How much drawdown for this return?

Discussion in 'Trading' started by tyrant, Nov 12, 2006.

  1. tyrant


    Assume you are trading a 500k capital of your own and has a strategy that generates on average 50% per annum, what is the max drawdown and also the average drawdown that you expect to experience?

    For e.g., I think Aaron of Schindler's averages about 30% per annum but he has gone through a 50% drawdown at one stage.

  2. Accredited investors generally do not tolerate more than 15% matter what the return..
  3. You bet if I'll take a 30% draw down for a 1000000% return.
  4. Its according to which comes first :)

  5. tyrant


    Hi Electric,

    Forget about what investors would tolerate. What would you tolerate given an expected annual return of 50%?

    Warren Buffett's long term average return is 30%. I appreciate if somebody can give me his worst drawdown during those years? Something like 50% maybe?

    How about others? What kind of darwdowns do you tolerate?
  6. A simple DD does not tell the whole story. Compare:

    1) A 20% DD taking 100 days to recover;
    2) A 30% DD taking 2 days to recover

    I'll take the 30% DD.
  7. tyrant


    Yes. Max drawdowns is but one aspect of many important things to look at. Speed of recovery or resilience is important too. Thanks for posting but appreciate your view on my question.
  8. Do you guys like "High Yielding Roller Coaster" type of systems when it is in other hands? I assume you are trading yourself.
    Don't you let your managed money portion of your funds diversify you from your own trading?

    I have not answered the question yet, as I want to see what you guys answer. Be honest too! Also do you allow for more DD when it is your own trading?

    Michael B.
  9. For a 500K account there are trading/scalping strategies give you 100% return for max DD < 12%. So for 50%, DD must be < 6% (at least for me).

    For bigger account (e.g. >$10M), it's hard to expect 50% return without some thing like 30% DD, which I would accept.
  10. I don't think he is anywhere near 30% average return. By looking at BRK-A he had a 40% drawdown from 1999-2000
    #10     Nov 12, 2006