Drawdown

A drawdown is the decline from a peak in a portfolio's value to the lowest point that follows it, before a new peak is set. The maximum drawdown over a period is the deepest of those declines. It is measured in percent from the peak, so a fall from one hundred thousand to seventy thousand is a drawdown of thirty percent, and recovering it takes a rise of more than forty.

Why it matters

A return figure tells you where a period ended and nothing about the route. Two portfolios can finish a decade at the same number while one of them dropped by half along the way and the other never fell more than fifteen percent, and those were very different things to live through. Drawdown is the number that describes the route, which makes it a useful check on whether a portfolio matched what you expected of it rather than only on what it produced.

How BullBenchmark shows it

We rebuild your portfolio value for every day of your history from your own transactions and historical prices, which is what a drawdown figure has to be measured against. Time travel makes the same history readable from the inside: set a date and the whole dashboard returns to what it showed on that morning, including the verdict against the index. That date control is working on the demo dashboard.

Related terms

Market value · Annualized return · Benchmark

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