Going Through the Five Stages of Grief

In my book, Invest Like a Shark, I discuss how the emotions we experience during a market downtrend are very similar to the five stages of grief that were identified by Dr. Elisabeth Kubler-Ross when we experience a loss like the death of a loved one.

The five stages of grief are denial, anger, bargaining, depression and then finally acceptance.

It doesn't take a lot of imagination to see how those emotions have manifested themselves in this market. Denial is generally the most costly because it takes a very long time for people to even admit that market conditions have changed. We certainly have seen plenty of anger later.

I think of the numerous commentators who tell us to "stay the course" as being engaged in bargaining behavior. If we just hold on to our stocks and ignore this awful market, everything will be fine. We don't want to really address the issues. We want to find ways to hope it away.

I'm certainly getting a sense of some depression, and that means that acceptance may not be too far off. Acceptance won't mean that the market will start a new bull market, but it will help us stabilize and give us better trading. It has been a painful market for a while now, but eventually we'll come to grips with it and our chances to make money will improve.

We are seeing a little upside as I write, but the volatility in this market is likely to stay very high. That means you should take profits when you have them. My Shark Investing Stock of the Week, the Ultra Semiconductors ProShares (USD - commentary - Cramer's Take), which is double long chips, is perking up; I'm doing some flipping into the strength.

Long USD

ALL REV SHARK BLOG ENTRIES | POST A COMMENT | READ COMMENTS  

---

James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.