OUTLOOK

"Profiting from a Decline in Oil Stocks"

1/7/2008

In our Outlook on 12/31/07, we forecasted that the XOI index would correct to 1535 or less within 4 weeks.  Our forecast was correct.  Within 1 week of our forecast, the XOI declined to 1535 or less, closing at 1519.98 on 1/7/08.

As of 1/7/08, we have exited our short position in oil stocks since our profit target has been achieved.  As contrarians, we will look for other opportunities to go against the crowd and profit from trades that put the odds strongly in our favor.

Mark Yuan, CFA