As part of an ongoing series of articles I have been writing about 11 "Rules for Trading" that I have developed. In last week's edition of the Sterling Weekly I covered my Fifth Rule of Trading, "If a stock or option does not move as you expect within a few days then look to exit the position." This week I am going to discuss my Sixth Rule of Trading, "Do not become emotionally attached to an investment!"

When an investor or trader will become emotionally attached to an investment or trade all the emotions that you strive to remove from the decision making process become a factor and they cause you to stop paying attention to any of the rules, methods, or anything else that has allowed you to be a profitable trader or investor. They are all bad, and do not help your efforts to maintain profitability. Fear of taking a loss will cause you to hold onto a stock that has moved against you and increase your losses. Greed will cause you to hold a stock you should be looking to take profits in because you want it to go higher. Insecurity will cause you to sell a stock before you should. I have seen investors and traders become emotionally attached to the idea that a certain sector of the market or a commodity was going to skyrocket in value and as a result they invested in stocks with very bearish chart patterns. Just think of all the people who bought gold stocks during the decade long bear market in gold. All that capital became nonproductive and wasted away. Or the large number of people who where buying Yahoo on the dips when it was coming down from its highs of $250/share.

In order to be a successful trader or investor you must be able to remove your emotions from the decision making process! It doesn't mean you should not trust your instincts, but know the difference between instinct and emotions.

I find it more than somewhat ironic that the head of the California retirement pension plan (CALPERS) is calling for NYSE Chairman Dick Grasso to resign from the NYSE when they do not have any money invested in the NYSE nor do they represent any of the represent any of the employees of the NYSE. Yet, they are not calling for the resignation of California Governor Gray Davis who has bankrupted the State of California and continues to give away state's money through executive decisions to anyone he thinks will accept a handout and vote to keep him in office during the upcoming recall election, and thus directly effecting the lives of people who pensions they are managing. On second thought, it is very hypocritical on their part and is an example of what happens when politics overly effect the management of an important office such as the giant CALPERS retirement fund.

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Today's Opinion: Closed @ 1,029.32 Current Expections: I am still expecting the S&P 500 to test 1,057.86 over the intermediate term.