I have decided upon 301 stocks to add to coverage and about 350 to delete.   Almost all of the additions are in excess of $500 million in market cap and if you ever find that I do not cover a US headquartered stock that exceeds that limit, please send me an email with the symbol and I’ll evaluate it.  I have my fill of foreign-based stocks and ADRs so unless it’s a signifcant company in excess of $2 billion in market cap, I won’t consider adding it.  New stocks will be added when I give them their new signal and old stocks will be deleted when I change their current signal.   I need to do this for data integrity reasons, transparency, and to ensure the proper calculations for the HEDGEfolios Timing Indicator.   For the website to start showing a stock, I must have completed the fundamental evaluation and give it a new signal based upon my technical analysis.  About 20 of the new additions should have appeared over the previous 2 weeks of this year, but I had not yet completed their initial fundamental analysis until yesterday (note I spent about 30 hours doing the initial review on these stocks.)   Consequently, before these stocks are added, they will have to complete the signals I gave over the past 2 weeks.   Depending upon how long these recent signals last, it might be a few months before all the stocks are added.  Most of the stocks I am dropping from coverage have fallen significantly since I added them years ago and no longer exceed $500 million.   Given that most of these stocks have no (or minimal) analyst coverage, I understand that my deletions will be disappointing to some of you microcap traders.    If you are trading stocks like these, I trust that you have honed your own set of analytical tools and should not be relying on me or any other analyst.

Additionally, I am dropping coverage on 160 ETFs and am not planning to add more than a handful, if any.   The only way I’ll add an ETF is if it is unique compared to the other ETFs I cover and if it has a substantial “market cap” and is very liquid.  I used to be a fan of ETFs as a category.  However, over the past 5 years, their expansion has really turned me off.   There are way too many ETFs that cover the same baskets and they are very small in both “market cap” and dollar trading volume.   About 5 years ago, I noticed that I had to have two forms of technical analysis…1 for stocks and 1 for ETFs.   Over the years, I have mentioned how dislocated ETFs have become compared to their underlying stocks.   At times, I would see stocks changing direction up to 4 weeks later than their related ETFs and vice versa.   In the past six months, I have lost confidence in the fundamentals and technicals of many ETFs and for an increasing number of these products, I see great risks that are not being acknowledged by most of their investors or sponsors.   I recognize that my opinion on ETFs is not consistent with all the supposed experts and financial gurus that keep hyping this asset class (for their own profit).   If you are a fan of ETFs, I am sure there is an abundance of analytical tools (other than HEDGEfolios) to keep you happy.   Good luck with them.

Very few really tough questions are ever asked of the Federal Reserve and the Treasury.   Apparently, Bernanke and Geithner feel they only have to answer to the President and Congress.   We are not privy to questions the President might ask them and I don’t feel we should be entitled to invading that privacy.   And as for Congress?    That’s a joke.   Of course, that’s largely open public record and we get to see the Congressional testimony by Geithner and Bernanke on multiple networks (even though I still haven’t seen them swear to tell the truth and nothing but the whole truth).

But what do we ever learn from either the testimony or the “questions”?   If you have ever watched one of those circus acts, you’ll see a lot of political speeches and very little substance.  Usually, you see your representatives showing total ignorance of capitalism, markets, economics, finance, accounting and relevant subjects.  Occasionally, somebody like Rep. Ron Paul or Senator Bunning might have the microphone and show that at least a few of these people have the intelligence to ask insightful and tough questions.   On those occasions, both Bernanke and Geithner (as their predecessors did before them) will seem offended or just look with disdain at someone for daring to stand up for Americans and demand accountability and competence.   The answers are rarely (if ever) insightful or even come close to responding to the actual question.   As for the media, they do a great job lobbing softball questions and making sure they don’t upset the guest so they have a chance at another future useless “interview.”   In the few times somebody like Bloomberg wants to ask real tough questions that the Fed and Treasury don’t want to answer it has to file a FOIA lawsuit and you’ll get appeals from our government all the way to the Supreme Court just to avoid answering them.  So in the end, we get lies and avoidance and incompetence from the people in power.

As for the common American, Bernanke and Geithner are not accountable to us.   But we can at least ask some questions knowing that they will never be answered or answered correctly or answered honestly.   But we should ask them anyway!   I have asked questions of the Fed via their email mechanism and after a long time, got a useless response.   But I asked anyway.   I have asked more than a few painful questions via this blog to put these people on the spot and of course, nothing happened.  But I asked anyway.   It’s important to do that for several reasons.   First, it causes awareness of problems that the politicians would much rather ignore and second, it attempts to preserve one of the few elements left of our previous rights and the representative democracy I used to believe existed in this country - the right of free speech and to question your government.

I’ll keep asking the questions.

When AIG went down, the government made a lot of promises that have not been kept and made deals under powers that they do not have.   At the time, very few questions were asked.   Political leaders just rolled over and let Bernanke and Geithner and Paulson do what they wanted to do.   The media reported the garbage they were fed by the government.  And for the most part, most Americans did nothing other than say they were happy that the government was stepping in to save us.  It is only after the damage is done and we see that AIG is a bottomless pit, that AIG was used to bailout its counterparties, that taxpayers will lose billions of dollars on their AIG investment, that the NY FED led by Geithner asked AIG to withhold the truth, etc. etc. that we finally find out some of what was going on.   Now questions are being asked but after all this time and all that lost money, what will we get out of asking them?   Do you think it will undo the damage?   Do you think it will prevent a similar problem from happening?

In the AIG example, people were outraged about the payouts at 100 cents on the dollar to Goldman and other AIG counterparties.   But the money is gone.  And as Geithner said, it won’t come back.   Remember, that was about $100 billion.

Here’s a few questions on a similar but much, much bigger issue….

1) Of the $1.25 TRILLION the Fed is using to buy Mortgage Backed Securities from “Primary Dealers”, how many cents on the dollar did the Fed purchase them for?

2) Who did the Fed purchase them from exactly? (as in provide a list of names and how “much” was bought and at what price)

They will never answer those questions.   Yet, they are the same kind of questions we are asking now about AIG when that money is already gone.   Given that the Fed is suggesting it will extend and expand its MBS purchase program, wouldn’t it be nice to get the answers?

Rather than shutting down HEDGEfolios at the start of 2010 (tomorrow) as I had planned, I have decided to keep it open for a bit with a few major changes that will reduce the quality of the site.

I am no longer committed to publishing the signal changes for each week by any particular time or day.   They might come out on Monday or Tuesday or Wednesday, etc etc….so they will be of varying quality with regards to timeliness.  When I was trying to make money by selling subscriptions and trying to analyze my performance, I endeavored to get the data out to you as soon as I could.   That meant I devoted usually 20-30 hours of every weekend for the past 7 years doing my fundamental and technical analysis techniques that include such things as looking at about 30,000 to 50,000 technical indicators depending on how difficult the previous trading week was.  After the first trading day of the week, I have to go through many additional hours just to get the site updated.   Now that 2009 is complete and I have finished the year for performance measurement purposes, I feel like it’s time to ease up on myself.  I had planned to stop altogether but am willing to give this a try for a while.   It’s a hobby for me now to support my own investing career…not an attempt to treat this as a business with customers.  If you want to follow along and get some insight into what I am doing, then that’s fine.

Some other changes:

Starting with signals on or after January 4, 2010, I will NOT be posting monthly or year-to-date performance calculations.   If someone truly cares, they can take the time to do it themselves.  I will always believe in ultra transparency and all the signal data (the good and bad) will remain on this site for anyone to review.

I will not be publishing the updated HEDGEfolios Timing Indicator each week.  I’ll still be using it for myself, but I won’t be making it available here.   Consequently, the HEDGEfolios Timing Indicator chart shown on this site is not relevant after December 31, 2009.

I plan to keep coverage of about 3,000 stocks as seeing that many each week is a significant reason why I have outperformed over the years.  However, I will stop coverage on many stocks that are less than $500 million in market cap and I will add a few that have come public in the past few years that I just never added (such as Visa).   On all but a few ETFs such as (DIA, SPY, QQQQ) I will be stopping coverage once I decide to give them a signal change.   My opinions of the ETF universe has declined so much that I cannot stand covering them here.   In my opinion, except for a few quality ETFs, they are highly illiquid and not the lower risk well-diversified offerings that their sponsors have promised.  Right now, most of the current ETF signals are wrong so I don’t feel good about removing them until I complete their current signal.

I am not sure how much I will be writing.  If I have something meaningful to mention, I’ll probably put it out there.

As I move forward with this more relaxed version of HEDGEfolios (aka HobbyFolios), I am sure there will be some other changes and I’ll let you know when they happen.

Thanks for following me over the past 5 years since HEDGEfolios showed up on the Internet.

Good luck with your investing.

HEDGEfolios stock performance for 2009 (through 12/31/09 close) was up 94.89%.

Over the same time period, the S&P 500 index was up 23.49%.

At the end of December, the HEDGEfolios universe consisted of 3,090 stocks.

Commentary:  I will post a final review of HEDGEfolios performance in the next few days.  Good luck with your investing.

Here is a chart showing the performance of HEDGEfolios vs. the S&P 500:

Prior Years’ Performance:

• 2008, HEDGEfolios performance was +30.51% vs. -38.47% for the S&P 500 index
• 2007, HEDGEfolios performance was +21.78% vs. + 3.55% for the S&P 500 index
• 2006, HEDGEfolios performance was +25.54% vs. +13.62% for the S&P 500 index
• 2005, HEDGEfolios performance was +19.99% vs. + 3.00% for the S&P 500 index
• 2004, HEDGEfolios performance was +31.19% vs. + 9.00% for the S&P 500 index

Disclaimer: Nothing in my performance quoting is intended as an advertisement or in any other way meant to encourage anyone to subscribe to HEDGEfolios. These performance figures have not been audited or verified by an outside party and are NOT in compliance with the CFA’s AIMR Performance Presentation Standards. They don’t net out any transaction costs such as commissions or management fees and are not a total return calculation as I do not include dividend yields or any compounding factor. These performance figures cover a hypothetical portfolio of the entire HEDGEfolios stock universe with an equal weighting of each security. The calculation is simply the cumulative total of all gains and losses from the signals during the period in question.

I’ve heard that nobody can time the market.   I have heard that over and over.   I have heard it from academics in love with their finance theories inclusive of Efficient Markets / Random Walk.  I have heard it from supposed investment experts who hide behind buy-and-hold and index investing as a way to collect fees.  Mostly, I have heard that you cannot time the market from people who have either never tried or who tried and failed and then gave up.

Additionally, I have been told that I’d lose credibility if I ever claimed I could time the market.  If making a statement that goes against “common wisdom” impacts my credibility more than the facts surrounding my techniques and performance, then so be it.

For now, I’ll let you decide what “success” at timing the market means.   Does it mean that you have to be 100% correct every instance?   Does it mean that you have to outperform by 10%, 20%….100% compared to just following the market?

All the times I have heard “you cannot time the market”, I have never heard how they precisely define success or failure at that pursuit.

Since this site appeared on the Internet in January of 2005, I have offered the HEDGEfolios Timing Indicator as my primary indicator for market timing.

Here are 34 dates where I said the market’s direction was turning during the past 5 years:

• Bearish    February 14, 2005
• Bullish     May 31, 2005
• Bearish    September 26, 2005
• Bullish     November 7, 2005
• Bearish    April 10, 2006
• Bullish     July 10, 2006
• Bearish    July 17, 2006
• Bullish     July 24, 2006
• Bearish    November 27, 2006
• Bullish     February 20, 2007
• Bearish    February 26, 2007
• Bullish     March 19, 2007
• Bearish    April 30, 2007
• Bullish     June 4, 2007
• Bearish    June 11, 2007
• Bullish     September 4, 2007
• Bearish    October 22, 2007
• Bullish     December 10, 2007
• Bearish    January 22, 2008
• Bullish     February 4, 2008
• Bearish    March 3, 3008
• Bullish     March 17, 2008
• Bearish    June 9, 2008
• Bullish     July 21, 2008
• Bearish    September 15, 2008
• Bullish     October 13, 2008
• Bearish    January 12, 2009
• Bullish     March 16, 2009
• Bearish    June 15, 2009
• Bullish     July 20, 2009
• Bearish    August 17, 2009
• Bullish     September 14, 2009
• Bearish    October 26, 2009
• Bullish     November 9, 2009

As a secondary measure, you can evaluate the performance of all the SPY signals I have given.

• DOWN    March 28, 2005
• UP          August 1, 2005
• DOWN    October 3, 2005
• UP          October 31, 2005
• DOWN    April 10, 2006
• UP          July 3, 2006
• DOWN    January 8, 2007
• UP          September 17, 2007
• DOWN    October 22, 2007
• UP          February 25, 2008
• DOWN    June 2, 2008
• UP          July 21, 2008
• DOWN    August 25, 2008
• UP          October 20, 2008
• DOWN    January 12, 2009
• UP          March 9, 2009
• DOWN    June 22, 2009

I challenge anyone to actually compute the performance of either or both of those data sets.   You decide if that proves or disproves whether it is possible to time the market.

If you believe that the financial crisis exposed in 2007 and 2008 was just a bad dream, I can understand why you might now believe the financial fantasy….. that the system is healthier.   I’ve heard enough “expert” economists and politicians and finance / investing gurus and big bank CEOs et al say that paying back the TARP is a sign of our improvement.   Even Citi is saying that.   Do you believe all of them?

• Assurances from the same people that repeatedly denied they were in trouble in the fall of 2007.
• Assurances from the same people that misrepresented financial statements.
• Assurances from the same people that said they didn’t need to raise more capital.
• Assurances from the same people that said they didn’t need to cut their dividend for many quarters until they cut it by about a half and then by a half again and then eventually to 1 penny per share.
• Assurances from the same people that said they had written down all of their bad loans and investments each quarter for about a year.
• Assurances from the same people that said the worst was behind us and then really behind us and then really really behind us.
• Assurances from the same people that said they never needed to borrow from the Fed’s discount window.
• Assurances from the same people that said they never needed to borrow from the Fed’s PDCF.
• Assurances from the same people that said the Fed loans were well-collateralized.
• Assurances from the same people that said that they didn’t need to use a bazooka but used it to nationalize Fannie and Freddie.
• Assurances from the same people that said Credit Default Swaps were helpful to our financial system.
• Assurances from the same people that said the PPIP would clean up the balance sheets.
• Assurances from the same people that claimed they needed TARP legislation to buy toxic assets.
• Assurances from the same people that then used the TARP to force government “investments” into the biggest banks in America.
• Assurances from the same people that said they didn’t need the government’s TARP “investments”.

Of course, there are many more examples but I’ll skip them for now.  Maybe that was all just a bad dream.   Maybe it never happened.   Maybe it is just better if we forget all that bad stuff and pretend that all the lies and deceptions were meant to protect us.   The end apparently justifies the means.

Maybe it’s best to come up with an ever-popular, ever-growing financial fantasy.   The kind that says how great it is that our government created “money” out of thin air to give confidence to the world that we would not let our bad dream turn into a reality.

Let’s have fantasies that the money that really doesn’t exist was lent to financial firms that weren’t really in trouble…that was just an unfortunate bad dream.   The fantasy that bank “profits” were generated over the past 3 quarters sufficient to repay the money that the government lent them.   Oh yeah, don’t let me forget the profit we “earned” on those “investments”.   Let’s fantasize that these “profits” weren’t a result of printing money, giving it to the banks at basically zero percent interest rates and then encouraging them to buy a ton of new Treasury notes of varying maturities whereby the government pays them interest at a nice spread.   Then throw in the right to avoid marking assets to market and avoid increasing the provision for loan losses and then abracadabra you have profitable, healthy banks.

Go ahead…believe the fantasy.   Why remember the bad dream of 2007 and 2008 and early 2009?   Just believe that Fannie and Freddie are actually healthier now than they were prior to nationalization.   Believe that the FHLB system is healthy.   Believe that FHA is healthier.   Believe that the underlying mortgages are healthier now than 2007 or 2008.   Believe that the banks that actually survived are healthier because of all those fantastic profits that didn’t come from incremental loans to healthier businesses at increasing interest margins.   Believe that the bank failures are slowing and won’t get worse.  Believe that the FDIC is not bankrupt because it can borrow from the Treasury who can issue more obligations for money that really doesn’t exist.  Believe all that and anything else included in the financial fantasy because dealing with reality is just not very much fun.

For good or bad, it’s President Obama’s economy now.    Blaming what they “inherited” on Bush may have worked up until the past few weeks, but that is over.   When Geithner tries defending himself and the administration by pointing out how they pulled us back from the brink, he is making the case that the worst is behind us.   Go with that then.  Claiming victory over what happened in the past means that the future is all yours.  (Remember Mission Accomplished?)   When Bernanke tells Congress that the economy stopped its decline and is improving, he has established the turning point.   And who is responsible for the turning point??????….the current administration of course!   It couldn’t be Bush.    Hearing various administrative officials sing the praises of the improving unemployment statistics on Friday makes it clear that they think the worst is behind us for the job market.   Once again, they take credit by simultaneously mentioning the gazillion jobs they either “saved or created” with the “stimulus” plan.  Hearing the President suggest his critics should look at the rising stock market as evidence that things are better is impressive.   All that positive stuff????…that’s all this government’s doing.   All that negative stuff from before the inauguration????….that’s the past government’s doing.    So here’s to hoping they are right.   Because now that the Obama administration has taken credit for getting us back on the right track….they own the track.    And if the stock market starts to slide???  And if the economy starts to slow down again???   And if credit markets start to seize???    And if unemployment continues to head higher???  Who will get the credit for all that?

Please watch this video of Senator Corker (R-TN) asking Ben Bernanke about Section 23 A and Regulation W exemptions which allows for bank holding companies to get the Fed’s approval to allocate capital (inclusive of depositors’ money) for purposes other than what is normal.  You’ll hear Ben play down Sen. Corker’s concerns by saying thinks like…”we don’t grant those very often” and then again… “It’s not something that happens often.” and then… but if they do happen, there are  “guarantees, protections, backstops, to make sure that the bank is not at risk of taking losses.”    REALLY BEN!?!  REALLY!?!  You make it seem like there were so very few of these exemptions and that they are just typically some minor matter that is so protected that we should believe that there is minimal risk to depositors.

Please remember my post called The Ghosts of Glass-Steagall that I wrote on August 27, 2007 (before most anyone was talking about the sad demise of Glass-Steagall).  Remember what Bernanke just said yesterday about it being something that rarely happens and how the Fed and FDIC make sure to protect us.   Sure thing!!  You betcha.

Then read my followup Haunted by Glass-Steagall that I wrote on November 1, 2007.  At the time, I feared exactly what I think Sen. Corker was asking about…the risking of depositor money by bending rules that were meant to protect us, precisely at the time when the risk is greatest.

Click on these links to see how many of these type of requests were made and granted over the years.  Evaluate them for yourself.

Prior to mid-2007, the transactions are pretty much what Ben explained… a few requests, often for banks you may not recognize and often for normal acquisition purposes.
2005 click here

2006 click here

But in 2007 as the crisis hit, things changed.   The names from June on will look familiar… Wachovia, Citi, Bank of America, JPMorgan, Deutsche Bank, Barclays, Royal Bank of Scotland, Citi again.    Do you believe that it was just coincidence that all these companies showed up at the same time?   At the time, they and the Fed loved to tell everyone that the banks were “well capitalized” and we know that was not even close to being true.

2007 click here

Looking through 2008 and 2009, you see the requests begin looking more and more like 2005 and 2006.  I guess you could look at that as some kind of proof that things are not so extreme.   But it doesn’t change the fact of what happened during the crisis and it does not ensure that we won’t see the same pattern the next time we have a crisis.

2008 click here

2009 click here

The way it looks to me… Bernanke allowed banks representing about half of American deposits to put those funds at risk precisely when the system was at its most vulnerable.  It’s one more example of the regulators and especially the Fed waiving key regulations and protections when they become relevant.   Which takes me back to Senator Corker’s excellent question and Chairman Bernanke’s misleading explanation.   Bernanke pretends that Section 23A and Regulation W exemptions are rarely given or represent some minor transaction paperwork.   If you looked through the actual correspondence, is that your perception?  Bernanke’s explanation may be true for more stable times but it was untrue for the scenario that Senator Corker was specifically asking about.  Many people seem to be impressed by Bernanke’s creativity in his attempts to solve the crisis.   I am more impressed by his ability to mislead and lie without any accountability and as per Senator Bunning’s awesome statement, the ability for Bernanke to apparently say what he feels is true and be totally wrong without any accountability or consequence.

For the past few months, I have been writing very few posts…but almost everyone of them is negative.  I’ve even mentioned the word crash a few times and threw in a picture of some dummies to provide some subliminal messages.   Meanwhile, the market has continued higher.   So as you might expect, I’ve gotten my share of emails and calls asking me if I’d care to retract my negative comments or at least admit how wrong I have been.

I’ve heard this stuff before…the last time was in 2006 and the first half of 2007 (read through my archives).  Back then, some kind-hearted people told me that they were worried for my mental health because I was living in denial about how great things were and that being so negative would lead me into clinical depression (if I wasn’t already there.)   I was not offended, though I was slightly amused.

The answer to the questions about retracting my pessimistic commentary is the same answer as always and it’s really short…. “NO”.   First of all, please take a look at my performance on over 3000 stocks this year, or last year or for that matter, any year since this site first appeared in 2005.  I don’t need someone else to ridicule me into changing my mind, I can do that just fine on my own.  Regardless of my personal opinion, the signals at HEDGEfolios are a reflection of what I believe the rest of the market thinks and will do….not what I think it should be doing.   So along the way over the ups and downs of the past 5 years, I have changed my mind (on my own) based upon all the analysis I do.   Listening to people telling me that I need to cheer up or get more positive has never made me more positive and neither has it made me any more negative than I already was.

Since I was unwilling to give into the hecklers, as a concession, I’ve been asked to explain my position in detail.   I don’t need to do that.   I’ve done enough explaining on this site and I doubt it has done any of us much good.   After all the correct predictions I have made over the years, you either believe I know what I am doing or you don’t.

So rather than repeating the rationales that I wrote over the past 4 years, I’ll just give you a few hints about why I have never been so negative about the stock market.   Please search my archives for “Expected Value” (just click here).   I’ve never had a lower expected value calculation for the market than I do now.   On a technical basis, I am looking at approximately 1000 stocks that have either no support levels or very weak support levels anywhere within a 38-50% retracement range off the most recent rally (with quite a few having no support for 75-100% retracements).   I’ll give you two charts that are the poster children of what I am looking at  GOOG and AAPL.   Go through the charts on the 3000+ other stocks I cover and you’ll see what I mean…you won’t be seeing double, or triple….there are many hundreds of charts that all look the same.   As for fundamentals…at least the way I do them, this is the most overvalued market I have seen since starting this site.

I recognize that there is an abundance of happy talk experts telling you exactly the opposite of what I am saying and they might even be willing to show you fancy charts and figures that will likely impress far more than my plain comments.   Go with whatever works for you.   Unless there is an exogenous shock, I’d be surprised if we get a negative reversal before the new year.   After that, it’s only a matter of time.    In my opinion,  there is a high probability of a significant negative market event.

HEDGEfolios year-to-date stock performance for 2009 (through 11/30/09 close) was up 86.88%.

Over the same time period, the S&P 500 index was up 21.33%.

At the end of November, the HEDGEfolios universe consisted of 3,102 stocks.

Commentary: As I predicted last month, HEDGEfolios went through a lot of volatility during November …from 20% UP signals at the beginning to 74% UPs at the end.  My performance this month of +0.42% sucked compared the gain of 5.74% in the S&P 500.  I intend to remain ultra sensitive to short term changes until a clear direction appears.  Despite the 74% UP signals, my personal opinion on this market has never been more pessimistic and that includes my negative attitude prior to July, 2007.

I expect that this will be my last monthly performance report.   I do intend to have a final year end wrap up.  Good luck with your investing.

Here is a chart showing the performance of HEDGEfolios vs. the S&P 500:

Prior Years’ Performance:

• 2008, HEDGEfolios performance was +30.51% vs. -38.47% for the S&P 500 index
• 2007, HEDGEfolios performance was +21.78% vs. + 3.55% for the S&P 500 index
• 2006, HEDGEfolios performance was +25.54% vs. +13.62% for the S&P 500 index
• 2005, HEDGEfolios performance was +19.99% vs. + 3.00% for the S&P 500 index
• 2004, HEDGEfolios performance was +31.19% vs. + 9.00% for the S&P 500 index

Disclaimer: Nothing in my performance quoting is intended as an advertisement or in any other way meant to encourage anyone to subscribe to HEDGEfolios. These performance figures have not been audited or verified by an outside party and are NOT in compliance with the CFA’s AIMR Performance Presentation Standards. They don’t net out any transaction costs such as commissions or management fees and are not a total return calculation as I do not include dividend yields or any compounding factor. These performance figures cover a hypothetical portfolio of the entire HEDGEfolios stock universe with an equal weighting of each security. The calculation is simply the cumulative total of all gains and losses from the signals during the period in question.