The Psychological Impact Of Maximum Drawdown (MDD) on Portfolio Management
I suppose everyone is still in the holiday mood after celebrating Christmas with our loved one and about to countdown the arrival of 2022 , a new chapter or year in our journey of investment and I will try to keep this blog post short. There is one very important topic I would like to highlight here before the closing of 2021, i.e “ The Psychological Impact Of Maximum Drawdown (MDD) on Portfolio Management." For every investor, I think drawdown should be one of the most important topics to understand when you start to learn about stock investing. Even before talking about gains or returns you expect from your investment, one should really and clearly think about “how much I can stand or “tahan ” to lose from the investment? what are my risk tolerance and maximum drawdown I could stand when looking at my portfolio in RED , especially the psychological impact of losing sleep or stress? What Is a Drawdown? <Source: Investopedia.com> KEY TAKEAWAYS A drawdown refers to how...