his economics professors during his freshman year.

His father, Irwin Schiff, is a notorious tax protester and the author of "The Federal Mafia," a self-published book that was ordered off the market by a federal appeals court earlier this year because judges said it encourages tax evasion.

Rather than take on the Internal Revenue Service, a quest that has resulted in prison time for his father, the younger Schiff has taken on the Fed and the Department of Labor, which he claims are understating inflation in an effort to postpone the coming financial catastrophe.

Needless to say, not everyone agrees with him. (Though Bill Gross, the chief investment officer at Pimco, the Newport Beach bond-management giant, recently voiced similar concerns about the reliability of the Labor Department's numbers.) Even so, local investment types say they'll miss Schiff.

Gordon McBean's first job in the securities industry was working alongside Schiff at Lehman in Los Angeles in 1989.

Fifteen years later, McBean, now head of research at Roth Capital Partners in Newport Beach, considers Schiff one of the most colorful characters he's run into during his career.

"He's a very bright, talented and hard-working guy," McBean says, "and a breath of fresh air. He's got a unique viewpoint."

Fans of the younger Schiff's opinions can take heart: He will continue to do his weekly Internet radio show, "Wall Street Unspun," which is Webcast every Wednesday at 5 p.m. Pacific time and archived on his company's home page (www.europac.net).

He promises to keep urging investors to move into "safe foreign assets," a strategy that Lydon warns "is not for the faint of heart."

Schiff's advice for local homeowners is just as controversial.

"It's all over," he says of the run-up in real-estate prices. "People are still pretending that their houses are worth all this money. But they're not because no one can sell them. The only thing they can do is refinance them and take as much cash out of them as possible – in essence sell it to the bank – and take the proceeds out of the country."

Otherwise, he warns, "members of this generation will never know retirement. They'll be working until they drop dead."