Investors who had not experienced the October massacre of 1987, or the bear market years of the 1970s, were unprepared for the financial setback. One approach is to use metaphors that help clients understand the risks and rewards of investing in the stock market. A metaphor is a word or phrase that describes one concept in terms of another. Thus, a distraught investor may describe a stock as falling off its price-earnings cliff and lying bruised and broken on the ground.
Metaphors make an abstract concept concrete and understandable.
By its very nature, investing is abstract and scary to people. When clients buy into stocks or mutual funds, they take cold hard cash and entrust it to a stranger who suggests that over some period of time they will get more back than they put in. Are there other experiences that could be employed as a metaphor for investing. The experience must involve danger, the threat of loss, and the thrill of achieving success. In addition, it must involve strong positive and negative emotions.