Worst So Far

Cousin was scrolling our marketplace on Wednesday, hunting for the card with the shallowest drawdown. Sensible way to shop. Most people do exactly that.

So I asked him which crashes were sitting inside the window when that number got measured.

Long pause.

Here is the thing I think most people get wrong about a track record. A maximum drawdown is not a limit. It is a record. It says: across this particular stretch of calendar, this was the worst it ever got. It has never once said anything about what happens next.

And the stretch of calendar is doing enormous work.

Our own backtest window runs 23 April 2021 to 27 April 2026. Inside it, the Nifty 50's worst fall is 16.92 percent. Same index, January to March 2020: roughly 38 percent. Same index, January to October 2008: roughly 60 percent. Nothing about those fifty companies changed between those numbers. Only the window.

On Rs 10,00,000, that is 8,30,800 left, or 6,20,000, or 4,00,000. The climb back is worse than the fall suggests, because it always is. Plus 20.4 percent gets you home from the first one. Plus 150.0 percent from the last.

The uncomfortable bit, and it is our shelf too: that window opens thirteen months after the covid bottom. Not one strategy on it has been asked what it does in a 60 percent fall. The question was never in the sample. Every shelf in this country is quoting a worst case measured inside the calmest stretch it could find, and none of them are lying. They just cannot show you a crash that their data does not contain.

So when you are sizing your nerve against a card, double the worst number you see, put it in rupees, and ask the question again. If your answer changes, the number was doing the holding, not you.

A factsheet tells you the worst thing that has happened so far. Those last two words carry the whole sentence, and they are the only two nobody sets in bold.

Profile against the hole, not the headline: