What is your estimated maximum drawdown your net wealth has experienced so far?
E.g. if the richest you’ve ever been was 100k and your net wealth dropped back to 80k (before hopefully recovering), you had a 20% drawdown
but what if max % drawdown wasn’t at max net wealth? my biggest drawdown was during dotcom crash, where I lost >70% but i had very little assets then compared to now.
Fair enough, not for tiny amounts. Say anything above 50-100k CHF equivalent
Ie doesnt have to be max wealth overall. Just max wealth at the time
Do you also include 2nd pilar in your Net worth?
I am including it so it smooth the trauma.
I was started to be invested into equity from 2012 so no major crash except Covid and Trump tweets.
This is just by end of month values.
Increase: +20% in May 2026
Decrease: -12% in July 2026
But that is month to month, I gained about +7% on 30 July, so the if you look at peak to trough it would have been around -20%.
This is including total wealth. If we are just talking about stocks then those numbers would be quite a bit bigger (+46% in May 26 and -23% in July 26, though again that would have been more like -30% if counted peak to trough rather than month to month).
I think this is a good mental trick. I look only at my stock portfolio which makes it much more volatile. I think it is because it is the most visible. I have an app on my phone which shows minute by minute moves.
Whereas for things like Pillar 2 you probably don’t see that often, maybe once per year in a statement. Same for value of real estate.
NW - barely 7% m2m (back in 2020)
Equity - probably 20+%
Thanks all. The reason I was asking- I had the hypothesis that a lot of the FIRE community hasn’t been through a real stress test yet. And with that might be selling in a true painful drawdown.
But looks like that hypothesis doesn’t hold. At the same time, there might be bias, because anyone who has been wiped out or called it quits at the lows, might not be on this forum anymore. Time will tell
If you have your equity asset split into multiple brokers (3 for me) + 5 LPP3 accounts,you cannot monitored them easily nor liquidate your position that quickly. I have to check my aggregated spreadsheet to gget the view of the drawdown.
During Covid the painfull part was not the drawdown in it’s own but more the noise generated by all the news and when to invest your cash reserve if you have some …
It is a good plan to define how much you will invest when global indexes becomes red (xxk chf at -15%, xxk chf at -30% …). It can help you to pull the trigger and rebalance your bond allocation.
Well, the current situation could also be a test. On the one hand, we have the crazy AI boom, big valuations, big debts, increasing energy costs, war in iran etc. one could easily argue for higher interest rates triggering a recession and a big crash.
On the other hand you could equally argue for continued loose fiscal policy combined with a dovish fed that will print and carry out operation twist in coordination with Treasury to control interest rates across the yield curve. In such a case you could argue for even crazier asset prices maybe offset a bit by lower USD.
The other question is what you will sell to make such an investment.
The maximum drawdown is one thing, the recovery time (how long until you get back to ATH) another.
For me: 2021-12 to 2024-02 (-27% in 2022-12), so 27 months (all in retirement)
I didn’t lose sleep, but it wasn’t fun, either.
Any lessons you can impart on the rest of us this awaits sooner or later?
Most new age investors have not seen the bad crashes like Dot com or GFC. And if they did then their NW was lower at that time as a multiple of their income.
The bear market of 2022 is worst most people might have experienced. Covid crash was short lived and so did the Tariff shock. Those two wouldn’t matter that much
In my view , a longer duration 40-50% crash in stock markets (at the time when more than 3-5X of your annual income is tied in stocks ) could test many to limits
This is more than Dot com or GFC, right? Do you expect such a crash in the next 3-5 years?
I started retirement with about eight years’ worth of expenses in cash, with the plan on spending that gradually down. That was a little painful at first, it meant selling and seeing a big chunk of cash not earning nice interest.
But it was much easier to endure the long drawdown, telling myself that I had more than enough cash to burn through before I had to sell before the recovery.
So I would encourage anyone to have some cash cushion (or glide path) at the beginning, even if you were 100% equities during accumulation, purely for mental reasons.
Also, while tracking net worth and optimizing financials had become kind of a hobby during accumulation, this hobby can become less attractive after retirement, maybe like the descent after a hike to a mountain top. That’s not a loss, the point of retirement is that you get free time to do new things! If you discover you actually like working towards goals, set them yourself!
| Metric | 1929 Great Crash (Dow Jones) | 1973 Oil Crisis (S&P 500) | Dot-com Crash (Nasdaq) | Great Financial Crisis (S&P 500) | 2022 Market Crash (S&P 500) |
|---|---|---|---|---|---|
| Peak Date | September 3, 1929 | January 11, 1973 | March 10, 2000 | October 9, 2007 | January 3, 2022 |
| Trough Date | July 8, 1932 | October 3, 1974 | October 9, 2002 | March 9, 2009 | October 12, 2022 |
| Full Recovery Date | November 23, 1954 | July 17, 1980 | April 23, 2015 | March 28, 2013 | January 19, 2024 |
| Decline Duration | 34 months | 21 months | 31 months | 17 months | 9 months |
| Recovery Duration | 268 months (~22.3 yrs) | 69 months (~5.7 yrs) | 150 months (~12.5 yrs) | 48 months (4 yrs) | 15 months (1.25 yrs) |
| Maximum Drawdown |  -89% |
 -48% |
-78% |
 -57% |
 -25% |
(Note: Index selections follow standard historical tracking formats. The 1929 crash measures the Dow Jones Industrial Average; the 2000 crash targets the tech-heavy Nasdaq Composite index; while 1973, 2007, and 2022 utilize the broader S&P 500 index)
This shows nominal recovery times, but of course you have re-invested dividends and impact of inflation which would make recovery times longer for most of them except 1929 where we had deflation and so recovery time in real terms would have been shorter than the 22 years in the table.
Perhaps today we are most analogous to the 1973 oil crisis/collapse of Bretton Woods given the current oil disruptions and potential changes to the monetary world order.
What year did you start retirement?
2021
Not bad, I guess you would have been glad to have the cash over the 2022 period.