Traditional Investing & Portfolio Theory

Why does a 50% loss need a 100% gain to recover?

A 50% loss needs a 100% gain to recover because the gain is calculated on the smaller remaining balance, not the original amount. If 100 falls by half to 50, you must double that 50 to return to 100, which is a 100% rise. The percentage needed to break even grows faster than the loss itself, so a 20% loss needs 25% and an 80% loss needs 400%. This asymmetry is why limiting deep drawdowns matters; it explains the arithmetic, not any guaranteed outcome.

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