Risk
Recovery period
Also called Time to recover
How long it took a portfolio to climb back to its previous peak after a fall.
How it works
Depth and duration are separate facts, and duration is often the harder one. A 25% fall that recovers in six months is a bad quarter; the same fall taking six years is a different life.
The period spent below the previous peak is sometimes called the underwater period, and charting it shows the experience of holding far better than a returns line does.
Related terms
- DrawdownThe fall from a portfolio’s previous peak to its lowest point before it recovers.
- Maximum drawdownThe largest peak-to-trough fall a portfolio or strategy suffered over the period examined.
- Underwater periodAny stretch of time during which a portfolio is worth less than its previous high.
- Sequence-of-returns riskThe risk that poor returns early in retirement do lasting damage, even if average returns are fine.
More in Risk
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.