10 Ways to Console Yourself When Losing Money in the Markets

By Dr. Jim Dahle, WCI Founder

As I write this in March 2025, the US stock market has been diving. It does that every now and then, just like other investments. I'm often surprised by how hard that is on people, though. All of a sudden, the forums and my email box become full of questions about what to do about it. Well, it's part of your job as a long-term investor to lose money from time to time. That doesn't necessarily make it easy, though. Here are some tips that might help.

10 Ways to Feel Better About Losing Money

It sucks to lose money, but you don't have to feel badly about it if you remember these tips.

#1 Consider the Clarity of Your Crystal Ball

Part of the reason why it hurts to lose money is that you feel dumb. You feel like if you had paid more attention or paid an advisor that you could have somehow avoided being in the market when it went down. Well, guess what? Your crystal ball is cloudy. Don't feel bad. Mine is, too. And so is everyone else's. The Market Timer's Hall of Fame is an empty room. If you think you can predict the market, start journaling your predictions. Be specific. Within a year or two, you'll likely convince yourself that your crystal ball is cloudy, too.

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#2 You Don't Lose Until You Sell

You can tell yourself lies, too. This lie is quite popular and one of my favorites. Your house, like your stocks, goes up or down in value each and every day. You just don't realize it because nobody marks it to market. However, the liquidity of the stock market provides daily (and minute-by-minute) pricing on your publicly traded investments. So, you realize it when you're losing money, and it can be emotionally painful.

But you don't have to sell your stocks every day. You can own them for years before you sell. Go ahead and tell yourself that you don't lose money on your house or on your stocks until you sell them. It's not actually true; you really did lose some wealth when the market dropped today or yesterday. But it just doesn't matter all that much, so tell yourself whatever you need to feel better.

Another favorite lie is “stocks are on sale.” There's actually some truth to that. We all get excited when gasoline, food, and Broadway tickets go down in price, but for some reason, we get bummed when stocks become cheaper to purchase. But stocks went down in price for a reason—the market as a whole thinks they're less valuable than they were a few days ago. You might think the market is wrong, but the market is usually right more than the individual investor.

#3 Think Long Term

Remember your timeline. You didn't (I hope) invest money in the stock market that you need any time soon. You won't be spending this money for 10-60+ years. Who cares if it goes down in value this year, much less this week? You shouldn't. All you should care about is that it was a profitable investment from the time you owned it until the time you sold it. The truth is that you're never actually going to sell a whole bunch of your early investments anyway, at least in a taxable account. You'll be spending dividends and interest, and if you have to sell some shares, they'll probably be the high-basis shares you bought in the last few years before retirement.

#4 Tax-Loss Harvesting

Another great way to make lemonade out of lemons, at least in a taxable account, is to tax-loss harvest. You trade one investment with a capital loss for a similar but not “substantially identical” investment. You stay in the market to benefit from the almost inevitable recovery in stock prices while booking a loss you can use on your taxes. You can use $3,000 a year against ordinary income and an unlimited amount against capital gains each year. If you combine this technique with using appreciated shares (owned for at least a year) for charitable donations, it can be particularly powerful.

#5 You're Buying More Shares

Whether you are periodically investing like most who earn money every month and then put it in the market—or dollar cost averaging a lump sum of money—you get more shares for your money when the share price goes down. If your monthly contribution bought 100 shares last month, you can be thrilled that you bought 113 shares this month with the same amount of money.

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#6 Expected Future Returns Are Higher

Another cool thing about investments is that the lower the price you pay for them, the higher your expected future return. If bonds drop in price because interest rates go up, guess what? That bond now has a higher yield and a higher future expected return. Stocks work the same way. Now, you can buy a dollar of earnings from that company for $15 instead of $18. That's a win.

Real estate is similar. Prices go down, cap rates go up, and future appreciation becomes more likely. Trees don't grow to the sky. There is a natural canopy height for a forest. There's a lot more room for a 10-foot tree to grow before reaching that canopy than a 100-foot tree.

#7 Rebalance

Some people just need something to do when the market goes way down. A good written investing plan includes a provision telling you when and how to rebalance your portfolio back to its original percentages. If you feel like you need to do something, maybe check and see if it's time to rebalance. This generally forces investors to sell high and buy low, typically a good thing in the long run.

#8 Be Happy About Your Diversification

When the market dropped in early 2025, not all of my investments went down in value. Some zigged while others zagged. This is the benefit of diversification. US stocks were down, but international stocks, real estate, and bonds all went up in value. Celebrate your winners and try to forget about your losers. You know you have a diversified portfolio when you are always upset with something you own.

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#9 Consider Whether Your Asset Allocation/Risk Tolerance Was Right

Risk tolerance is revealed in bear markets. You thought you could handle a 100% stock portfolio, but now you're losing sleep at night. You just learned an important lesson. While I would rather NOT see you adjust your asset allocation in the middle of a nasty bear market, you probably should after the recovery. If you must do so now, try to only sell down to the sleeping point. Better to capitulate with 10% of your portfolio than 100% of it.

#10 Get Rid of Legacy Holdings

Some of us own investments in our taxable accounts that we would rather not own anymore, but we don't sell them because of the capital gains tax implications. These are legacy investments. Guess what? In a nasty bear market, those capital gains tax implications are decreased, and they may go away completely. That's a great time to get rid of your legacy holdings. It can be a great time to do a Roth conversion, too.

It's not fun to watch money that you used to own disappear. Stay the course and try to console yourself by thinking differently or at least find some productive portfolio tasks to do instead of selling low.

What do you think? How do you survive bear markets? Which of these techniques do you use? 

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