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Bolling: The Stages of Grief

Stocks in this article: C AIG FNM

I spend a good amount of the trading day talking to people from all walks of trading life. On Thursday I had a profound conversation with a guy I had never spoken to before.

The conference call was the result of a heated conversation I was having with a money manager regarding Citigroup (C). I was fuming about how the shorts were crushing the stock. It felt like it was Lehman, American International Group (AIG), Fannie Mae (FNM), and Freddie Mac (FRE) all over again. It felt like the market was going to zero. I was really worked up. My friend interrupted me and suggested I hold on while he put another trader on the conference call. "Paul" (not his real name) also was worked up about how the markets were acting so irrationally. During our conversation, he uttered a thought in passing, "This feels almost like someone is dying."

After hanging up the phone I looked up a book I had read years ago about grief. When my Mom passed, I was given "On Death and Dying," a book in which Elisabeth Kubler-Ross describes five distinct stages of the grieving process. Look how the stages have fit perfectly in the process of this bear market, or maybe the death of the bull market.

Stage 1: Denial

Grief: This cannot be happening to me ... I feel fine.

Market: Previous Federal Reserve Chairman Alan Greenspan, in February 2007, predicted a recession. The investment community threw up its arms in disbelief. "How could he say these things ... he is just trying to stay in the spotlight or sell books," people said. Recall too how many CEOs told us that they were not exposed to subprime assets. Denial also ran deep during the summer of 2008.

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