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Chart of the Day: Recovering from Losses is Hard

Samuel A. Kiburz, Senior Vice President, Chief Investment Officer 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

About the Author

Samuel A. Kiburz, Senior Vice President, Chief Investment Officer
Samuel A. Kiburz, Senior Vice President, Chief Investment Officer

Samuel serves as Senior Vice President, Chief Investment Officer for the Crews family of banks. He manages the individual investment holdings of his clients, including individuals, families, foundations, and institutions throughout the State of Florida. Samuel has been involved in banking since 1996 and has more than 20 years experience working in wealth management.

Investments are not a deposit or other obligation of, or guaranteed by, the bank, are not FDIC insured, not insured by any federal government agency, and are subject to investment risks, including possible loss of principal.

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