## Wednesday, May 22, 2019

A table that can hold some hotheads, who believe that the market is something like a casino, and «I will lose now, I will win back later.» The first left column is the drawdown of the portfolio. The second column shows how much the portfolio should grow in order to restore its initial value. The next three columns show how many YEARS will be needed to restore the portfolio to its original value with average annual returns of 10%, 7.5% and 5%. Take for example the drawdown of 50%. To restore a portfolio, you need to earn 100% for the rest of it. With an average yield of 10% per annum, this will take 7.27 years, at 7.5% per annum, 9.58 years are needed, and at 5% per annum, 14.2 years already. Intuitively, we all understand that. But with numbers in front of you, it may be much easier to control the risks.