Gianpiero Di Girolamo @gdigirol: "📊 𝗚𝗲𝗻𝗲𝗿𝗮𝗹 𝗖𝗮𝘀𝗲 𝗦𝘁𝘂𝗱𝘆..."

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📊 𝗚𝗲𝗻𝗲𝗿𝗮𝗹 𝗖𝗮𝘀𝗲 𝗦𝘁𝘂𝗱𝘆 2: 𝗧𝗵𝗲 𝗣𝗼𝘄𝗲𝗿 𝗼𝗳 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗧𝗼𝗽-𝗨𝗽𝘀 𝗗𝘂𝗿𝗶𝗻𝗴 𝗗𝗿𝗮𝘄𝗱𝗼𝘄𝗻𝘀 𝗖𝗼𝗺𝗽𝗮𝗿𝗮𝘁𝗶𝘃𝗲 𝗔𝗻𝗮𝗹𝘆𝘀𝗶𝘀: 𝗣𝗮𝘀𝘀𝗶𝘃𝗲 𝘃𝘀. 𝗔𝗰𝘁𝗶𝘃𝗲 𝗜𝗻𝘃𝗲𝘀𝘁𝗼𝗿 𝗠𝗮𝗿𝗸𝗲𝘁 𝗖𝗼𝗻𝘁𝗲𝘅𝘁: An asset undergoes sequential drawdowns (–30%, then –20%, then –10%), followed by a 6-month flat period, and then a +60% recovery. 🧍‍♂️ 𝗣𝗮𝘀𝘀𝗶𝘃𝗲 𝗜𝗻𝘃𝗲𝘀𝘁𝗼𝗿 Initial Investment: $ 1,000 𝗔𝘀𝘀𝗲𝘁 𝗩𝗮𝗹𝘂𝗲 𝗔𝗳𝘁𝗲𝗿 𝗗𝗿𝗮𝘄𝗱𝗼𝘄𝗻𝘀: After –30%: $ 1,000 × 0.70 = $ 700 After further –20%: $ 700 × 0.80 = $ 560 After further –10%: $ 560 × 0.90 = $ 504 Flat period → no change After +60% recovery: $ 504 × 1.60 = $ 806.40 Net Return: –$ 193.60 Return %: –19.36% 🧍‍♂️ 𝗔𝗰𝘁𝗶𝘃𝗲 𝗜𝗻𝘃𝗲𝘀𝘁𝗼𝗿 𝘄𝗶𝘁𝗵 𝗧𝗼𝗽-𝗨𝗽𝘀 Initial Investment: $ 1,000 𝗧𝗼𝗽-𝗨𝗽𝘀: $ 100 after –30% → buys at 0.70 level $ 100 after –20% → buys at 0.56 level $ 100 after –10% → buys at 0.504 level $ 50 x 6 months during flat period (at 0.504 level) = $ 300 𝗧𝗼𝘁𝗮𝗹 𝗜𝗻𝘃𝗲𝘀𝘁𝗲𝗱: $ 1,600 Let’s now calculate the units accumulated: Initial $ 1,000 at $ 1.00 = 1,000 units $ 100 at $ 0.70 = 142.86 units $ 100 at $ 0.56 = 178.57 units $ 100 at $ 0.504 = 198.41 units $ 300 at $ 0.504 = 595.24 units Total Units = 1,000 + 142.86 + 178.57 + 198.41 + 595.24 = 2,114.99 units At final price (after +60%): $ 1.00 → $ 1.60 Portfolio value = 2,114.99 × 1.60 = $ 3,383.98 Net Return = $ 3,383.98 – $ 1,600 = +1,783.98 Return % = +111.5% 📐 𝗦𝘂𝗺𝗺𝗮𝗿𝘆 𝗧𝗮𝗯𝗹𝗲 Strategy Final Value Invested Net Return Return % Passive $ 806.40 $ 1,000 –$ 193.60 –𝟭𝟵.𝟯𝟲% Active (Top-Up) $ 3,383.98 $ 1,600 +$ 1,783.98 +𝟭𝟭𝟭.𝟱𝟬% 🔍 𝗞𝗲𝘆 𝗜𝗻𝘀𝗶𝗴𝗵𝘁 In this scenario, where the asset fully recovers from a deep drawdown, the active investor achieves not just a recovery but a huge outperformance. By adding during downturns, they accumulate units at increasingly better prices. When the price rebounds, the compounding effect on the larger number of low-cost units multiplies the returns. 🧠 𝗙𝗶𝗻𝗮𝗹 𝗡𝗼𝘁𝗲: Same as in Case 1 This strategy only makes sense if you have high conviction in the asset’s quality and its capacity to rebound. Otherwise, staying exposed—or doubling down—may do more harm than good, whether it's a stock, ETF, or Popular Investor portfolio. $GLD (SPDR Gold) $SPX500 $NSDQ100 $QQQ (Invesco QQQ) $VOO (Vanguard S&P 500 ETF) $FNGA $SOXX (iShares Semiconductor ETF ) $SOXL (Direxion Daily Semiconductors Bull 3x Shares) $SPY (SPDR S&P 500 ETF)