23 Oct The Dangers Of Going For It
The Dangers Of Going For It
Oct. 23, 2019
My friend has a problem.
He’s a trader, and he has big dreams.
That seems like a good thing.
The self-help industry makes $10 billion a year telling us to have goals and teaching us how to get them. Goals are the secret to life!
And he’s thinking about announcing his goals publicly.
Should he, though?
As background, my friend has had some trading success. He’s made 100% on a stock discretionarily and made 100% in a year using a strict system.
But some of his strategies aren’t beating the market this year (yet), and if you can’t beat the market, you might as well just punch yourself in the face and give up. (His words.)
So, here’s the thing. He says he’s solved his under-performing problems and now is thinking about entering a trading contest.
Why? Because it forces him to have a deadline (contest starts next January 1st), and it also publishes his results publicly.
I’ve told him he could just use something like myfxbook.com if he wants his results out there, but he thinks that’s a dumb idea. (He’s kind of obnoxious.)
I’ve asked him if he’s ready for something like this.
He scoffs. He said he’s been researching for over a year and is totally ready. That’s why he wants to announce it to the world and enter a contest.
After all, isn’t that the standard template?
Set a goal, announce it to the world, and be greeted with enthusiasm!
But there’s a dark side to talking about your goals.
The first dark part is surprising.
Studies have shown that announcing a goal can actually make that goal less likely to be attained. Studies found that the goal-announcers lacked enthusiasm after the announcement. They’ve already pictured it. It didn’t seem special any longer.
There’s also the potential of embarrassment. For example, what if you announce a goal of making 50% in a year…and end up making 37%? Making 37% is amazing, but that’s not how you might feel. You might feel like a failure. And I bet the trolls online will be happy to call you a failure.
By announcing a goal, you turn an incredible situation into an awful one.
And that’s not the worst danger.
There’s a real danger of getting obsessed with a goal and making it your identity. A goal can become a part of you, the most important part.
If that happens, goal-setters will double down when the goal looks to be unattainable. They take a bad situation and make it much worse–all for the sake of the goal.
Has this happened in trading?
Do you remember the fall of Long Term Capital Management? That was the firm who hired the smartest people in the world to run it, posted amazing results, and demanded ridiculous terms because they were the best and had figured it out.
They had a reputation to uphold. Goals to achieve.
And when their highly-leveraged positions went against them? They doubled down. They had to prove they were right. They had to hit their marks. And they went under, almost collapsing the entire financial system in the process.
What about Enron? They had quarterly goals to achieve and did everything they could to achieve them. When it looked like they wouldn’t reach their predicted numbers, they cooked the books and criminally misrepresented results. That mindset took Enron from one of the biggest companies in the U.S. to bankruptcy.
That’s what happens when goals become fused with our identity. The ending can be tragic.
What’s the solution?
Have big goals, but keep them to yourself. Put a process in place that will lead to success but maybe not hold yourself to a specific, announced number. Work hard and quietly every day and share when it’s over.
I told my friend this.
Did he listen?
No, he did not.
At least, not yet.
In our next email, we’ll go over the potential portfolio he wants to use for his big goals.
And we’ll try to convince him that there are even more problems out there than he realizes.
Talk to you soon.
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