Coping With The Guilt Of Losing Money

By  THE INVESTOR 

I accept it’s normal to feel frustrated, angry, or even downright stupid when you lose money on your investments.

But what about guilt?   My portfolio’s fall from its peak value in summer 2007 to a low in October 2008 represents a big loss for a 30-something private investor like me: at least a couple of years of after-tax income in cash terms.  More importantly, the losses meant I had fewer options in October 2008 than the year before. I’d originally begun investing to build up a house-buying war chest for when the over-valued housing market corrected itself.

After several years waiting, house prices were finally falling, but my investments had fallen further.  It was my sister who put it simplest and best, when I explained to her my fate:

“Ah, I see. If only you’d sold all your investments and put the money into a savings account! Now you’d have even more money, and you could buy a cheaper house.”

My sister was a 100% right.

Being told what I did wrong by my sister, who takes no real interest in money, might have hurt my pride. But then my emotional state has taken several turns during the bear market. I’ve felt:

Frustrated:  After half a decade of waiting for property prices to fall and saving as much as 50% of my annual after-tax income, I’d thrown away my ticket to the ball.

Angry:  At the world, and at the markets. What were the chances of a once in a hundred year credit crisis coming along just when I was finally getting ready to buy a house?

Foolish:  If I’d thought property prices would fall so far, how could I have missed the connection with the stock market? Wishful thinking, perhaps?

Guilty:  My family background is not a wealthy one, and the money I’d lost was modestly substantial – more than my parents’ life savings. What was I thinking playing roulette with the market and exposing myself to such losses?

Despite these churning emotions, I didn’t sell up in despair. Instead, I kept buying while shares were cheap. I did what history and the likes of Warren Buffett say you should do – hanging in and even buying when others were fearful.

Time will tell if this faith in the stock market simply compounds my losses or leads to a recovery, but I’m glad I’ve stuck to the rational line.

Here some tips that might help you if you’re also feeling guilty or giving in to bear market despair.

1. Don’t take it personally

The stock market doesn’t know or care that I was saving money for a house, or what I’d given up. The world is a billion times bigger than our own investments, and our good or bad decisions. Market declines of 40% will leave anyone’s portfolio battered. A bear market is not your fault.

2. Accept declines are as inevitable as gains

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