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If you've owned stocks for more than the past few months, then you're well aware of just how rough a road shareholders have had to walk lately. Even some of the best companies have seen their shares get hammered, and more than a few have given up the ghost entirely.

But even if you've faced some significant losses over the past year or two, you don't have to give up on hopes for a prosperous financial future. The key is to come up with a long-range plan for your investments and to stick with it through rain or shine.

Dealing with the inevitable
If you invest long enough, you're inevitably going to run into your fair share of stock market disasters. Sometimes, a brutal bear market will knock down your entire portfolio. On other occasions, some piece of bad news will have a uniquely large impact on one particular stock that you own, causing such a big loss that it may have a major effect even on a well-diversified set of investments.

Lately, even well-regarded companies have struggled with huge share losses. Just take a look, for instance, at the returns of some of the stocks that members of our Motley Fool CAPS community saw as highly attractive opportunities one year ago -- and still see as promising today:

Stock

CAPS Rating,
1 Year Ago

Current CAPS Rating (out of 5)

1-Year Return

General Electric (NYSE: GE  )

****

****

(55.4%)

Chesapeake Energy (NYSE: CHK  )

*****

*****

(56.2%)

National Oilwell Varco (NYSE: NOV  )

*****

*****

(49.7%)

Alcoa (NYSE: AA  )

****

****

(63.9%)

Nokia (NYSE: NOK  )

****

****

(49.4%)

Leucadia (NYSE: LUK  )

****

*****

(46.6%)

Shaw Group (NYSE: SGR  )

****

****

(49.4%)

Source: Motley Fool CAPS, Yahoo! Finance.  As of July 23, 2009.

If you've been a shareholder in these or countless other stocks that have seen large drops during the bear market, then you might feel as though you have no control over your financial fate. But nothing could be further from the truth. What you need to do to get back on your feet boils down to three simple steps:

  • Figure out your time horizon.
  • Decide how much you should invest in which types of investment assets.
  • Keep investing costs to a minimum.

But what about the money I've lost?
There's no denying that the drop in the stock market over the past two years has been particularly harsh for investors. But you're definitely not the first person to experience significant financial losses. Whether it's the Great Depression of the 1930s, the energy crisis of the 1970s, the 1987 stock market crash, or the tech bust earlier this decade, investors just like you have lost huge sums of money. Yet each time, the best investors have picked up the pieces, learned from their mistakes, and continued on an even better path toward recovery.

Moreover, think about some of the greatest investors you've ever heard of -- people like Warren Buffett or Benjamin Graham, to name just a couple. Not only did they make their way through difficult financial times; they downright thrived in them, finding ways to preserve capital that helped them stand head and shoulders above their peers. 

By having the courage to stick with their investing strategies even in the face of losses, they not only ensured the eventual recovery of their portfolios, but also improved their overall returns in the process.

Get started today
To ensure your success, though, you really need to plan ahead. Without a plan, you won't know how to deal with the losses you suffer from time to time -- and the resulting uncertainty could snowball into a huge financial mess.

Fortunately, it's easy to find all the tools you'll need right here at the Fool. From advice on asset allocation to tips on all sorts of different investments, you can fill in whatever knowledge gaps you have and figure out the best way to go forward.

So stick around for a while. You'll end up reaping the benefits of your labors for decades to come.

For more on retiring rich, read about:

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Fool contributor Dan Caplinger is a born planner. He owns shares of General Electric and Chesapeake Energy. Leucadia National and National Oilwell Varco are Motley Fool Stock Advisor selections. Chesapeake Energy and Nokia are Inside Value recommendations. The Fool owns shares of Chesapeake Energy. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy helps you seize the day.


Read/Post Comments (3) | Recommend This Article (26)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 24, 2009, at 4:29 PM, KeithHiggs wrote:

    "What about the money I've lost?"

    Well, if you've had the good sense to hold companies that are down with but not in drastic excess relative to the market at large all of your losses are on paper only.

    If your horizon is still some years away - re-examine your holdings as though you are just purchasing them now - in today's market - and make your own judgement regarding future value expectations. In that light the smart move very well could be to follow Warren B's advice of "Don't just do something, stand there."

    Additionally, now may be the perfect time to be acquiring additional shares at fire sale prices relative to both your original purchase, and future value.

  • Report this Comment On July 24, 2009, at 9:16 PM, SissyTheClown wrote:

    Telling people to hold fast and wait it out is all well and good; but, what about us folks who were forced to retire this year when our 401Ks were down almost 50%. We don't have the option of waiting it out...we must put that money in annuities because we can't live on our Social Security checks alone. I'm sure several of us would like to hear your suggestions with this scenario in mind.

  • Report this Comment On July 30, 2009, at 9:35 PM, ozzfan1317 wrote:

    You shouldnt have had more thaqn a minority percentage of your assests in Stocks that close to Retirement most of it should have been in a Bonds or a Bond fund.

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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Related Tickers

8/29/2014 4:02 PM
AA $16.61 Up +0.04 +0.24%
Alcoa, Inc. CAPS Rating: ****
CHK $27.20 Up +0.22 +0.82%
Chesapeake Energy CAPS Rating: ****
GE $25.98 Down -0.03 -0.12%
General Electric C… CAPS Rating: ****
LUK $24.93 Up +0.18 +0.73%
Leucadia National CAPS Rating: ****
NOK $8.37 Up +0.24 +2.95%
Nokia CAPS Rating: **
NOV $86.43 Up +1.01 +1.18%
National Oilwell V… CAPS Rating: *****
SGR $32.57 Down +0.00 +0.00%
The Shaw Group, In… CAPS Rating: ***

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