My investment newsletter, The Cohan Letter, outperformed the S&P 500 in 2007. Specifically, the average stock mentioned in The Cohan Letter rose 28% in 2007. This compares favorably to the performance of the S&P 500 which rose 3.5% in 2007.

The three top performing stocks mentioned in The Cohan Letter were:

• New Oriental Education & Technology Group (NYSE: EDU) which rose 84% from $43.75 in April 2007 to $80.59 at year end;
• Companhia Vale Do Rio Doce (NYSE: RIO) which climbed 77% from $18.50 in March 2007 to $32.67 at year end; and
• Transocean Inc. (NYSE: RIG) increased 66% from $86.20 in April 2007 to $143.15 at year end.

Each month The Cohan Letter mentions three stocks. If a stock mentioned declines 2% after it's mentioned, the stock is "sold" from the portfolio. This 2% stop loss rule contributes to the relatively high average return of The Cohan Letter.

Now in its sixth year of publication, The Cohan Letter's average annual return since its inception is 22% -- the average annual return of the S&P 500 during that period was 11.8%.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.