Published on Apr 28, 2026 • Updated on Jun 7, 2026
This article was written by Adem Tumerkan
Content Editor, Dunham | 2025 ThinkAdvisor Luminary Award Winner | 2026 Wealthies Finalist — Thought Leader of the Year | Macroeconomics, markets, geopolitics & global trends
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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. But managing the greed side is the harder conversation. 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.
These are for the calls that come in during a sell-off. The goal isn't to minimize what the client feels - it's to help reframe what they're seeing so the emotional logic reverses.
"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 is loss aversion and how does it affect investment decisions? Loss aversion is the behavioral tendency for investors to feel the pain of a loss roughly twice as intensely as the pleasure of an equivalent gain. In practice, it causes clients to panic-sell during downturns — locking in losses — rather than staying the course. Financial advisors can counter it by reframing market drops as buying opportunities using concrete analogies clients already understand, like the department store sale.
What are the best analogies financial advisors can use during market downturns? The most effective behavioral finance analogies for market downturns include: Weather vs. Climate (short-term drops are weather; long-term direction is climate), the Department Store Sale (quality stocks on sale are still quality businesses), Turbulence at 35,000 Feet (volatility is part of the route, and a good pilot flies through it), and Daily Weigh-Ins (day-to-day market moves are noise; the long-term trend is what matters).
How can financial advisors manage client greed during a market rally? Managing client greed requires proactive communication before markets peak. Effective strategies include using analogies like Leaving the Party Before Last Call to frame early rebalancing as discipline and wisdom, and the Bidding War analogy to separate price from value. The goal is to help clients recognize FOMO as a behavioral bias before the emotional pull becomes impossible to override.
When should financial advisors use behavioral finance analogies with clients? The most effective time to introduce behavioral finance analogies is during calm markets. When planted early, these frameworks become reference points clients reach for themselves when volatility hits. During a downturn or market euphoria, the analogy should come after the advisor has acknowledged the client's emotion.
How can advisors use "Buy Fear, Sell Greed" with clients? Advisors can use the phrase as a simple way to explain why a rules-based overlay like DunhamDC increases equity exposure during drawdowns and trims it during rallies. It gives clients a memorable concept that maps to a real process — reducing panic calls and reinforcing discipline during volatile markets.
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.
