The IFD Trap

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I wanted to share some thoughts on a topic not directly related to trading. I don’t want to take credit for something I didn’t conjure up, since the late Dr. Wayne Dyer originally put the thought in my head, but it has been a persistent notion for me that I would like to share. It’s called the IFD syndrome.

Dyer described it as “the psychology of tomorrow”, and in my experience, it’s something a lot of people practice. Let’s face it, life isn’t easy, and a lot of people need something to look forward to in order to get through each day. I’ve heard it from friends all my life: about a forthcoming vacation, or a prospective promotion, or maybe a new car they’re expecting (that never seems to materialize). “I need something to look forward to.”

The three letters of IFD stand for the following:

Idealize: This is the stage where you think to yourself, “Won’t it be great when ____________________” The blank space could be just about anything as you age through life, such as “Christmas is finally here’ or “I start high school” or “I graduate this stupid high school and go to college” or “I get married” or “I have my first child” or “I get divorced from this miserable marriage” or “I get that big promotion” or “my company goes public.” You name it. There’s always some happy event in the future that, you believe, Will Make Things Better Than They Are Now. You anticipate it. You count the days. You can hardly wait until it’s here.

Frustration: The day arrives. Whatever it is you were anticipating is finally here, at long last. Perhaps there’s a sense of relief or exhilaration. You are, in fact, happy, just like you thought you would be. And then, sooner than you dared imagine, it starts to fade. The Christmas presents aren’t as fun as you hoped. Being in college and away from your parents isn’t all that great. Being married isn’t what you thought it would be. Having a child isn’t an endless chain of bliss. You’re upset. You’re let down. You’re disappointed.

Disillusionment: Which brings us to the third letter, D, for disillusionment. You can’t understand why This Great Thing you anticipated didn’t give your life unending bliss. This was supposed to change things. This was supposed to make everything better. And it didn’t. So what do you do to address your bad feelings? How do you cure your emotional ills? Simple! Please return to the top of this triad, and Idealize something else.

Perhaps you recognize yourself in this, and it can certainly apply to trading as well. I’ve done it myself in the past: “Won’t it be great when QE ends in October 2014, and then the markets will return to normal and we can start making some money again?” I practically counted the hours down, and, well, it wasn’t what it was cracked up to be.

Or, at this very moment, “Won’t it be great when September 30 is here, and I can close out a really good quarter and stop worrying so much about something ruining my quarterly results?” That day will come and go, and it won’t mean anything anymore.

I think it’s instructive for us to reflect on IFD in our own lives and try to think differently. It took me thirteen years to build Prophet into something that someone wanted to buy. As we approached our buyout date (January 26, 2005), I was exultant. I was going to have more money than I had ever had in my life. And the day came, and I excitedly looked at my big bank balance, and I reveled in the phone calls that started coming in from bankers who wanted to manage my money.

But after a few days…………nothing. We all experience hedonistic adaptation, and whatever our “new normal” is loses its novelty. I’ve read about this from people who have had big paydays that completely dwarf my own. So, in my own life, my next big financial event is going to be the hoped-for public offering of a company I invested in back in late 2005. If that goes through (which, ironically for me, sort of requires a strong stock market) it’ll make me more money than Prophet ever did, but you know what? It really isn’t something I’m all worked up about because, frankly, if and when it happens, I won’t be much happier than I am right now. Just more financially secure. Nothing else.

I offer this simply to suggest you understand the syndrome. Stop thinking tomorrow is going to save you or change you. Let’s try our best to keep our eyes on where our feet are falling in front of us today.