Question of the Day: The stock market recently dropped 33% from its peak. What percentage increase would get it back to its original level?

Mar 25, 2020
Question of the Day, Math, Investing

Answer: 50%

It's the math of investment returns. Let me explain:

Your investment was worth $100. After a 33% drop, your investment is worth $67. In order to get back to $100, it has to rise $33 in value which would be a 50% increase from its current level of $67. 

No additional questions.

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Behind the numbers (Zachs):

Big Losses Hard to Recoup
The math of percentages shows that as losses get larger, the return necessary to recover to break-even increases at a much faster rate. A loss of 10 percent necessitates an 11 percent gain to recover. Increase that loss to 25 percent and it takes a 33 percent gain to get back to break-even. A 50 percent loss requires a 100 percent gain to recover and an 80 percent loss necessitates 500 percent in gains to get back to where the investment value started.


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About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.