![]() Be sure the Maximum Drawdown calculation includes data from 2007-2008, since this was the period of the last major market downturn. How can I invest more wisely using Maximum Drawdown?įirst, be aware of Maximum Drawdown (looking back 10 years or more) before investing in any portfolio or fund. Express the drop in value as a percentage.We suggest looking at least at the last 10 years so that you include the last major market drop in 2008. Find the maximum peak-to-trough drop in value over the period you're considering.Then repeat this for all subsequent months. For example, start with $10,000 prior to your first month of data and then increase your portfolio value by the first month's percent return. The total monthly return should include dividends and distributions. Calculate the hypothetical value of the portfolio from month-to-month, using the total monthly return for each month. ![]()
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