Nvidia's shares fell 89.7% between January and October 2002. A $100 holding bought at the January high was worth about $10.30 at the October low. It took until November 2006 to get back to $100.
That fall is called a drawdown: the drop from a previous high. This guide explains drawdown and maximum drawdown. It then sets the worst falls of five assets side by side, from an S&P 500 fund to Bitcoin, with how long each took to recover.
What is a drawdown? A drawdown is the fall in an investment's value from its previous high, measured in %. The maximum drawdown is the largest such fall over a period: the loss for someone who bought at the top and sold at the bottom.
Big winners have had deep falls. Nvidia returned 37.2% a year from 1999 to 2026, with dividends counted. Yet it once fell 89.7%.
A loss needs a bigger gain to repair. After a fall of 50%, an investment must rise 100% to get back to its old high.
Recovery time matters too. QQQ (the exchange-traded fund, or ETF, that tracks 100 large Nasdaq-listed companies) took 14.9 years to regain its 2000 high.
Drawdown vs maximum drawdown
A drawdown compares the latest price with the highest price so far, counting that day. That high point is the peak. Recovery comes on the first day the price closes back at or above the peak.
The sum is simple: drawdown = price ÷ peak − 1. At Nvidia's October 2002 low, the result was −89.7%.
The sum gives a negative number. This guide quotes each fall as a positive %, so −89.7% is a fall of 89.7%.
The maximum drawdown is the worst of all the drawdowns over a stated period. It shows the most an investor could have lost from a high.
A drawdown is measured from the high. Someone who bought below the peak lost less. That investor may even still be in profit.
Drawdown differs from volatility, the size of day-to-day swings. What Is Volatility? covers that measure. Volatility does not say how far a price has fallen from its top.
Drawdowns of an S&P 500 fund since 1993: the underwater chart
An underwater chart plots the drawdown on every day. The line sits at 0% on a new high. It dips below zero during each fall.
Source: YX Insights
Chart 1 shows SPY (the S&P 500 ETF) from January 1993 to 6 October 2026, with dividends counted. SPY is a fund that tracks the S&P 500, an index of 500 large US companies. What Is the S&P 500? explains the index.
SPY fell 10% or more from a high 12 times. Four of those falls went past 20%.
The deepest was 55.2%, from the 9 October 2007 peak to the low on 9 March 2009. SPY got back to its 2007 high on 16 August 2012, 4.9 years after the peak.
The longest wait followed the fall of 2000 to 2002. SPY needed 6.6 years to regain its March 2000 high.
On 6 October 2026, SPY closed at a record high, so its drawdown was 0%. Since 1993, SPY has closed at a record on 10.5% of trading days.
Maximum drawdown of five assets: shares, a bond fund and Bitcoin
The table sets five assets side by side. Each one starts at the first date in our price data, so the periods differ. Bitcoin's data starts in 2014.
Asset | Data from | Worst fall | Peak | Low | Back at the old high | Peak to recovery |
|---|---|---|---|---|---|---|
Nvidia (NVDA) | Jan 1999 | −89.7% | 3 Jan 2002 | 9 Oct 2002 | 13 Nov 2006 | 4.9 years |
Bitcoin | Jan 2014 | −83.4% | 17 Dec 2017 | 16 Dec 2018 | 30 Nov 2020 | 3.0 years |
QQQ (Nasdaq-100 ETF) | Mar 1999 | −83.0% | 27 Mar 2000 | 9 Oct 2002 | 20 Feb 2015 | 14.9 years |
SPY (S&P 500 ETF) | Jan 1993 | −55.2% | 9 Oct 2007 | 9 Mar 2009 | 16 Aug 2012 | 4.9 years |
TLT (long-term US Treasury bond ETF) | Jul 2002 | −48.4% | 4 Aug 2020 | 19 Oct 2023 | Not yet (45.2% below on 6 Oct 2026) | 6.2 years so far |
Source: YX Insights
Nvidia's worst fall, 89.7% in 2002, is the deepest of the five. Nvidia got back to its January 2002 high in November 2006.
QQQ tracks the Nasdaq-100, an index of 100 large companies listed on the Nasdaq Stock Market. QQQ fell 83.0% between March 2000 and October 2002. QQQ did not get back to its 2000 high until February 2015, 14.9 years after the peak.
Bitcoin's worst fall was 83.4%, from December 2017 to December 2018.
Bitcoin has had other deep falls since. From its high on 6 October 2025, Bitcoin fell 53.1% by 30 June 2026. On 6 October 2026, it was still 31.4% below that high.
TLT (the long-term US Treasury bond ETF) holds US government bonds with more than 20 years left to run. A government bond fund can fall far too. TLT fell 48.4% from August 2020 to October 2023.
The 10-year Treasury yield is the interest rate on 10-year US government bonds. Over those dates, it rose from 0.52% to 4.98%. Bond prices fall when yields rise, as Bond Prices and Yields explains.
On 6 October 2026, TLT was still 45.2% below its 2020 high.
Maximum drawdown vs annual return
Source: YX Insights
Chart 2 puts each asset's annual return beside its maximum drawdown. Annual return here is the steady yearly rate that turns the start value into the end value, with dividends counted.
The two highest returns came with the two deepest falls. Nvidia returned 37.2% a year, while Bitcoin returned 45.2%. Their worst falls were 89.7% and 83.4%.
A deeper fall did not always bring a higher return. QQQ's worst fall was 83.0%, while SPY's was 55.2%. Yet their returns were almost the same.
QQQ made 11.0% a year from 1999. SPY made 10.9% a year from 1993.
TLT returned 3.2% a year, yet it still fell 48.4%. So read return and drawdown together. Either figure alone leaves out half the picture.
Why a deep drawdown takes so long to recover
Source: YX Insights
Chart 3 shows the rise needed to win back a fall. The sum is 1 ÷ (1 − fall) − 1.
A 10% fall needs an 11.1% rise. A 50% fall needs 100%. A 90% fall needs 900%.
The gap grows because the rise starts from a lower base. Nvidia's 89.7% fall needed a rise of about 870% to recover.
From its January 2002 peak, that took Nvidia 4.9 years. From the October 2002 low, it took 4.1 years.
How to read a drawdown figure
A few checks help:
Check the period. A maximum drawdown covers only the dates tested. Our Bitcoin data starts in 2014, so it leaves out any earlier fall.
Check the prices used. Daily closes show deeper falls than monthly averages. Counting dividends can make a fall look smaller than prices alone.
Check the recovery. Ask how long the asset stayed below its high, as well as how far it fell. Look at the drawdown today too.
Use it with other risk measures. Beta measures how much a share moves with the market, as What Is Stock Beta? shows. Beta does not show how deep a fall has been.
Check a backtest against holding the asset. A backtest runs a trading rule over past prices. Compare its maximum drawdown with the asset's own over the same dates. How to Read a Backtest Report shows where to find it.
A drawdown is the fall from a previous high. The maximum drawdown is the worst one over a period. Read it with the time taken to recover and the return earned alongside it.
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Common questions about drawdowns
What does drawdown mean in stocks?
A drawdown is how far a share or fund has fallen from its previous high, in %. If a share peaked at $100 and now trades at $80, its drawdown is 20%. The share stays in drawdown until it closes back at or above $100. A new high resets the drawdown to 0%.
How do you calculate maximum drawdown?
Divide each day's price by the highest price up to and including that day. Then subtract 1. The most negative result over the period is the maximum drawdown. For SPY (the S&P 500 ETF) from 1993 to 6 October 2026, it was −55.2%, from October 2007 to March 2009.
What is a good maximum drawdown?
There is no single good number. A maximum drawdown means something only next to the return earned. So compare a fund or strategy with holding what it invests in, over the same dates. For scale, SPY's worst fall since 1993 was 55.2%, with dividends counted.
Is a drawdown the same as a loss?
No. A drawdown measures the fall from the highest price, while a loss depends on what you paid. An investor who bought below the peak has a smaller loss, or may even be in profit. A drawdown becomes a realised loss only when the holding is sold below its purchase price.
How long does it take to recover from a drawdown?
It depends on how deep the fall was and what came after. SPY took 4.9 years to regain its 2007 high, with dividends counted. QQQ, a Nasdaq-100 fund, took 14.9 years to regain its 2000 high. TLT had not regained its 2020 high by 6 October 2026, 6.2 years later.
DISCLAIMER: This article is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.