Understanding the Five Stages of Grief: What to Do When Your Investments Are Losing Money
Updated: 2022-05-13T13:28:33Z
minute read


The election had ended. Unfortunately, not all of our chosen candidates gained the needed votes to hold office. Some are at a loss. Some are not. However, some are even in worse shape because their investments are losing too.


Understanding the Five Stages of Grief: What to Do When Your Investments Are Losing Money
"watching-stocks-on-mobile-phone" by Olya Kobruseva is licensed under CC0



    If you haven't heard the news, the stock and crypto markets are at a frenzy and bottoming. The big whales who are backed by seasoned traders and algorithms are able to get out.


    However, the retail investors like you and I were not so lucky.


    We know that some losses are uncontrollable, like a loss of a loved one. You need to accept it regardless of how hard it is.


    But when it comes to investments, you do have some degree of control over it. It is through Risk Management.


    Read Article: Master the Art of Risk Management in the Stock Market


    Even if you are ready to weather the storm, sometimes, if not most, market forces will creep their way into your portfolio to suck it dry.


    Too late for your risk management setup to kick in.


    If that happens, you will be in limbo with the five stages of grief.





    Even if the world is telling you that the market is bottoming, you still convince yourself that it is just a little dip.


    It will bounce back.


    More often than not, your assumption will be wrong. The market is not fond of listening to your feelings.


    It has its own.





    Now it is clear as day that it is bottoming when your portfolio is at a 50% loss.


    You will likely find someone to blame. It may be your laggy platform, big whales shaking the boat, or the recent election? (partly true if you are locally invested), and even to yourself.


    Be accountable.


    You know for yourself that it is you. And you alone are responsible.





    The market bottomed again. Others are securing their life vests while you are still paralyzed with what happened.


    You convince yourself that if the market rises at least 10%. You will secure your life vest.


    But before the day ended, the market bottomed again. Your account is now at an 80% loss.





    This is the stage where you don't care anymore.


    You don't open your portfolio account and at least try to mitigate the problem.


    You say to yourself, that 80% loss is as good as losing 100%.





    This is where you fully accept that you've lost.


    Your head is now clear of what to do next. Be it salvaging what is left on your account or being more observant of the market signs.


    This is where you learn your lesson, but with a high tuition fee.


    However, you are now equip with the knowledge and experience of how to deal with it next time.


    Your weakness today will be your strength tomorrow.



    Closing Thoughts


    Dealing with investment losses will not be the same for everyone. This is true if what you are losing is money that is not intended for investments.


    This is why it is important to allocate disposable money to volatile investments like stocks and crypto. Money, even if incurring a loss, will still let you sleep at night.


    Managing your risk is the only way to lessen the impact of market losses.


    Before entering a trade, make sure to have the following:


    1. Properly researched Stock or Crypto
    2. The amount that you are investing per Stock or Crypto
    3. The amount that you are willing to lose. For example, 10,000 for every 100,000
    4. Knowing when to enter
    5. Knowing when to get out


    In the face of market uncertainty due to national and international forces, make sure that you are protected.


    Protect your capital by doing risk management, just as you tried protecting your freedom by voting.




    What you should do today


    What are your Risk Management Techniques? Share your perspective in the comments below.


    Did you know that an 80% loss takes 400% profit to break even?


    Read Next Article: Break Even Point Calculator: Percentage Gain and Loss


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    "But, in a larger sense, we can not dedicate, we can not consecrate we can not hallow this ground. The brave men, living and dead, who struggled here, have consecrated it far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us that from these honored dead we take increased devotion to that cause for which they here gave the last full measure of devotion - that we here highly resolve that these dead shall not have died in vain that this nation, under God, shall have a new birth of freedom, and that government of the people, by the people, for the people, shall not perish from the earth."
    - Abraham Lincoln
    - The Introvert's Perspective by ÆlfRæd (ElfCounsel)
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