Every investor knows the markets can be unpredictable. Still, when losses actually hit, the emotional toll can feel overwhelming. The natural instinct is to either panic-sell or completely ignore the portfolio. But according to Josefino Gomez, a Registered Financial Planner (RFP), neither approach works.
In an interview with Financial Adviser PH, Gomez explained that the key to recovering from losses is not to react blindly but to reset properly.
“Losses are part of investing. What matters is how you respond to them,” Gomez said. “Your first steps after a setback can determine whether you recover stronger—or stay stuck in fear.”
Here are the first moves Gomez says every investor should make after a loss.
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Take a Break
When portfolios are bleeding red, emotions run high. Gomez believes the very first step is to step away.
“Take a pause. Even a short break or vacation can clear your head,” he said. “You can’t make good decisions if you’re in panic mode. Time off prevents knee-jerk reactions that often lead to bigger mistakes.”
By detaching briefly, investors give themselves the space to return with a calmer, more objective mindset.
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Take Responsibility
It’s tempting to blame the market, global news, or even bad luck. But Gomez stressed the importance of accountability.
“You have to own up to your role. Were you following your plan? Did you rebalance when you should have? Did you reduce risks appropriately?” he asked.
Taking responsibility doesn’t mean beating yourself up. It means acknowledging that your actions—or inactions—played a part. This mindset shift is empowering. “If you’re part of the problem, you’re also part of the solution,” Gomez said.
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Assess and Fix
Losses can be painful, but they can also be valuable teachers. Gomez encourages investors to analyze what went wrong and extract lessons.
“The bigger the loss, the stronger the lesson,” he said. “But you don’t have to learn only from yourself. Read, find mentors, and learn from others’ mistakes too.”
This process includes:
Reassessing each position in your portfolio.
Asking if the original reasons for buying are still valid.
Deciding whether to hold, cut, or even add to a position.
Markets evolve, valuations change, and sometimes an investment no longer makes sense. Other times, a solid company becomes an even better buy at lower prices. “Don’t let losses define you,” Gomez said. “Let them guide you to make sharper, smarter decisions.”
The Power of Reflection
Gomez emphasized that this stage—pausing, owning up, and reassessing—isn’t just about recovering losses. It’s about developing resilience.
“Every downturn is a chance to sharpen your skills and build maturity as an investor,” he told Financial Adviser PH.
By treating losses as tuition fees for long-term wisdom, investors not only protect their future portfolios but also build the emotional toughness needed to withstand inevitable market cycles.
Final Takeaway
Investment losses are unavoidable, but they don’t have to be permanent setbacks. The early steps you take—stepping back, taking responsibility, and learning from mistakes—can reset both your strategy and your mindset.
“Investing is a journey,” Gomez said. “Sometimes you earn, sometimes you learn. Either way, you keep moving forward.”
