Market Reflection - December 24, 2007

Weekly Results:S&P 500 +1.13% NASDAQ +2.1% Russell 2000 +4.2% MSCI Emerging Markets+.35%

Given the recent market behavior, most participants are ready for 2008. Especially with a sluggish December which appears to finish belowhistorical average. This wraps up a rollercoaster year which witnessed asurge in Crude prices and an ongoing upside move in Emerging Markets. On the other hand, 2007 demonstrated a depleting US Dollar and breakdown inFinancials triggered by a credit crisis. Not to mention, accelerated boom in China, decline in yields and a clear increase in volatility.Interestingly, the market dynamics kept the bulls and bears active.Overall, a 'wild' welcome for Ben Bernanke, as his first year chairman of the Federal Reserve. All added up to an eventful year.

Looking ahead, most cycle studies suggest a trend shift is upon us.Visible trends in the past 5 years are subject to change. Primarily, apause in an explosive bull market for Emerging Markets, Crude, Commodity related themes and Commodity linked Currencies. Conversely, a bearishperiod for US Large Cap, US dollar, and innovative based industries.Now, to clarify a trend shift can mean opportunity while others call ituncertainty. For example, emerging strength in Large Cap Growth developing. Again, select technology and healthcare can be rewarding forstock pickers. Unfortunately, there are more issues to be resolved for the broad markets. Regardless, additional sell-offs can set betterentry points.

During this part of the year, it is customary for the analyst communityto write about thoughts for the next year. In fact, most pundits have stated that a weak and slow year is ahead of us. Let us not forget, thatswitching the calendar does not alleviate on-going market trends.Meanwhile, there are themes that developed in 2007 that have yet tomaterialize. For example, media sector remains depressed, most US healthcare is stagnate and large cap tech is showing early signs ofleadership.

Now a New Year is a fresh start but old investment disciplines are yetapplicable. As stated above a cycle shift in leadership offers intriguing times for money managers. Expect periods of "trendless"markets which will challenge investor's conviction levels. At the sametime additional panic selling can carve out bottoms which can be neglected by fear. Perhaps this New Year offers a buying opportunity for long-term investors despite near-term concerns.

Happy Holidays!