How to use it
- Choose “Drop %” and enter how far the stock fell, or choose “Prices” and enter your buy price and the current price.
- Enter an expected yearly return (8% by default) to estimate how long recovery takes.
- Open the averaging section and enter the shares you hold and the shares you add now to see the new average cost and the rise still needed.
The top result is the rise needed to break even, followed by years to recover, your average cost after averaging down and the rise needed then, and a table from a 5% to a 99% drop.
How it is calculated
- Rise needed: after a drop d the stock is worth (1 − d), so it must rise 1 ÷ (1 − d) − 1.
- Years: at a constant return r, years = ln(1 ÷ (1 − d)) ÷ ln(1 + r); with a return of 0 or less it never recovers.
- Averaging down: new average = (old shares × buy price + added shares × current price) ÷ total shares; new rise needed = average ÷ current − 1.
Example: a stock bought at 100 falls to 70 (down 30%) and needs +42.86% to break even, about 4.6 years at 8% a year. Adding as many shares again at 70 brings the average to 85, so a 21.43% rise is enough.
Notes
- Pure arithmetic: no fees, taxes or dividends. Your broker statement is the final word.
- Averaging down does not erase a loss; it lowers the average cost while putting more money at risk.
- This is not investment advice.