In the end, let's not lose sight of the fact that we are nearly five years into an economic recovery, and we are still very much on monetary life support. This underscores the secular challenges that have produced and will continue to produce subpar growth despite short-term interest rates anchored at zero.

Yesterday's tapering move brings us ever closer to the aforementioned discovery of natural prices for stocks and bonds.

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My view is that markets will begin to take note.

My Tactical Response

"In the business world, the rearview mirror is always clearer than the windshield."

-- Warren Buffett

To a person, the talking heads in the media who provided instant analysis of the Fed's tapering decision were bullish late yesterday afternoon. Not surprisingly, many of the same commentators who were bullish after a 300-point rise in the DJIA had previously cautioned about the market's likely adverse response to a tapering.

It is for the reasons listed above (and others) that I shorted yesterday's market rip and moved from a market-neutral stance to a net 10% short position. (Note: Yesterday I expanded my SPDR S&P 500 ETF Trust (SPY)

What keeps me from moving more aggressively short is that I have learned to be respectful of the market's unbelievable price momentum, and frankly, I don't know the timing of a downturn/correction with any degree of certainty or precision.

What I am certain of is, as The Oracle wrote, it might shortly "be time to be fearful when others are greedy."

At the time of original publication, Kass was long TZA and short SPY and QQQ

Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.

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