THE GLOSSARY · RISK
Maximum drawdown
The fall between a peak in your portfolio and the trough that follows. The trap is not the loss: it is the asymmetry of what you have to win back.
By the Yoseri News desk · · 1 min read
Maximum drawdown — the fall between a peak in your portfolio and the trough that follows, expressed as a percentage of capital.
The trap is an asymmetry that intuition misses every time: losing 50% forces you to gain 100% just to get back to even. Losing 20% asks for only 25. Losses do not compound symmetrically with gains.
| Drawdown suffered | Gain needed to get back |
|---|---|
| −10% | +11% |
| −20% | +25% |
| −33% | +50% |
| −50% | +100% |
Concretely: on a 2008-style recession scenario applied to a $35,840 portfolio, the simulated loss reaches 33% on the investments. Getting back to the previous level then takes about 29 months with monthly contributions kept up — and 47 months without them.
In Yoseri, a drawdown is read on the Investments page, next to the confidence of the model that produced the figure — low when the available history is too short, and it says so.
Yoseri News is an educational publication. Nothing in this article is investment advice, a recommendation to buy or sell, or tax advice. Yoseri is registered as neither an adviser nor a dealer with any market authority.