Drawdowns & recovery

Recovery math is asymmetric

A 50% loss requires a 100% gain just to get back to where you started.

What it means for your portfolio

Avoiding deep drawdowns matters more for compounding than chasing the last few percent of upside.

Does this apply to your holdings?

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The tech-heavy Nasdaq fell roughly 75-80% peak-to-trough in the 2000-2002 dot-com bust, and took around 15 years to reclaim its 2000 high.

The S&P 500 fell about 57% peak-to-trough during the 2007-2009 global financial crisis.

The S&P 500 fell about 34% in roughly five weeks in Feb-Mar 2020, then recovered its prior high within about six months.

General information only, not financial advice. Historical figures are approximate and provided for education.