Drawdown

A drawdown is the percentage decline in an investment or portfolio's value from a recent peak to a subsequent low point, before it recovers. A stock that falls seventy percent from its high has experienced a seventy percent drawdown, regardless of how long the decline took or whether it has since recovered.

Drawdowns are a common way to measure and communicate downside risk, since they capture the real, lived experience of holding through a decline in a way that average annual returns alone do not.