Max drawdown

Max drawdown — the largest peak-to-trough decline in an asset’s value. The table this course drills: MP2/RTBs-to-maturity ≈ 0; bond funds −5–15%; diversified global equities −30–50% at least once a decade (normal, recoverable, for holders); single stocks −50–90% (sometimes forever); crypto −70–90% per cycle. Sizing positions so the expected drawdown is holdable in pesos is the whole game of risk tolerance.

First used in: 1.8 · Risk: what you’re actually paid for