{"id":2042191,"date":"2016-01-20T20:05:16","date_gmt":"2016-01-20T14:35:16","guid":{"rendered":"http:\/\/stockviz.biz\/index.php\/?p=2042191"},"modified":"2016-01-20T20:05:16","modified_gmt":"2016-01-20T14:35:16","slug":"definition-drawdown","status":"publish","type":"post","link":"https:\/\/stockviz.biz\/index.php\/2016\/01\/20\/definition-drawdown\/","title":{"rendered":"Definition: Drawdown"},"content":{"rendered":"

Drawdown<\/strong>, of an investment, is the peak-to-trough decline during a specific period.<\/p>\n

It is not uncommon for stock indices to drawdown 30% in a year. Here’s how we see it.<\/p>\n

Nifty 50 Drawdowns<\/h3>\n

\"drawdowns.nifty50\"<\/a><\/p>\n

Nifty Midcap 100 Drawdowns<\/h3>\n

\"drawdowns.midcap100\"<\/a><\/p>\n

Explainer<\/h3>\n

Drawdowns take their time to form and can be identified into three distinct points: <\/p>\n

    \n
  1. The day from which the investment started going down. ‘From’ in the above images.<\/li>\n
  2. The day on which the investment stopped going down. ‘Trough’ in the above images.<\/li>\n
  3. The day on which the investment recouped all its losses from (1). ‘To’ in the above images.<\/li>\n<\/ol>\n

    The number of days the whole processes took is the ‘Length’ of the drawdown. ‘Recovery’ shows the number of days it took to get back to it initial value.<\/p>\n

    Path dependency<\/h3>\n

    The yearly breakup shown above doesn’t give the real picture of how the investment actually performed during the entire stretch of time. For example, here’s NIFTY 50 vs. MIDCAP 100:<\/p>\n

    \"Between<\/a><\/p>\n

    Depending on where your starting point is, you end up with different drawdown and return profiles. You can fool around with that here: svz.bz<\/a><\/p>\n

    Take-away<\/h3>\n

    Returns go hand-in-hand with drawdowns. Seasoned investors wait for it (in bond funds) to enter, most long-term investors learn to ignore them and continue their dollar cost averaging (aka SIP.) <\/p>\n","protected":false},"excerpt":{"rendered":"

    Drawdown, of an investment, is the peak-to-trough decline during a specific period. It is not uncommon for stock indices to drawdown 30% in a year. Here’s how we see it. Nifty 50 Drawdowns Nifty Midcap 100 Drawdowns Explainer Drawdowns take their time to form and can be identified into three distinct points: The day from … <\/p>\n","protected":false},"author":2,"featured_media":2042221,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3471,9],"tags":[960],"class_list":["post-2042191","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing-insight","category-your-money","tag-returns","entry"],"_links":{"self":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/2042191","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/comments?post=2042191"}],"version-history":[{"count":0,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/2042191\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media\/2042221"}],"wp:attachment":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media?parent=2042191"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/categories?post=2042191"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/tags?post=2042191"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}