Stock market research reports may refer to what is called a “drawdown.” However, it is not always clear what this term means. Because it is often not well defined and is used in at least a few different ways.
In its simplest form, it’s Wall Street-say “you lost money”.
Chuck Lieberman, Chief Investment Officer of Advisors Capital Management, based in New Jersey, said: “Instead of saying that the stock price fell, there was a drawdown.”
The term is sometimes defined as the rate of change from peak to trough in the value of an asset. For example, at the start of the Covid-19 pandemic, SPDR S & P 500 (SPY) exchange-traded funds that track the S & P 500 index showed a drawdown of approximately 32% between February 10 and March 20, 2020. .. The rest of the year.
Investors can use the drawdown information to make portfolio allocation decisions based on the amount of risk they can tolerate and the amount of returns they want to target.
What is a “drawdown”? -WSJ
Source link What is a “drawdown”? -WSJ