Controlling your emotions is critical to successful portfolio management. We’ve all heard that before, but it really is tougher to do than to say. If you look at the performance of HEDGEfolios right now, you’ll probably be able to identify a few of the emotions I am currently experiencing. I am frustrated, angry, disappointed - you name the negative and I’ve got it bad. It’s very rare for me to have the percentage of winning signals less than 68% and this week, I am posting 57.5% winners. Fortunately, 53% of the losers are less than 5% wrong and a market decline will reverse these figures very quickly. But that rationalization is not helping me right now. Having emotions like greed, fear, regret, and even anger are normal, but denying their existence is the first step towards failure. If you cannot recognize them, you cannot control them.  However, just because you are humble enough to identify your weaknesses, doesn’t mean you will be successful managing them.

Each week I review all these 4000 charts and it’s painful to see so many that I disagree with. Then I look at valuations and it usually makes me feel even worse. Now that I have 60% DOWN signals, any upward move in the market tightens the screws even harder. I just don’t see what the bulls are spewing these days in the underlying technicals or the valuations. So I am sticking with the HEDGEfolios Timing Indicator and working on my emotions. As I have previously written, the HEDGEfolios Timing Indicator typically is a leading warning sign by about 1 to 5 weeks. Given that it gave a bearish signal on 11/27/06 when the S&P was at 1400.18, we are 8 weeks into it and the market is still 2.1% above that level. If it sounds like I am hoping for a decline, you are correct. Satisfaction with being right is a huge trading emotion for me and I am looking forward to it.