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Chart of the Day: Recovering from Losses is Hard

Crews Bank & Trust Wealth Management Services Jun 25, 2024
Green (required gain) and gray (loss) bar graph, illustrating how one needs a 100% gain to recover from a 50% loss in the stock markets.

Contents

Today’s Chart of the Day is from Compounding Quality (Compounding Quality (@QCompounding) / X) and shows the percentage gain needed to recover from a loss. Quite simply, you need a 100% gain to recover from a 50% loss. For example, a 50% loss on $100 leaves you with $50. To get back to $100, you need a 100% return. This demonstrates the great Warren Buffet’s adage, “The first rule of an investment is don’t lose [money]….”
 
Now, for context, fluctuations in price are one thing. Here, I am talking about irrecoverable losses such as buying a stock and having it go down 50%, never to return to the previous price. This why advisors are often wary of riskier types of investments.
Chart of the Day

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Crews Bank & Trust Wealth Management Services
Crews Bank & Trust Wealth Management Services

Experienced professionals from our wealth management services team can help you achieve a bright financial future through investment strategies tailored to you. We’ll show you all of the options available and help you choose the ones best suited to you. We’ll provide high-quality, personal service as we work toward your goals together. Our Portfolio Managers do not receive commissions on trades; our recommendations of investments are based solely on your best interests.

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