The Eighth Day · The Maximum Drawdown is the Bend of the Stream

A mountain creek is rarely straight.
It winds around rocks, turns under tree roots, makes a loop in a low spot, then slowly flows out. From start to finish, it takes a much longer path than a straight line. But it’s precisely those bends that help it avoid obstacles, gather strength, and eventually merge into the river.
The maximum drawdown is the bend in the account’s net value curve.
You move downward from a high point, thinking you’re lost, thinking you can never return. But that’s not true. The market is just avoiding certain things — overheated emotions, excessive leverage, overconfidence. Once it’s bypassed them, it will naturally come back.
I’m used to viewing drawdowns and volatility together. Large drawdowns and high volatility mean sharp turns, so buckle up. Large drawdowns with narrowing volatility indicate a gentle slope, almost at the end. Like a stream entering a deep pool, surface calm, but underneath, it’s gathering strength.
When I see floating losses, I open the historical drawdown records. I find that every major drawdown is followed by a new high. Not always the same, but always similar. Streams don’t forget the ocean just because they take a longer route. #GatePreIPOs首发SpaceX