No. of Recommendations: 16

URL of last week’s projections:
http://boards.fool.com/Message.asp?mid=27227039

Here are the Exponential Growth rankings for Monday, December 1, 2008.

Note: SJR-B.TO has no historical data and was excluded.

Screen	Stocks
Risk Averse
DMND
APOL
FDO
NAFC
CPSI
Pessimist
CRDB
APOL
DMND
THOR
CPSI
Risk Neutral
CRDB
APOL
THOR
DMND
CPSI
Optimist
CRDB
APOL
THOR
CPSI
DMND
Low Volatility High Growth
NAFC
CHD
HAE
MCD
WMT

(*) These are the viable option candidates this week. A stock is a "viable" candidate for a 6/3 option if (a) it is in the top 5 of the LVHG screen, (b) it has a projected annual growth rate greater than 50% under the Risk Averse formula, and (c) it has publicly-traded call options.

Please see the notes below for a brief explanation.
Projected Total Annual Returns
Based on 6 Months of Prior Data, Exponential Growth Model, and Friday close.

Risk Risk Low Volatility
Stock Mean Sigma Averse Pessimist Neutral Optimist High Growth*
DMND 0.015058 0.061633 -10% 40% 119% 241%
APOL 0.018266 0.082479 -21% 43% 159% 369%
FDO 0.010451 0.062433 -30% 10% 72% 170%
NAFC 0.006474 0.051211 -33% -3% 40% 103% 1
CPSI 0.014026 0.080429 -35% 16% 107% 270%
AMGN 0.008932 0.063703 -37% 1% 59% 152%
THOR 0.015911 0.089000 -37% 20% 129% 335%
CRDB 0.027316 0.131623 -38% 60% 314% 969%
GB 0.011478 0.077520 -41% 4% 82% 218%
MYGN 0.007783 0.065947 -42% -7% 50% 141%
STRA 0.007123 0.065708 -44% -10% 45% 133%
CHD 0.001774 0.047761 -45% -22% 10% 55% 2
DLTR 0.005244 0.061439 -46% -16% 31% 105%
MCD 0.000454 0.047941 -49% -28% 2% 45% 4
WMT -0.001106 0.045129 -51% -32% -6% 31% 5
CHE 0.004648 0.071784 -55% -24% 27% 114%
HAE 0.000562 0.060771 -57% -34% 3% 60% 3
ESI 0.008282 0.089287 -58% -19% 54% 193%
DV 0.000329 0.062405 -59% -35% 2% 60%
COCO 0.008774 0.093195 -59% -19% 58% 209%
TEVA -0.002014 0.056434 -60% -40% -10% 35% 7
FLO -0.001257 0.059167 -60% -39% -6% 44% 6
OSIP 0.002016 0.071199 -60% -34% 11% 86%
SPTN -0.000259 0.063167 -60% -37% -1% 56%
MANT 0.002929 0.076297 -61% -33% 16% 102%
AXYS 0.006367 0.088768 -61% -27% 39% 164%
DNB -0.004934 0.049050 -62% -46% -23% 10% 10
BMY -0.002552 0.057789 -62% -42% -12% 33% 8
TSCO 0.004469 0.086054 -64% -32% 26% 135%
HCBK -0.001909 0.068329 -66% -45% -9% 48%
STE -0.003291 0.063770 -66% -47% -16% 33%
VSAT -0.000197 0.075647 -67% -43% -1% 71%
CLHB -0.004535 0.061270 -67% -49% -21% 23% 9
PRGO -0.002268 0.069716 -67% -46% -11% 47%
BJ -0.003795 0.066595 -69% -49% -18% 33%
CAI -0.005299 0.063728 -70% -52% -24% 20%
MHS -0.005495 0.068004 -72% -54% -25% 23%
RKT -0.001900 0.082341 -72% -50% -9% 64%
RMD -0.003100 0.080812 -73% -52% -15% 52%
CHRW -0.008673 0.070746 -77% -62% -36% 6%
ESRX -0.008701 0.074734 -78% -63% -36% 9%
PNRA -0.005998 0.092407 -81% -62% -27% 43%
NSC -0.011511 0.073713 -81% -68% -45% -6%
VIVO -0.007578 0.090785 -82% -65% -33% 30%
GMCR -0.006658 0.097697 -83% -65% -29% 43%
AMED -0.010283 0.095565 -85% -71% -41% 17%
CCC -0.012600 0.097727 -87% -74% -48% 5%
CMP -0.009758 0.109907 -88% -73% -40% 33%
GWR -0.011361 0.107124 -88% -74% -45% 20%
ASGN -0.014302 0.097182 -88% -76% -52% -4%
CRY -0.009269 0.116735 -89% -73% -38% 43%
SWN -0.009796 0.142418 -92% -78% -40% 68%
ENER -0.031509 0.168687 -98% -94% -81% -34%

Brief explanations:

1. The "Exponential Growth" model can be used in mechanical investing to rank the stocks from any screen or set of screens. When used on a set of screens, it is similar to (and hopefully better than) the "Overlap" method. On the assumption that a "good" stock is one that grows strongly along an exponential path, we calculate the mean and standard deviation (sigma) of weekly change in log(Price), going back 26 weeks. We use weekly closing prices, adjusted for splits and dividends. Thus, a "good" stock should have a high mean and a very low sigma. The sigma statistic is often called "historical volatility." It measures the amount of deviation from a purely exponential path. Sigma can interpreted as a measure of the risk of the stock as an investment. Values of sigma close to zero suggest that the growth of the stock will not be erratic in the future, and therefore less risky. It is only a suggestion, not a guarantee, or even a prediction.

2. The next step is to project what the price of the stock will be one year in the future, under four different conditions:
--- (a) growth will be two standard deviations below expected (Risk Averse)
--- (b) growth will be one standard deviation below expected (Pessimistic)
--- (c) growth will occur at the expected rate (Risk Neutral)
--- (d) growth will be one standard deviation above expected (Optimistic)
These four conditions serve to give investors a feeling for where these stocks will be in the future, if they continue to grow as they did during the previous 26 weeks. But beware: few stocks continue their past behavior for very long.

3. Next, projections made under the four above conditions are used to generate four rankings of these stocks. The ranking implied by condition (a) is called "Risk Averse" because it uses a severe adjustment for risk. The ranking for (b) is called "Pessimistic" because it adjusts the growth for risk. The projected rate of return in this condition is often called the "Risk Adjusted Return" in the financial literature. The ranking for (c) is called "Risk Neutral" because those who use it are not paying attention to risk at all. The ranking for (d) is called "Optimistic" because investors who seek out risk and volatility often prefer it.

4. Finally, a fifth ranking is generated known as the "Low Volatility High Growth" (LVHG) screen. This is designed to find stocks with very low volatility that are nevertheless growing strongly. The top one or two stocks in this screen may be especially appropriate for 6/3 call options. The theory, still untested, is that option investors as a class prefer momentum stocks with high volatility, like NEWP and RMBS. By seeking out those strongly growing stocks that have rock-bottom volatility, we hope to sneak in "under the radar" to find options that are dramatically under priced. The LVGH screen is made by first sorting the entire table for lowest possible volatility (sigma), then sorting the top ten for highest growth (mean).

5. Need more detail? Please visit Loren's website:

http://www.Aetheling.com/MI


Best of Luck,

Jeff
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