What Hercules, Greek Mythology, and Behavioral Finance Can Teach Investors About Market Declines- Part 2
Source: Movie Posters Etc.
In Part 1, we framed our discussion about typical emotional responses to investing through the characters Pain and Panic from the Disney movie Hercules. If you did not get a chance to read this blog, you can review it at the link below.
Source: Wikipedia Fandom
Pain is the Price of Admission
In Part 1, we talked about Pain. Not physical pain. Investment pain.
In fact, if you have been invested for any meaningful length of time, you know that pain is simply part of the experience. It's the price of admission that every investor pays in exchange for the opportunity to participate in the long-term growth of markets.
Panic is different.
If Pain is the emotional discomfort investors feel during market declines, Panic is what happens when that discomfort takes control of decision-making.
In Disney's Hercules, Pain and Panic worked as a team. One created the discomfort. The other amplified it into chaos.
Investing works much the same way.
The market declines. Portfolio values fall. Headlines become increasingly alarming. Financial television begins treating every red day like the opening scene of a disaster movie. Then something subtle begins to happen. Investors stop asking whether their long-term plan is still sound and start asking a very different question:
"What can I do to make the Pain stop?" In other words, don't just sit there feeling bad while your portfolio drops in value, do something.
That question may have destroyed more wealth than recessions, wars, inflation, or bear markets ever could.
The reason is simple. Pain is temporary. The actions that accompany Panic often create permanent consequences.
Those actions are completely the opposite of thewisdom Charlie Munger, Warren Buffett's longtime partner, repeatedly dispensed to people who want to be successful in their investing endeavors:
Source: x.com
Over the course of nearly four decades working with investors, I have witnessed this cycle repeatedly. The names and circumstances change, but the emotional script remains remarkably consistent.
I heard it during the technology bubble collapse in the early 2000s. I heard it again the next year after 9/11. I heard it during the Financial Crisis. I heard it during COVID. I heard it during the inflation and interest-rate shock of 2022. I heard it during the tariff-driven volatility of 2025.
As I shared with you in Part 1, the conversation is almost always driven by Pain first, closely followed by Panic.
"Maybe we should sell everything and wait until things calm down."
On the surface, that sounds perfectly reasonable. After all, who wouldn't prefer to invest when uncertainty disappears?
One thing that has always fascinated me is that investors happily buy assets when prices are rising but often want to sell them when prices are lower. If they liked the investment at $100, you would think they'd love it at $80. Financial assets may be the only thing Americans don't enjoy buying on sale.
Let's turn to Warren Buffett for his thoughts about buying when prices our lower:
Source: x.com
It seems that Mr. Buffett loves having the opportunity to buy things when prices are lower.
The primary problem with waiting for things to calm down, is that the markets probably won't wait with you.
One of the most frustrating realities of investing is that recoveries typically begin long before investors feel comfortable enough to participate in them. Markets are forward-looking and typically begin discounting future economic growth and rising corporate earnings six to nine months before they appear in the economic data.
Think back to March 2020. Businesses were closing. Millions of Americans were losing jobs. Entire industries were effectively shut down. Nobody knew how long the pandemic would last or what the economic consequences might ultimately be. If you were looking for reassurance from the headlines, you weren't going to find much.
Yet that was precisely when the market began recovering.
While headlines remained overwhelmingly negative, investors began recognizing that Congress and the Federal Reserve were throwing enormous resources at the problem. The markets realized that governmental forces were not going to let things devolve into an economic depression and started recovering long before the economic data improved.
The same pattern has played out throughout history. Markets bottom before the economy improves. Markets recover before confidence returns. Markets begin moving higher while investors are still gripped by Panic trying to figure out whether the worst is yet to come.
This creates one of the cruelest ironies in investing. The moment many investors finally feel comfortable buying again is often the exact moment when a large portion of the recovery has already occurred.
Panic doesn't understand this because Panic assumes that clarity arrives before opportunity.
History suggests the opposite. Opportunity often arrives disguised as uncertainty.
This is why selling during a decline creates a challenge that many investors fail to appreciate. The decision to sell is only the first decision. Eventually, a second decision must be made.
When are you going to buy back in... and at what price? And that second decision is usually far more difficult than the first.
If the markets do indeed continue to cascade lower, giving you an opportunity to buy at even better prices, will you have the courage and intestinal fortitude to buy when things feel even worse than they do now.
And if the markets do what they normally do, which is begin moving up before the economic news gets better, will you realize your worst fear and have to buy back when stocks have moved higher?
What, then, causes the investor to buy? The answer is often nothing. At least not for a long time.
Many investors discover that it is far easier to decide when to get out than when to get back in.
Eventually, the market begins recovering. Then it continues recovering. Months pass. The investor becomes increasingly frustrated as prices rise without them. What began as fear slowly transforms into regret.
The emotional burden shifts from worrying about losses to worrying about missed opportunities.
Ironically, this is often when Panic changes costumes. At market bottoms, Panic tells investors to sell. During recoveries, Panic tells investors they have missed their chance.
Both messages are equally destructive.
Behavioral economists have long shown that investors feel losses far more intensely than gains, which helps explain why Panic becomes so persuasive during market declines.
Our brains evolved to protect us from threats.
Unfortunately, the same instincts that helped our ancestors survive dangerous situations often work against us in investing. The market falls and our brains immediately begin searching for safety.
The challenge is that safety and success are not always the same thing.
Some of the strongest market advances in history have occurred during periods when uncertainty remained extraordinarily high. Investors who waited for an official declaration that everything was okay frequently found themselves watching the recovery from the sidelines.
The financial media doesn't make this easier.
Modern investors are exposed to a nonstop stream of information, predictions, warnings, forecasts, and breaking news alerts. Every market decline is framed as historic. Every setback is urgent. Every commentator seems convinced that this particular crisis is unlike any crisis that came before it.
Please don't confuse having access to information with possessing the wisdomto know how to use it... especially during stressful situations. I believe all modems should come with a warning label, " Wisdom sold separately".
However, the reality is far less dramatic. Human beings have always faced uncertainty. Markets have always climbed walls of worry.
Every generation eventually becomes convinced that its challenges are uniquely dangerous, yet markets have historically continued to reward disciplined investors who remain focused on the long term.
As you can see in our last chart today, just since 1987, which happens to coincide with the year I started as a financial advisor, we have experienced 17 different geopolitical and economic crises. When you throw in healthcare crises, such as SARS, avian flu, swine flu, and COVID-19, the count moves up to north of 20 potential times to panic in just under 40 years.
That doesn't mean every recovery is immediate. It doesn't mean every decline is shallow. It certainly doesn't mean investing is easy. But one thing you will recognize in the chart above, after every panic induced downturn, markets moved on to new highs, and investors saw their assets grow... at least the ones who didn't let Panic rent space on their mental shelf.
But discomfort and catastrophe are not the same thing. The lesson isn't that declines feel good. They don't. The lesson is that investors who panic during declines often transform temporary losses into permanent ones.
Panic focuses on the next headline. Successful investors focus on the next decade. Panic demands action. Discipline demands patience. Panic wants certainty.
Investing requires faith that the future will eventually be better than the present, even when today's evidence feels incomplete.
The Greeks understood something profound when they personified emotions like fear and dread. Those emotions often arrive before the battle begins. They cloud judgment. They distort perception. They convince people that retreat is the safest option.
Investors face the same challenge today.
Pain will visit every portfolio eventually. Another correction will occur. Another recession will arrive. Another crisis will dominate headlines. Another generation of experts will explain why this time is different.
And when that happens, Panic will once again start whispering: Sell... Wait... Hide... Come back later.
History suggests those whispers should be treated with extreme skepticism.
Pain may be the price of admission. Panic is often the cost of surrender.
The investors who ultimately succeed are not the ones who never experience fear. They are the ones who learn how to hear Panic's voice without handing it control of the portfolio.
As always, our goal is not to predict every twist and turn the market may take in the coming months. Our goal is to remain disciplined enough to participate in the opportunities that the coming years may provide.
That is how we help you accumulate and grow the financial resources you need to live the life you want. That's also how we keep "Moving Life Forward".
© 2026 Jesse Hurst
Senior Wealth Manager
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