Every so often an investor will say something akin to, man, I wish I would’ve bought Apple or Netflix at some period of time decades ago, and I totally get that sentiment, especially when you look at a mountain chart like this. Now, chances are when you think of a stock portfolio, you probably picture something like this showing an asset or a portfolio starting at some prior period of time, and you could see how it’s climbed the mountain as it’s accumulated in value.

And honestly, that’s what we all like to see is something accumulate as opposed to fall. But that being said, there is another way of looking at the same type of asset. You can think of it like the upside down of investing. Now when you see this chart, it can look pretty ominous and in a lot of ways it is, but it’s really looking at the same data, but from a slightly different perspective. It’s taking the closing value of a given equity and it’s looking back to its prior all time closing high to see how far it’s fallen from that prior high.

The reason why a chart like this is valuable is because it speaks to the experience that an investor could have had, had they bought at the absolute worst time, the prior all time high of that asset. The truth is a lot of people have short-term memories. If we always look at an asset in terms of one perspective, only looking at how much it’s grown over time, we can suffer from recency bias.

We can be led astray based upon how much something has grown recently and forget about how much it’s fallen in the past. And while past performance doesn’t guarantee future results, it can be a good indication in terms of how much risk is present within an asset so that when we look at it, we don’t get led astray by recent performance.

As investors, we have to be mindful of both worlds and when we see a stock runup as much as it did in this case, are we forgetting about how much it’s fallen in prior times and make sure that we have the right temperament to not get overexposed in a particular asset or over concentrated so that we’re subject to a significant drawdown in one particular area. To not get overexposed in a particular asset or over concentrated so that we’re subject to a significant drawdown in one particular area. Looking at both sides of a chart is a good way of making sure that you’re not looking too greedily or fearfully at any given asset.