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The 5 Stages of Grief
Sunday 22, April 2018


The five stages of grief


I think because I did a double major in Psychology and Management Studies, I often find myself looking at the psychology behind investment behaviours- making note of similarities and differences and trying to figure out why investors do things the way they do. As a result, it occurred to me recently that investors whose investments are down go through the same five stages that someone who is grieving a loss or been diagnosed with a terminal illness goes through- denial, anger, bargaining, depression and acceptance. As a financial advisor, and even as an investor, being aware of this may prevent you from making missteps along the way.


In the denial stage, you are not living in ‘actual reality,’ rather, you are living in a ‘preferable’ reality. If you receive news on the death of a loved one, perhaps you cling to a false hope that they identified the wrong person. It is similar when you investments start to go down, you may try to deny the news and press onward in an attempt to make your mental map fit what you want it to be. “This stock can’t go down. It is just a temporary situation. I should buy more!”


Once you start to live in ‘actual’ reality again and not in ‘preferable’ reality, anger might start to set in. It is at this stage that we find ourselves thinking “Why me?” and “Life’s not fair!” You might look to blame others for the cause of your grief and also may redirect your anger to close friends and family or your financial advisor. In down markets investors are too often overcome by their “loss aversion” instincts, thinking that if they don’t sell, they stand to lose more money. It is not recommended that people make any critical decisions at this stage as their judgement may be clouded by the anger.


When something bad happens, have you ever caught yourself making a deal with God? “Please God, if you heal my sister, I will strive to be the best sister and never complain or fight with her again.” This is bargaining. In a way, this stage is false hope. You might falsely make yourself believe that you can avoid the loss through a type of negotiation. “If I can buy even more of that stock I can make up for my losses when it bounces back.” This is when you will find yourself making endless “what if” statements. What if you had only done things differently?


After bargaining fails to resolve the conflict, our attention moves squarely into the present. There may be sadness and regrets, worries or intense feelings of emptiness. “What am I going to do?”



In the last stage of grief you come to an understanding that everything is going to be okay, emotions become more stable and you have a sense that life will get better. Rather than it being that we are ‘cured’, it is more that we can accept the situation and feel ready to try and move on and take action to deal with the situation.


It is at this point that people dealing with the loss of a loved one usually seek treatment from a health professional or mental health provider, and someone whose investment is down may seek the help of a financial advisor.


But my suggestion is not to wait until this stage to seek help. In the case of your investments stay in constant dialogue with your investment advisor so that they can help you to determine the appropriate action and hold your hand through the process.


Perhaps financial advisors are not so different from counsellors after all!


Toni-Ann Elliott (formerly Neita) is the AVP, Personal Financial Planning at Sterling Asset Management. Sterling provides financial advice and instruments in U.S. dollars and other hard currencies to the corporate, individual and institutional investor. Visit our website at Feedback:  If you wish to have Sterling address your investment questions in upcoming articles, e-mail us at:




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