Investing term
What is Permanent loss?
Loss that does not come back — a stock that goes to zero, or a portfolio sold at the bottom and never reinvested.
Permanent loss is capital that never comes back — a company that goes bankrupt to zero, or selling a sound portfolio at the bottom and never reinvesting. It's the loss that actually matters, and it's worth distinguishing from temporary drawdowns, which recover. The goal of diversification and discipline is to avoid permanent losses while calmly riding out temporary ones.
For example
A single stock you own goes bankrupt and is worth $0 — that's a permanent loss, unlike an index fund's 30% dip that later recovers fully.
Permanent loss is taught hands-on in Stage 17 — Portfolio-Level Risk.
See the lesson →