Lose half. Now you need to double it.

In hedge funds, lose half your money, and you need to double it. The drop is called a drawdown. Say a fund is at a hundred dollars. It falls to fifty. That's a fifty percent drawdown. Now look at the way back. To get to a hundred, fifty has to gain fifty. That's a hundred percent. Half down. Double up. A small fall is cheap. Ten percent down takes about eleven to recover. Thirty down takes about forty-three. Seventy down takes about two hundred and thirty-three. So why do investors care? Deep falls can take a long time to recover. And time is what investors can't get back. Down is faster than up.