How to Get Through a Drawdown Without Making Decisions You Will Regret

The decision people later regret is made not on the day the market falls, but on the day the drawdown first exceeds the depth you had silently counted on. That is why all the work is done before the fall: you determine in advance which event will make you sell, which will make you buy more, and which will not make you do anything at all. If there is no such rule, your state of mind takes over its role, and your state of mind is at its worst precisely at the point of maximum drawdown — where the selling price is at its lowest. Below are the mechanisms that turn a temporary decline in prices into a permanent loss of money, and the ways around them.

Why a drawdown hits your decisions, not your portfolio

Until you sell, a drawdown is a revaluation. It changes the "portfolio value" line in the app and changes neither the number of securities in your account nor the issuer's obligations to you. The loss becomes final at the moment of the trade: a sale converts a paper decline into a realised loss.

Something not obvious follows from this: the danger is not the market but a shrinking horizon. A person who bought for years starts, in a drawdown, to look at the daily chart and to measure themselves against the entry price. The entry price is a fact of your biography, not a property of the asset; the market does not know about it and is under no obligation to return to it. As soon as a decision starts to rest on "I just want to get back to zero", it stops resting on the business.

Telling a drawdown from an impairment

A fall in price does not in itself tell you what has happened. Two different events have to be told apart: the market has marked down the company's future — or the company's future has genuinely deteriorated. This is checked not against the chart, but against the financial statements and the facts.

Look at what has changed in revenue, debt and interest expenses, whether payouts have stopped, whether the dividend policy has changed, whether restrictions on distributing profit have appeared. The source data is taken from issuers' financial statements and from corporate news, not from the comments under social media posts. Valuation multiples are useful here as a question, not as an answer: if 3,78 for {{instrument:SBER}} is below the range that is usual for the stock, that is a reason to ask what the market is pricing into future earnings, not a conclusion that the stock is cheap.

What turns a drawdown into a permanent loss

Leverage. A margin position takes away your right to wait it out. When the collateral falls below the requirement, the broker closes the position by force, and does so at the market price at exactly the worst point. An investor without leverage chooses the moment of sale themselves; an investor with leverage has handed that choice over to the mechanics of settlement.

The date by which the money is needed. Money you will need in the foreseeable future must not be held in equities: in that case the date of sale is set by your life, not by your calculation. For short-term goals there are OFZ and other instruments of the debt market, which have a maturity date — a property that equities do not have.

The tax side of the trade. A sale is a taxable event. By locking in a loss, you break the continuous holding period on which the investment deduction under Article 219.1 of the Tax Code depends, and start it over again. The loss itself does not vanish without trace: Article 220.1 allows losses on traded securities to be carried forward to future periods and used to reduce the tax base — 13%. But offsetting losses is a consolation, not a strategy: it returns part of the tax, not part of the capital.

A plan written in advance

Step 1 — put down in writing the criterion on which you sell: a deterioration in the business, the cancellation of payouts, a change in the ownership structure, a parameter moving beyond the limit you have set. Step 2 — describe separately what you do when the price falls with no change in the facts: usually nothing, or a scheduled top-up. Step 3 — set a date for reviewing the portfolio and stick to it, without shifting it to suit the mood of the market; the corporate events calendar and the payout calendar serve as reference points: {{dividend_calendar|limit=5}}.

Cash flow helps because it gives you a reason not to sell: as long as the securities are paying, the portfolio remains a working asset. The summary of dividends shows which payouts have been confirmed and which are so far only under discussion. If picking individual securities in a drawdown is psychologically hard, part of the solution can be funds, where the decision on the composition is made not by you and not on the worst day. Unfamiliar terms are explained in the glossary.

What you will not find here

This article does not and cannot say which drawdown is "normal" and which points to a problem: the platform has no data on your portfolio, your time horizon or your obligations, and market averages do not describe your case. Nor is there a forecast of recovery: no such thing exists, and any number in a sentence of that kind would be fiction. The only verifiable thing you control in a drawdown is your own actions and the period for which you have committed your money to the market.