For those who have suffered a 30, 40, or even 50% loss in this market, what is on top of your mind right now is: How am I going to recoup my loss money?

There are certain precepts that you have to accept before going any further, the #1 being that the stock market is still the greatest vehicle for you to create and destroy wealth. If you agree on this statement, then there is no reason to look for alternatives such as gold bullion or vintage wine. You just need to know how to use the stock market to your best advantage and make money from it.

Make a clean start

The most important thing to realize is: you WILL NOT make your money back in the same vehicles that you lost it in. Every new bull market is powered by a new crop of leaders: technology, Internet, home builders, oils, ags... There is never a replay. If you are hoping for one, you are setting yourself up for a big disappointment detrimental to your financial health.

The lingering pain of recent losses clouds your judgment and impairs your action. Making a clean slate by getting rid of your losers may be very painful but the pain will subside as you stop the bleeding. Just don't look back if any of your losers rebound. Only then will you have a clear unencumbered mind to go forward.

Basically, what happened, happened. There is no undoing or redoing it. You need a clean slate, and cash in the bank is it as far as stock investing goes.

Spoting the new leaders 

I don't know who or what sector will lead the next bull market. Nobody does. Most predictions are cheap and worthless. But if you know how to recognize those leaders early on, you are half way there.

Learning from your past investment mistakes 

Look at the stocks you owned: they must have attracted you at some point for some reason. What was that reason? Chances are, it was valid, but you were late to the party and overstayed the welcome. Why didn't you act sooner? If you can find out answers to these questions, you will learn how to recognize profitable patterns early on and apply them to new situations. It's not the stock that makes you money, it's what you do with it.

Learning from past mistakes can be applied broadly. If you are too busy in your professional life, you may not have the time to manage your portfolio and will need to hire a professional. Why did the one you had do so poorly? Did you choose lightly? Or did you like the guy but procrastinated too long to follow his recommendations? Did you chase performance by buying the hottest mutual funds of the previous year and churning your account? Did you listen to CNBC too much? Good professional advice is hard to come by and cannot be bought the way you buy flowers for your spring garden.

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