Bear markets don't just take away your hard-earned investing profits. They also mess with your head.

In many ways, prolonged bear markets are harder to endure than the quick, painful market crashes. During crashes in 1987, 1990, and 1998, sharp declines lopped off double-digit percentages from major market indexes. But the key to long-term success in those cases was simply not to panic. If you didn't sell right after the crash, then you didn't have to wait too long before stocks went to new all-time highs.

Serious bear markets, on the other hand -- the ones that take years to play out -- challenge your conviction and your investing discipline. No matter how many bears you've gone through, experience doesn't make them any easier to handle. And unless you've been investing for more than 30 years, you have at most one long-term bear market under your belt to guide you through the current downturn.

Falling into the bear trap
One of the hardest things about investing in a down market is seeing your holdings slip into the red. Anchoring on arbitrary prices like the one you paid when you first bought a stock isn't rational. But it's tough to ignore, especially if you have tracking software or brokerage reports that constantly remind you whether you have gains or losses on all your individual positions.

At first, having a few losers among an otherwise solid portfolio doesn't hurt too much. After a while, though, more of your stocks may fall sharply. Slowly but surely, your attitude may become more defensive, and the temptation to sell your few remaining winning stocks while there are still profits to be had may become too strong to resist.

Selling your winners, though, is usually a big mistake.

Trusting the market
To see why taking profits on a winning stock isn't generally the right thing to do during a bear market, consider what it takes for a company to do well in a tough economy. Unlike in bull markets, where plenty of stocks go up for no apparent reason other than optimism about the entire economy, companies have to demonstrate competitive advantages under the most brutal conditions in order to see their share prices hold up while the overall market drops.

As examples, look at a few companies that have performed well in the last year:


1-Year Return

Activision Blizzard (NASDAQ:ATVI)


First Solar (NASDAQ:FSLR)


Petroleo Brasileiro (NYSE:PBR)


MasterCard (NYSE:MA)


Walter Industries (NYSE:WLT)


Illumina (NASDAQ:ILMN)


Source: Motley Fool CAPS.

All of these companies have taken steps to secure their place atop their respective industries. Activision pursued a deal with Vivendi to acquire rights to World of Warcraft and make the company a gaming powerhouse. Energy has proven successful for many companies, but in particular, First Solar's explosive growth, a new oil find for Petrobras, and Walter's benefiting from coal's ascending popularity have made them top names. Despite Visa's (NYSE:V) successful IPO, MasterCard has refused to settle for second fiddle in the credit card industry. And Illumina's biochip business keeps on chugging.

Having defied a slowing economy, are these top dogs really on their way out? After making it this far, do you think they're on their last legs now?

Don't sell for the wrong reasons
If the only reason you're considering selling stocks that have proven their strength during adverse conditions is to take the sting out of your losses, don't sell. Although you might get lucky and pick exactly the right time to get rid of your shares, you'll often find that those stocks will keep going up after you sell, leaving you with only the losers.

On the other hand, if you have good reasons for selling -- bad management, changing businesses, truly ridiculous valuations, or a new leader taking control of an industry -- then it doesn't matter whether your stock has moved up, down, or sideways since you bought in. Take that money off the table and find a better place for it.

Bear markets throw even the most experienced investors off balance. So before you make a big investing decision, pay extra attention when stocks are down. Only if you're sure that emotion isn't trumping hard analysis should you take action -- especially when you're considering selling shares of a company that has thus far thrived during the market downturn.

For more on investing in tough times, read about:

Illumina and Activision Blizzard are Motley Fool Stock Advisor recommendations. Read more from Fool co-founders Tom and David Gardner on how to invest in good times and bad. A 30-day trial is absolutely free, but the things you'll learn are priceless.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned in this article. Petroleo Brasileiro is a Motley Fool Income Investor selection. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy won't cut you out.