I “overdo” it sometimes with the signals. Sometimes I “underdo” it. One situation causes too much turnover, another causes too little, both usually cause a hit to performance.

Last week, I changed a lot of signals to DOWN while working on Getting Centered and this week, I changed more signals(209) to UP vs. DOWN(152). However, this ratio is misleading.

It is very very rare for me to change the signal on a stock in two consecutive weeks. This week, 45 of the “new” UP signals were “new” DOWN signals last week and 98 of the “new” UP signals were “new” DOWN signals two weeks ago. Of these 143 signals, 71 were losers averaging -5.8% and 72 were winners averaging 4.71%. Without these short term reversals, previous weeks would not have been so negative and this week would be more negative than it looks.

What to make of this? This market is very difficult, almost as tough as it was for me from November until mid-March. Under these circumstances, my normal portfolio management rules against changing signals on the same stock in consecutive weeks has to get thrown out. During these times, I work on my humility and find it much easier to admit when I am wrong and I have no problem “Undoing The Overdone.”

I apologize for anyone following the signals at HEDGEfolios. I hate turnover, especially when it gets excessive. This turnover is “excessive” and abnormal, but I expect it to continue until the sideways movements and volatility subside. I have no idea how long that is going to last. It has been going on for 3 weeks and the last time it persisted for about 4 months.

There is a very big battle going on right now to decide whether the market will retest lows or push higher. As a consequence, we get extreme volatility. I am never “neutral”, and the HEDGEfolios bias tells me to err on the side being Bullish. However, I much prefer to hang around the middle so I can adjust from week to week.