Yesterday, my wife and I played a round of golf with another couple at our Newark, Delaware country club.  We just happened to meet the couple when we arrived, so we decided to all play together. The husband is an engineer in the aerospace industry.  The wife happens to be my children’s pediatrician.

We were enjoying the unseasonably warm afternoon in November and as we walked down the 6th fairway, we marveled at the beauty of golf.  Even though the ball sits still and no one “defends” your shots towards the green, getting that little white ball into the hole on a consistent basis is beguilingly difficult.  This applies to weekend golfers as well as professionals: great golfers have won a major championship only to fail to make the cut in any tournament, large or small, in subsequent years.

Golf and trading share many similar characteristics.  In order to perform them well, you need a certain level of skill.  Like being good at accounting or cooking, being good at trading requires some level of knowledge.  Unlike accounting or cooking, a baseline level of knowledge is insufficient to guarantee success because golf and trading require something extra: a mastery of self.  These types of pursuits require a lifetime of learning and practice.

Taking What the Market Gives You

There is an old saying that traders have to “take what the market is giving.”  When the markets are not providing consistently good profit-making opportunities, we have to be satisfied with smaller profits or even holding our own (not giving too much back).

Like good golfers, good traders don’t win every time.  In fact, I wrote a few months back about legendary traders who were down 30 – 40% for the year. Across the board, many top traders and funds are still struggling.  As of the close on November 18th, the Dow Jones Credit Suisse Core Hedge Fund Index is negative 6.27% on the year.

That brings us to a very seasonal thought for those of us in the US.  Five weeks ago, our neighbors to the north celebrated the Canadian Thanksgiving holiday.  And this coming Thursday, Americans will take time out to give thanks as well.  Among delicious turkey dinners and the hope of good football games (What? The Detroit Lions are actually good this year?), we can pause to express our gratitude for so many gifts.

If you’ve had a rough year in the markets, relax.  It’s been a rough year even for the best traders.  Forgive yourself for your performance, endeavor to learn from this year’s trading, and be thankful that we are able to participate in free markets. 

Regardless of whether you’ve had a great year or one that was less than stellar, the ability to trade the markets provides benefits for which you and many others can be thankful.  Be grateful that by supplying liquidity and risk capital, YOU are providing a valuable service to our economy.  Your role as a speculator provides the grease that makes the economic machine run more efficiently.  Because of you, transaction costs are lower for long-term investors, and more investors can be involved in the markets.  Because of you, consumer prices are lower since markets are more efficient. Because of you, credit and equity are available to companies that need it to sustain or grow businesses.

Beyond being grateful that you play an important economic role as a trade, you can step back and be truly grateful for every breath you take, every hug you give or get and every life that you touch.  Thanksgiving is more than a holiday.  If you allow it, thanksgiving can become a way of life.  Someone you know needs a hug, a kind word or a phone call that’s been put off for too long.  Don’t wait; go give someone else a reason to be thankful right now, while you’re still thinking about it.  That would be the best Thanksgiving celebration you could give yourself.

To sum up,

1. Know that as a speculator you provide a valuable service to society. 
2. Remember that as a person, you can make each day a Thanksgiving Day by doing something to make someone else feel thankful. 
3. Allow yourself to enjoy being grateful (it really does feel good!).
4. Lather, rinse, and repeat. (Do this process over and over.)

Great Trading,
D. R.