TenBestStocks Market Signal Description

Since TenBestStocks’ launch in May 1999 the information that TenBestStocks provides has been limited to identifying stocks for exceptional growth and resistance to decline over rational investment periods. The long-term performance of the current 100% invested TenBestStocks Model Portfolio has certainly been exceptional as compared to the key market indices. This performance has been achieved during highly variable market periods impacted by war, natural disasters, economic turmoil, and financial crisis.

To date, however, the TenBestStocks computer model has been stock and industry specific and has not addressed future market direction – or market timing. As knowledgeable investors, however, we know that a significant element of overall stock portfolio performance (perhaps 35% or more) is directly related to the entry and exit timing of investments. There is no question that valid market timing information providing the ability to better capture gains during market up periods and better limit losses during market down periods would have a material positive impact on an investor’s overall return on his individual portfolio.

Over the past several months TenBestStocks has worked intensively to develop a clear, quantitative, and fact-based system to aid its subscribers in establishing the best portfolio management strategies for market entry and market exit. This new market timing tool described below was created using the same objective engineering principles employed in the TenBestStocks Computer Model.

Effective today September 29, 2008, we are introducing the new TenBestStocks Market Signal (TMS) to provide TenBestStocks’ subscribers with a significantly improved tool for anticipating the future change in the general stock market – and the TenBestStocks Model Portfolio specifically. Based solely on mathematically measurable data and fully back tested to TenBestStocks’ inception in May 1999 the TMS provides TenBestStocks subscribers with a clear indicator for potential appreciation or depreciation in the value of the TenBestStocks Model Portfolio. We firmly believe that the new TMS will materially improve a subscriber’s ability to manage his portfolio effectively during volatile market periods.

The TMS is a calculated value on a scale between 1 and 10. A TMS value less than 5 (the "Red Zone") indicates a greater potential for decline in the TenBestStocks Model Portfolio while a TMS value greater than 5 (the "Green Zone") represents a greater potential for appreciation in the TenBestStocks Model Portfolio (See table below).

*TenBestStocks Market Signal Value*	1	2	3	4	5	6	7	8	9	10
*TenBestStocks Market Signal Value*	Limited new investment capital preservation					Prudent new investing strategic stop loss

Each Tuesday the current TMS value is calculated and provided on the home page of the TenBestStocks Members Web. The weekly TMS values from the prior 13 weeks along with a complete history of weekly TMS values since May 1999 will be maintained and available to subscribers on the Members Website. As described below the TMS can be used to anticipate project future market direction and more effectively manage your own portfolio.

Reviewing the TMS each week the TenBestStocks subscriber can assess whether his specific portfolio management strategy is appropriate for potential future market conditions.

As stated above a TMS value in the "Red Zone" (below 5) indicates a prospective bear market period – a market under selling pressure and the prospect of lower stock prices. Conversely a TMS value in the "Green Zone" (above 5) indicates a prospective bull market period – a market with greater buyer demand and the prospect of higher stock prices.

During confirmed bear market periods TMS values have been shown to be consistently in the "Red Zone" while during confirmed bull market periods TMS values have been shown to be consistently in the "Green Zone." A change in market direction is signaled by two consecutive weeks of TMS value change.

· Confirmed bear market periods are defined as having consistent “Red Zone” TMS values with no more than one consecutive TMS value greater than 5. A change from a “Green Zone” bull market period to a “Red Zone” bear market period is be signaled by two consecutive weeks of a TMS less than 5.

· Confirmed bull market periods have consistent “Green Zone” TMS values with no more than one consecutive TMS value less than 5. A change from a “Red Zone” bear market period to a “Green Zone” bull market period would be signaled by two consecutive weeks of a TMS greater than 5.

The weekly TMS and the confirmed current market condition (“Green” or “Red”) will be clearly stated each week on the Members Website. Using the TMS we believe that the astute investor can develop an effective personal portfolio management strategy with an eye toward where the market is headed.

So how do we know that the TMS really works? A discussion of the TMS validating its basis and development is provided below:

The TMS uses 100% objective, measurable, and publicly available data which includes valuations, sponsorship, and market trends. It was developed to provide a quantitative measure of the current position of the market relative to its future direction. Designed using a professional engineering discipline the TMS was back tested weekly from the inception of TenBestStocks in May 1999 to determine its accuracy in projecting future market direction. Here are the results:

For the period May 29, 1999 (the TenBestStocks launch date) through September 24, 2008, the new TMS was calculated weekly based on the Tuesday market close. Beginning with an initial $10,000 investment the TenBestStocks Model Portfolio was managed using the “two consecutive week” discipline” described above.

During bull market “Green Zone” periods the TMS identified the TenBestStocks Model Portfolio was 100% equity. During bear market “Red Zone” periods the TenBestStocks Model Portfolio was 100% cash. Neither trade transaction costs nor interest income on cash are included.

All portfolio transactions were performed based on the Wednesday closing price consistent with the current discipline. This includes the normal weekly portfolio buy/sell equity adjustments, cash-to-equity transaction (“Red Zone” to “Green Zone” changes), and equity-to-cash adjustments (“Green Zone” to “Red Zone” changes).

· The TMS identified 30 time periods of market gain (325 weeks) representing 66.7% of the total (487 weeks). The average for each identified period was 13.3 weeks in length with an average TenBestStocks Model Portfolio appreciation of +9.63%.

· The TMS identified 30 periods of market decline (162 weeks) representing 33.3% of the total (487 weeks). The average for each period identified was 7.0 weeks in length with an average TenBestStocks Model Portfolio decline of minus 2.49%.

· On September 24, 2008, the value of the TenBestStocks Model Portfolio was worth $75,085 representing a total return of 650.9% (or 24.3%/yr).

On the above basis the new TenBestStocks Model Portfolio outperformed the current TenBestStocks Model Portfolio by nearly 125% which had a value of $33,440 on September 24, 2008. Over the same period it dramatically outperformed the S&P 500 which had a negative return of minus 6.5%.

Cash Percentage and Stop Loss Limits are two key factors to be addressed by the TenBestStocks investor utilizing the TMS as a tool in establishing his portfolio management strategy:

· Establish the percentage of cash to be maintained during periods of equity investment. Obviously, the more capital invested in equities during bull market periods the greater the opportunity for portfolio appreciation.

· Determine the stop loss level for invested equities to reduce the risk of loss because of the decline in individual stocks. Tighter the stop loss limits typically result in greater portfolio rotation, greater transaction costs, and more portfolio management time requirements.

Using the TMS the impact of portfolio cash position and stop loss limits on the new TenBestStocks Model Portfolio performance has been fully analyzed and the results of this evaluation are summarized in the Cash vs Stop Loss Table .

The yellow region indicated on this table reflects those conditions of “Minimum Cash Percentage Maintained” and “Stop Loss Percentage Maintained” which exceed the base condition return for 100% Cash and 0% Stop Loss for the period May 28, 1999 to September 24, 2008 (755.3%). Review of this table confirms the following:

· The portfolio return (%) increases with decreasing cash position maintained.

· Strategic stop losses are critical to maximizing portfolio return. Maintaining an average stop loss limit between 2% and 10% will significantly improve portfolio return.

Recognizing these important relationships the TenBestStocks investor can then potentially design an appropriate portfolio management strategy.

The elements described below represent an example of how a TenBestStocks investor can structure his basic strategy:

1. Establish the cash position to be maintained based on the investors comfort level. A typical cash position for the TenBestStocks investor during “Green Zone” periods ranges between 10% and 25%.

2. Establish the number of stocks to be managed within the portfolio. The typical investor maintains a portfolio of between 7 and 12 stocks depending on the time commitment he can make.

3. Establish a discipline for stock acquisition to assure adequate diversification between markets, industries, and segments.

4. Monitor the TMS each week as a guide for market entry or exit. Consider limiting or abstaining from new investments during confirmed “Red Zone” periods and prudently investing during confirmed “Green Zone” periods.

5. During “Green Zone” periods maintain stop losses based on the Suggested Exit Pricing provided on the Members Website.

6. During “Red Zone” periods promptly establish tight stop losses on all stocks (1% to 3%) depending on the issue and limit or abstain from new investment.

As stated previously immediately TenBestStocks will begin posting the new TMS on the Members Website on a weekly basis. This posting will include the current TMS value, the current market status (“Green” or “Red”), TMS values for the past 13 weeks, return since last market status change, and a link to the master TMS history.

Additionally, the current TenBestStocks Model Portfolio will be renamed the TenBestStocks Index. The redefined TenBestStocks Model Portfolio will now become the TenBestStocks Model Portfolio. Both will be monitored and updated weekly on the TenBestStocks website. No changes will be made in the method by which the TenBestStocks Index is calculated each week. The new TenBestStocks Model Portfolio will be calculated on the basis of 100% equity during confirmed “Green Zone” periods and 100% cash during confirmed “Red Zone” periods.