Drawdown Tolerance
The maximum percentage decline from a portfolio's peak value an investor can survive without changing behavior — without selling at a loss to free capital, without abandoning the discipline of the practice, without capitulating to a more conservative posture mid-drawdown. Drawdown tolerance is a behavioral and life-circumstance number, not a mathematical one; any drawdown above zero is mathematically survivable, but the practical limit is far tighter and is the binding constraint on position-sizing discipline. Most retail investors over-estimate their tolerance until they meet it.
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Active Management · Active Share · AI Revenue · Anchoring Bias · Cost of Capital · Creation Unit
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