CAGR is what you earn if you stay. Drawdown decides whether you stay.
A loss is bigger than its mirror gain. Most retail investors do not run this number before sizing a position. They should.
DRAWDOWN TAKEN
RECOVERY NEEDED
EXTRA EFFORT
What this means in 2025
Allcap MA spent 371 days underwater. LargeMid MA spent 350. The retail behaviour gap shows up not in the headline CAGR but in who actually sat through 21 percent down without rotating out at the bottom.
Pick the drawdown you can actually sit through. The CAGR follows.
Tanmay Kurtkoti
Before sizing a position, run the behavioural fit test. The 28-question wizard maps tolerance against the drawdown you would actually hold.
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