As Spring nears and temperatures warm many begin thinking about the game of golf.  And one of the fundamental precepts of golf is to:

Play the ball where it lies, play the course as you find it…

(Source:  Wikipedia also Conversation Kindling)

We were reminded of this when reading Vincent Fernando’s post at The Money Game entitled “Markets Have Never Been Normal, So Stop Blaming The Fed/China/Goldman For Your Mistakes.”  We recommend you read the entire (short) post.

So much energy is expended in the blogosphere chasing conspiracies and bemoaning the state of the markets and economy.  The fact of the matter is that markets are always in flux and have never been “normal.”  There is always some trend purportedly distorting market prices.  The challenge for investors is sussing out those distortions.  Fernando writes:

So if you are serious about making money, then stop blaming Bernanke/China/Goldman/What-have-you. Understand market distortions as part of the terrain and just go out there and find the best deals available for your money within the current environment. With this line of thinking, if something goes wrong then there are no scape goats allowed. Because if you expect to invest or do business without the effect of market distortions, then you’re probably better off staying on the sidelines and playing chess, or becoming a rabble-rouser in politics.

We touched on this topic last year as the frenzy over high-frequency trading was at its height.  The fact is that every trader experiences losses.  Experienced traders take ownership of those losses and use them as “tuition” in their education.  Back then we wrote:

Novice traders often blame unseen forces for their trading mistakes.  The HFT meme plays right into these fears.  When trades go wrong traders should examine their system for improvements as opposed to casting blame elsewhere.  This really comes back to the question of knowing what you are doing and what you own.  No one, especially some computer, is going to do any favors for you.  Blaming a network of autonomous trading computers for your woes serves no purpose.

So to come back to the golf analogy.  The ball is the price of securities as they stand today.  You can buy, sell, short or do nothing.  The course is best thought of as the state of the economy and financial markets.  There is little or nothing you as an individual trader can do about either. You can either choose to play the trading game as it stands today, or as Fernando says best stay on the sidelines.  Because trying to validate your economic or political theories through the markets will likely lead to disappointment.