Robo-advisor

Weekly Update

The Importance of Avoiding Large Stock Market Losses


Published February 3, 2017

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During the financial crisis the stock market fell by over -50%. By February 1, 2011, the stock market had recovered about +80% from the market lows. Yet, investors still had not recovered from the losses. In fact, they were still down by more than -15%! Many investors might have wondered: why am I still “underwater”? How can an 80% gain be less than a 50% loss? Chart 1 below sets out the math of this situation.

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