Investing term

What is Recovery?

The time it takes a portfolio to climb back to its previous peak after a drawdown.

Recovery is the time it takes a portfolio to climb back to its previous peak after a drawdown. It's a useful companion to drawdown depth: a fall is only as damaging as how long it takes to undo. Historically, diversified portfolios have always recovered eventually — which is precisely why selling during the drop, and missing the recovery, is so costly.

For example

After a 30% crash, a portfolio might take two or three years to recover to its old high — painful, but it gets there for those who stay invested.

Recovery is taught hands-on in Stage 17 — Portfolio-Level Risk.

See the lesson →

Related terms

60/40 portfolioThe classic balanced portfolio: 60% global equities, 40% investment-grade bonds.Asset mixThe split of the portfolio across asset classes — stocks, bonds, real estate, commodities, cash.Correlation trapThe phenomenon where assets that look uncorrelated in calm markets all crash together in a crisis.Headline noiseThe constant churn of financial news that moves prices intraday but is irrelevant to a multi-decade investor.
← Back to the full glossary