It has been about one and a half years since I posted my first commentary and since then I have added many new people to the email list. I am proud of my public predictions up until this point. Risking your reputation is one of the most difficult things one can do. For those of you that are new to my commentaries, I would like to recap some of the documented predictions I have made to date.

June 4^th 2007 (Drunk on Liquidity)

-          I warned of a serious recession and the end of the private equity boom. At the time, it was an extremely bold prediction because hardly anyone was arguing this point and the subprime crisis had not yet begun.

-          I recommended defensive stocks such as Proctor & Gamble, Johnson & Johnson, and McDonald’s. Since then, the S&P 500 is down almost 50% while an equally weighted portfolio of just these three companies would have provided a positive total return with a relatively low standard deviation.

-          I warned of potential dollar weakness which we then saw in the proceeding 18 months up until recently where it has retraced much of those losses.

-          I warned that the explosive growth in the unregulated derivatives market had created a very shaky foundation that would become vulnerable in a highly volatile environment.

August 14^th 2007 (Slippery Slope)

-          I cautioned that we were “at the early stages of a very significant credit crunch.”

-          I reiterated my position that the Federal Reserve and the U.S. govt. would not be able to stop the housing market correction because a sharp rise in foreclosures and credit contraction was inevitable.

November 11^th, 2007 (What to Expect from the Fed and the Dollar)

-          I predicted that the Japanese yen and the Chinese RMB would be the best places to store value. Since then, the yen and the RMB been two of the strongest performers against every single asset class (including currencies and commodities).

-          I said Goldman Sachs and Morgan Stanley and many other financial companies “continue to face serious downside risk (even with a bailout).” Since then, Goldman Sachs has lost approximately 80% of its market value and Morgan Stanley has lost approx. 85% and the rest of the investment banks have either declared bankruptcy or been forced to sell themselves.

November 27^th, 2007 (Election 2.0)

-          “Barack Obama seems to be gaining momentum and I expect he could do better than the scientific polls indicate because of a greater percent of younger supporters on the web that are missed in the traditional polls.”

-          I predicted that we would see much greater involvement of young people in this election than in previous years and that it would have a great impact on the election results.

February 16^th 2008 (Power of Denial in the Housing Market)

-          I predicted that we were not close to a bottom in housing and the real estate market.

-          I predicted that Manhattan’s real estate market would finally crack in 2008 and begin price declines, a process which I expect will last longer than most think.

March 4^th 2008 (The Commodities Bull Continues its Charge)

-          I recommended not using leverage if buying commodities because I expected significant pullbacks along the way of a longer-term bull market.

June 10^th 2008 ($135 Oil: Who is the Culprit?)

-          “I would not be surprised to see oil pull back significantly but I would be very surprised if it stayed lower.” Oil was at $135 per barrel then and now it is at less than $50 now.

September 15^th 2008 (Is this the Final Capitulation?)

-          “I could easily envision the federal funds rate eventually getting close zero and other “creative” assistance offered to the likes of Citigroup. I do not see how AIG will survive or even Washington Mutual without intensive government assistance.” Since Sept 15th, Citigroup has lost $80billion in market value going from $15 to $3.77 per share and is on the verge of a bailout. AIG has since received $153 billion in federal loans. Washington Mutual was seized by the FDIC and purchased by JPMorgan Chase but Washington Mutual’s creditors have been left high and dry.

-          I recommended Gold and Agricultural commodities. While both have outperformed the stock market since September 15th, it is too early to make any assessment of those predictions.

I would caution anyone that will be too comforted in the dollar’s recent strength relative to commodities, for the same reasons I have outlined in my previous commentaries. 3 months is not a long time in the world of investing. I don’t know when it will turn around but it is a very likely that the current and future monetary and fiscal policy measures will eventually create an inflationary environment. That said, the dollar rally may continue over the short-term because credit and economic contraction is so pronounced right now.