30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances

Preface

Investors are motivated by fear and greed, the saying goes. But I saw another emotion on display in the 2008 bear market: grief. And it played out exactly the way psychiatrist Elisabeth Kübler-Ross documented back in the late 1960s.

The first stage, denial, was widespread during the late 2007 through early 2009 downturn. Countless friends, colleagues, and Morningstar readers told me that they weren't opening their investment statements, as if not seeing their losses in black and white would make it all go away.

Others got angry (the next stage), and there were certainly plenty of targets available during the recent debacle. Choose your culprit: reckless lenders, greedy investment firms, and consumers signing up for loans that they knew they couldn't possibly afford. All had a hand in causing the worst stock market calamity since the Great Depression.

Bargaining is the next phase, and while it's less common than the other stages of the grief process, I've seen that in action, too. Many investors have told me that they're hanging on to stocks that they know are too risky for them in the hope of getting back to the price where they bought them. Another couple in their early sixties acknowledged that they have too much of their retirement kitty in stocks but they're determined to hang on. They say that they'll switch to a more age-appropriate mix just as soon as their portfolio gets back to the high point it scaled in 2007.

There have also been plenty of depressed people walking ...