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February 23, 2007

An End and a New Beginning

It is with great nostalgia and a bit of compunction that I announce the end of my daily blog. I recently accepted a job to work at the prop desk of one of the big firms in New York. While my activities there will not involve client interaction and therefore should cause no apparent conflict of interest with writing about the markets, I simply do not anticipate having time to consistently dedicate to blogging. I do intend to continue contributing to Safe Haven, and will also be more than happy to share thoughts via e-mail.

My two years of blogging has certainly been an educational experience. Scribing daily observations about the market provides a huge advantage to a trader because it forces a consistency in thought. Flopping one's opinion frequently causes mental chaos and makes it too easy to get caught on the wrong side of a trade. Of course, some would postulate that as an equity bear throughout my blogging tenure, I've been on the wrong side of every trade. Not true. I've done quite well despite my bearish stance, first from the rapid ascent of precious metals prices and second due to risk control and some fortunate timing of trades.

I remain very bearish on the prospects for U.S. equities. Stocks are simply riding momentum at this point, but they are out of gas. The latest revelations about the sub-prime mortgage market are heralding an inflection point in the credit cycle, and this inflection will clobber stocks. Once the meltdown process is underway, the Fed, lead by a person who has dedicated his life to studying scenarios for fighting depression, will print money like mad. The U.S. dollar will crater in the face of all the new liquidity, and rather than support prices, Bernanke's efforts will cause financial assets to tumble further as foreigners flee dollar-denominated paper.

For all these reasons, I also remain wildly bullish on the prospects for precious metals and commodities. Since I will be unable to actively trade my own accounts while employed by a broker-dealer, I intend to park most of my investment funds directly into metals or commodity-focused funds, such as the WorldCommodity Fund (an interview with this fund's manager is in the works for my next Safe Haven post).

So, on a final note, a thank you for all the readers who have perused these pages and provided feedback, both positive and critical. Until we meet again...

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