That 9X return from Nifty Midcap is irrelevant if you couldn't survive the 73% of time it was in drawdown
- Amar Harolikar
- Jun 22
- 2 min read
I analyzed 18 years of data for three iconic Indian investments: the Nifty 50, L&T, and the Nifty Midcap 100.
The results on paper are spectacular. But they hide a brutal psychological truth.
I designed the Anxiety Index to quantify the psychological impact. An index of 73% means you spent 73% of your holding period watching your investment sit below a previous peak (exact definitions at the end)
→ To earn that 9X in midcaps, you had to endure a 73% Anxiety (Index)
→ For L&T's impressive 7X growth, the price was a 75% Anxiety (Index), including a single drawdown that lasted 2,377 days.
Let that sink in. 6.5 years watching your investment be worth less than it was before. Even the 'safer' Nifty 50 spent 63% of the time in a drawdown.
Your biggest risk isn't a number on a spreadsheet. It's your own behavior in the face of a prolonged, gut-wrenching drawdown.
Your financial plan is irrelevant if you don't have the conviction to execute it when you are in depths of a bear market
Before you chase the next 10X idea, ask yourself:
↳ Do I have the temperament to go nowhere for 5+ years?
↳ Is my financial life structured to survive needing money at the worst possible time?
↳ Is my asset allocation built for my psychology, not just for a model?
Past performance is no guarantee of future results. But it is a hell of a teacher about the price of returns.
Quantify the psychological price of your own investments. I built TIGZIG Quants for this analysis - it's free. Analyze any stock, metal, or crypto across your chosen time window.
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P.S.
Drawdown measures the fall from an asset's most recent peak. You can be profitable overall but still be in a 20% drawdown. Anxiety Index is my metric for quantifying the psychological cost of watching your portfolio drop from a peak and waiting for it to recover. It is calculated by summing the days of most significant drawdown periods (I take the worst seven) and expressing this as a percentage of the total time.
This is not investment advice. I'm a CA, data scientist, ex-trader and long time investor building tools for my own research. The code is open-source.
