This year has been an absolute disaster for shareholders in British housing-maintenance company Connaught.

Back in June, it had a market capitalization of 450 million pounds. This week, its shares were suspended and the company appointed KPMG as administrators to wind down the company  and its social-housing division. Connaught shareholders look to have been completely wiped out, plus its lenders will have to take an almighty haircut, too.

Five steps to closure
This outcome must feel sickening for Connaught's shareholders, employees, suppliers, and creditors. Having suffered some brutal losses during my 23 years as an investor, I know how they feel, so they have my sincere sympathies.

However, this whole saga will not be over until shareholders have come to terms with their loss. When dealing with painful tragedy, many investors go through the five stages of grief set out by Elisabeth Kubler-Ross in her 1969 model for coping with terminal illness (later applied to bereavement and other personal loss).

Here they are:

1. Denial
In this usually short-lived stage, investors express disbelief and incredulity. While temporarily denying reality, common responses include, "This can't be happening" and "I refuse to accept this." However, when reality hits home, most soon move on to think about the implications of "the event."

2. Anger
At this stage, investors become outraged, angrily casting about for anyone to blame other than themselves. Often, they become swamped with helpless rage, protesting about the unfairness of the event and its harsh effect on their lives.

3. Bargaining
For some, the third stage of grief is the most tragic, because bargaining gives investors false hope. At this point, many remarks begin ruefully with "If only I ... ," "I'll do anything for ... ," and similar pleas. In an attempt to avoid confronting their pain, investors promise to give their life and soul in a futile attempt to make a pact with fate and turn back time.

4. Depression
Depression marks the beginning of the end of the grief process. Comments such as, "What's the point of going on?," "I can't live with this suffering," and "Why bother trying?" show a clear need to disconnect from the world and properly mourn.

Often, depression is the longest stage of grief, with some investors taking years to clear this hurdle.

5. Acceptance
Redemption arrives in the form of acceptance, when investors finally come to terms with their loss. In this "light at the end of the tunnel" conclusion, they realize that life goes on and it's time for their struggle to end.

Of course, different investors have different responses to wipe-outs. The most resilient get straight back on the horse, while others need time to lick their wounds. The most shell-shocked may never take risks again (something seen, for example, in the aftermath of the dot-com bust).

Obviously, not everyone rides the Kubler-Ross roller-coaster. A few experienced traders (and hardened gamblers) are so accustomed to cutting losses and moving on that they become remarkably resilient. In effect, they are immune to the emotional ups and downs of market hazards, making them a rare breed.

I'd welcome your personal insights into investment grief and how to cope with it, so please post them in the box below!

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