About the Stock Drawdown Recovery Calculator
Use this tool to estimate the percentage gain needed for an investment to return to its previous peak after a drawdown. It is helpful for investors comparing losses and recoveries, especially when understanding why a drop and a rebound of the same percentage do not cancel out.
How to use this calculator
- Enter the drawdown from the peak as a percentage greater than 0 and less than 100.
- Review the gain required to recover, shown as a percentage.
- Review the recovery multiple, which compares the required gain to the original loss.
- Change the drawdown value to compare different loss scenarios.
How it works
The calculator uses the drawdown percentage as the loss from an original peak value. It assumes the peak value is 100%, so a loss of L percent leaves 100 − L percent of the original value remaining.
To return from the reduced value back to the original peak, the required gain is calculated as loss ÷ (100 − loss) × 100. This works because the recovery gain is applied to the smaller remaining value, not to the original peak.
The recovery multiple is calculated by dividing the required gain percentage by the original loss percentage. Investing results shown here are educational estimates and not financial advice.
Example calculation
If a stock falls 20% from its peak, it is left at 80% of its original value. The required gain is 20 ÷ 80 × 100 = 25.00%, and the recovery multiple is 25.00 ÷ 20 = 1.25x. So a 20% loss requires a 25% gain to recover to the peak.
Frequently asked questions
Why does a 50% loss need a 100% gain to recover?
After a 50% loss, the investment is worth half of its original value. Doubling that reduced value is required to get back to the original peak, so the needed gain is 100%.
Can the calculator handle a 100% loss?
No. A 100% loss leaves zero value, so there is no finite percentage gain that can recover the original amount.
What does recovery multiple mean?
It shows how many times larger the required recovery gain is compared with the original percentage loss. For example, a 25% gain after a 20% loss is a 1.25x recovery multiple.
Does this include dividends, fees, or taxes?
No. The calculation only compares percentage loss and percentage gain. It does not account for dividends, trading costs, taxes, inflation, or timing.