Delta news letter has some comedy with insight i love.
“Investors just experienced what it is like to be down 20% and then right back up 20%. It equals a 4% loss.
This is explained by how percentages work. Percentage down is calculated from a large number (SPX 2,940.91). Percentage up is calculated from a smaller base (SPX 2,346.58) which means a smaller absolute rise in the market still equals 20%. For investors to recover all of the losses from the high, their portfolio would have to appreciate by 25% from the low.
The percentage math gets worse as the loss grows. For example, if a portfolio starts with $100 and loses $50, it is down 50%. For the portfolio to return to its original $100 amount, it would have to appreciate by 100%.
Percentage math helps explain why losses are so painful and why avoiding major loss should be a top priority in an investment portfolio. Delta specializes in risk mitigation to avoid major loss.”