Drawdown and recovery: why the gain you need is larger than the loss

A drawdown is the peak-to-trough decline of your portfolio, often written as a negative percentage. Recovery is the positive return required to get back to your prior peak. Because you are growing from a smaller base after a loss, the recovery percentage is always larger than the loss percentage — this is sometimes called drawdown asymmetry.

Formula (single-period, illustrative)

If your portfolio falls by fraction d (e.g. 30% → d = 0.30), the break-even gain g (as a decimal) satisfies (1 − d)(1 + g) = 1, so g = d / (1 − d). Multiply by 100 for percent. Example: after −30%, you need about +42.9% to recover — not +30%.

Worked examples

• −10% loss → about +11.1% gain to break even.
• −25% loss → +33.3% gain required.
• −50% loss → +100% (double) required.

These numbers describe arithmetic on a single portfolio value. Real paths involve cash flows, taxes, fees, and sequence of returns — use the calculator below for intuition, then discuss your situation with a qualified professional.

“Stock loss recovery calculator” — what this tool does

Investors often search for a stock loss recovery calculator after a sharp correction. This page expresses the same idea at portfolio level: pick a drawdown, see the recovery return implied by the formula. It does not predict markets or recommend trades — it makes the asymmetry visible so you can plan conversations with discipline. For a short companion read, see the stock loss & drawdown recovery guide.

Pair this with behaviour tools like the cost of panic selling calculator and risk education on averaging down. If you are also comparing regulated wealth categories in Pune, read that explainer before shortlisting firms — educational only, not a directory.