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Demonstration Results Summary
The practice account that we manage is up $107,000. On October 10, 2002, there was $647,000 in this Practice Account. We purchased common stocks in mid October and then wrote covered calls against all positions in mid November. As of January 18, there is $754,000 in cash in this practice demonstration account. The practice demonstration via our emails gained 17% in 95 days.

How Did This Happen
Around October 12 we bought common stock shares spending $647,000. We bought 1,000 shares each, of 24 different companies. The market moved up nicely for a month. Around November 12, we opened covered call positions. About 80% of the "market cycle value run" occurred in that first month. From mid November to mid January the market moved up and down, but mostly sideways. By opening the covered calls we hedged ourselves, giving us a high probability of ending with a profit position. On January 18, all covered call positions were called away from our practice accounts. They were called at the strike price that we had established in the 24 different cover call contracts. Therefore since January 18 we have been in 100% cash position.

Additional Emotional Considerations
We captured the lower risk "sweet spot portion" of this market cycle run. The market made 80% of its value cycle change from mid October to mid November. We hedged (opened covered calls) our positions in mid November. Essentially we locked in a profit position by using this hedging technique. That really felt good at the time...back there in November. It made our holidays a bit more relaxed.

It also felt good from November through January, knowing that we locked in a profit as the market was gyrating around the less predictable emotional issues created by the Iraq situation. Since January 17, we have been in a 100% cash position. Nice place to be, in this declining market.

And yes, it feels very good that all our practice cash is poised for deployment. We base this comment on our confidence that our products can work. Currently our Macro and Sector indicators are moving towards a new buying opportunity. They are now in a Watch to Buy (WTB) mode. Its our customer...do your homework alert mode. We plan to have our homework completed by February 14. Watch for the next email on Saturday. We plan to be ready for the next market cycle value move! Are you getting ready?

Practice Demonstration Evaluation Details
We had a $107,000 improvement in the cash position from October 12, 2002, through January 18, 2003. In October we had $647,000 and now we have $754,000 for a 17% improvement.

Effectiveness Rating was a delightful 100%. Effectiveness rating is a measurement of our win/loss record. We bought 24 positions in common stock. We made a profit on all 24. My dad always said "you will never go broke selling for a profit." For the most part we picked good companies. It was close on CHKP and DUK, where we were up only 1%. There were 7 companies that had > 20% returns. They were C, CSCO, EP, IBM, MRK, NOK, and SBC.

Efficiency Rating was 38%. Efficiency measures how we performed against the Theoretical Potential of this particular Value Cycle Change. For example: IBM had a cycle low of $54 and a cycle high of $89. Therefore IBM cycle change was $35, we captured $18, for a 51% rating. When you do the same math on all 24 companies, you get a 38% efficiency rating.

Where do we Focus to Improve? We do not know what our benchmarks on effectiveness and efficiency should be. We have never seen any information to set reasonable benchmarks for either their effectiveness or their efficiency ratings. The Efficiency Rating of 38% sounds low to us, we think we can move this up. Regardless, our focus is clearly on improving our efficiency ratings. For sure we know that a 17% return in 95 days is pretty good. How would you have felt about a 17% return in your real account?