Published on Apr 28, 2026 • Updated on Nov 5, 2026
This article was written by Adem Tumerkan
Content Strategist, Dunham | 2025 ThinkAdvisor Luminaries Award Winner | 2026 Wealthies Finalist, Thought Leader of the Year | Macroeconomics, markets, geopolitics & global trends
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Behavioral finance analogies help financial advisors explain the emotions behind panic selling, performance chasing, and resistance to rebalancing. Below are seven examples for client conversations during market sell-offs and rallies, with suggested wording and guidance on when to use each. The goal is to help clients pause, understand the trade-offs, and connect their next decision to their financial plan.
Markets drop 10% in a week. Your client pulls up their portfolio. Then they call you.
You walk them through the long-term chart. Historical recoveries. The spreadsheets. The charts.
They nod - then call back two hours later asking if they should move everything to cash.
This is loss aversion - when investors feel the pain of losses roughly twice as intensely as the pleasure of equivalent gains. And no amount of logic overrides that.
Put simply, when emotions are running hot, logic tends to be the last thing that sticks.
What can? A well-chosen analogy, delivered at the right moment could help.
If you're looking for analogies that explain financial concepts - things like diversification, planning, trust services - we've covered those separately here. The ones below are for a different moment entirely - when the market is moving and your client's emotions get out of control.
But there's a second problem most advisors don't talk about - the greed side of the cycle gets almost no attention.
The clients who blow up their portfolios aren't always the ones who panic at the bottom. Actually, more often than not, they're the ones who piled in near the top - chasing returns, ignoring frothy valuations, and adding risk because markets felt unstoppable.
As they say, the steeper the climb, the steeper the potential drop. Thus, Fear at the bottom is partly a hangover from unchecked greed at the top.
An advisor who only manages the fear side is always reacting. . Trimming when things look too good, pushing back when FOMO sets in - that's what keeps clients from climbing so high that the fall becomes unbearable.
Below is a behavioral finance analogy toolkit for both sides of the cycle: what to say when markets are crashing, and what to say when they're running too hot.
Which analogy fits the conversation? Start with what the client is worried about (or tempted to do). Here’s a quick reference before we get into each one.
| Client situation | Analogy | What to say | What to discuss next |
|---|---|---|---|
| A client wants to abandon a long-term plan after a market decline. | Weather vs. Climate | “Today’s forecast doesn’t change the season.” | Has the client’s situation changed, or are recent headlines driving the decision? |
| A client wants to sell an investment because its price fell. | The Department Store Sale | “A lower price could mean a better deal—if what you’re buying still holds up.” | Have the investment’s fundamentals changed? Does it still fit the portfolio? |
| A client questions the strategy during market volatility. | Turbulence at 35,000 Feet | “The pilot doesn’t land the plane every time there’s turbulence.” | Does the strategy still fit the client’s goals, cash needs, and ability to bear losses? |
| A client checks their portfolio daily and reacts to every move. | Daily Weigh-Ins | “One weigh-in tells you less than the trend.” | What review period and measures would better reflect progress toward their goal? |
| A client resists rebalancing because markets keep rising. | Leaving the Party Before Last Call | “You can enjoy the party without staying until the lights come on.” | Has the rally pushed the portfolio beyond its intended allocation? What would rebalancing change? |
| A client wants to chase a popular stock or sector. | The Bidding War | “Winning the bidding war doesn’t mean you got a good deal.” | What expectations are already in the price, and how much concentration would the purchase add? |
| A client sees strong recent returns as a reason to take more risk. | The Car Speeding on Ice | “Speed can feel like control—right up until it isn’t.” | How would the added exposure affect losses if conditions changed? |
"Today's forecast doesn't change the season."
Weather changes day to day. Yet climate develops over decades.
Think of market pullbacks as weather - difficult (sometimes severe) but not a signal to abandon the plan. Meanwhile, long-term market direction is the climate.
Storms are just part of the climate. Not the driver.
When to use it: When a client is reacting to short-term market movement and considering a long-term change - moving to cash, abandoning their allocation, or questioning the entire strategy based on a week of headlines.
"The same stocks you owned last month are on sale today. Nothing about the business changed."
When a quality retailer marks inventory down 40%, people line up. Most clients would buy their favorite coffee at 25% off without a second thought, right?
Markets work in reverse.
Quality businesses drop 40% and those same clients want to sell - not buy more. The emotional logic is backward. This analogy flips it, helping them understand how discounts could be a significant opportunity
When to use it: When a client wants to sell a fundamentally sound holding because the price dropped sharply. Remind them that the business hasn't changed - only the price temporarily has.
"The pilot doesn't land the plane every time there's turbulence."
Your clients hired a pilot. Turbulence is part of the route. You're not claiming to control the weather - you're claiming to know how to fly through it.
This one works because it reframes the advisor's role from "I'm not a forecaster" to "I'm a navigator."
That distinction matters for client retention and trust (forecasters are only right until they're not).
When to use it: When a client is questioning the entire plan because of short-term volatility, while their actual goals and timeline remain intact.
"Your weight can change day to day. Your health doesn't."
Step on a scale every morning and the number moves - water, timing, small fluctuations. None of that tells you whether you're actually getting healthier. The trend over months is what matters.
Market prices behave the same way.
Daily and weekly moves are noisy and often misleading. The long-term trajectory is the real signal.
When to use it: When a client is checking their portfolio too frequently and reacting to normal short-term movement as if it signals something structurally wrong.
This side of the emotional spectrum gets underserved - and that's a mistake. Clients who chase overheated markets near the top buy high with money they can't afford to lose. Managing the greed side of the cycle is what separates advisors who lead from advisors who only react.
"The best time to leave is when everyone is still having a good time."
The people who leave early miss the last hour. They also miss the hangover, the broken glass, and the cab line at 2 a.m. The clients who stay "just a little longer" often ride the drop all the way down.
This analogy works because it shows rebalancing as wisdom and discipline in a relatable way. The advisor who trims exposure during euphoria is being early - and that reads as leadership.
When to use it: When FOMO is setting in and a client is second-guessing their allocation because markets are still climbing. They see others winning. They want more exposure. This is the moment to use it.
"Paying $200,000 over asking price in a hot market doesn't mean the house is worth $200,000 more."
Most clients have watched someone overpay for real estate in a hot market - and watched the regret when prices cooled. Stocks aren't different. Price and value diverge during euphoria. Momentum isn't a valuation.
The reason this analogy sticks: clients have lived it. Real estate is tangible in a way that equity valuations aren't. It grounds the abstract in the felt.
When to use it: When a client wants to chase a sector that's already had a massive run at stretched valuations. Crypto, AI names, meme stocks - any momentum-driven trade that's already priced in the good news and then some.
"Speed can feel like control - right up until it isn't."
On ice, a car can glide smoothly at high speed with very little friction. Stable, even. The faster it goes, the harder it becomes to steer or stop.
Markets in a strong run feel the same way. Prices rise. Volatility stays low. Risk feels distant. Then conditions shift and control becomes harder to maintain - faster than anyone expected.
When to use it: When a client points to strong recent returns as justification for adding risk. Low volatility is not the same as low risk. This analogy makes that distinction visceral.
The analogy is a tool. How it's delivered determines whether it lands or bounces off.
Read the room first. Let them talk. Acknowledge the emotion before introducing the frame. An analogy that arrives before a client feels heard will land as deflection.
Match the analogy to the person. The turbulence angle works for someone who travels frequently, while the bidding war angle works for someone who bought a house in a hot market. Personalization is what makes it feel like an observation rather than a rehearsed line. Generic scripts don't build trust - specific ones do.
Don't over-explain it. If you find yourself narrating the metaphor, it's probably the wrong one. The best analogies land without commentary. If it requires a paragraph of explanation to connect the dots, the client will feel managed rather than guided.
Plant them before the crisis. The most effective behavioral coaching happens during calm markets. When a client has already internalized the "weather vs. climate" frame, they reach for it themselves when volatility hits. You're working with their thinking in advance rather than fighting their emotions in real time.
For a deeper look at some of the biases driving these moments - like the endowment effect, recency bias, present bias, and the risks of information asymmetry - see our piece on here.
You've been there. The market is down. The emotion is high. And before you can say a word, you already know — they've made up their mind.
No analogy lands in that moment. No chart changes it. The window to act closed before the phone rang.
DunhamDC is built for exactly that window — the one before the call. A rules-based strategy built on the Dykmans Curve that adjusts equity exposure automatically as market conditions change. It buys fear. It sells greed. The decision is already made before the emotion arrives.
Advisors who run DunhamDC don't scramble to talk clients off the ledge. DunhamDC already adjusted — buying as fear drove prices down, trimming as greed pushed them up. By the time the call comes, the portfolio reflected reality long before the client did.
See How DunhamDC Works →What should a financial advisor say when a client wants to sell everything during a market downturn? Start by asking what changed. The client may be worried about losses, facing a cash need, or questioning the strategy. Acknowledge the concern, then review the plan. Check whether their goals, time horizon, or ability to bear losses have changed. Let that review guide the decision.
How do you explain a market downturn to a client who needs the money soon? Start with when they need the money and how that spending will be funded. The weather-and-climate analogy fits long-term capital better than money needed soon. Review available cash, planned withdrawals, and portfolio exposure before talking about patience. Near-term spending deserves its own funding conversation.
How can financial advisors respond to clients who want to chase a hot stock or sector? Ask what draws the client in: the investment case, recent returns, or fear of missing out. The bidding-war analogy can help separate popularity from value. Then talk about the position's size, downside, and effect on diversification. Bring it back to how much risk the client can afford to take.
When should financial advisors introduce behavioral finance analogies to clients? Bring them up during onboarding and routine reviews, when there's time to talk about how the client might react to losses or a strong rally. Pick an analogy that fits their experience and tie it to the plan. In a stressful moment, listen first. Then revisit that shared reference point and check whether their circumstances have changed.
This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation, or as a substitute for legal or tax counsel. Any investment products or services named herein are for illustrative purposes only and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. Always consult a qualified professional or your own independent financial professional for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance. All examples are hypothetical and are for illustrative purposes only.
Information contained in the materials included is believed to be from reliable sources, but no representations or guarantees are made as to the accuracy or completeness of information. This document is provided for information purposes only and should not be considered as investment advice.
Dunham & Associates Investment Counsel, Inc. is a Registered Investment Adviser and Broker/Dealer. Member FINRA/SIPC. Advisory services and securities offered through Dunham & Associates Investment Counsel, Inc.
