Why drawdowns matter to investors
Drawdowns matter a lot to investors, especially those who are investing in volatile markets and unsteady industries. These unrealized losses can become realized losses very quickly if you exit the position instead of holding on for dear life because you believe the stock can recover over time.
But when you hold on to a stock that has no hope of recovering from a drawdown, you also miss out on other potential opportunities for wins, especially if your stock experiencing a drawdown is very slow to recover. That said, most stocks do recover from drawdowns, though the time frame can differ wildly. This is why it's so important to balance your risk with your stage in your investing journey.