Stock Market · True or False
Is it true that a 20% drop followed by a 20% gain brings you back to break-even?
False. Loss math is asymmetric. A 20% loss requires a 25% gain to recover.
A 20% drop followed by a 20% gain leaves you at 96%, not 100% — this asymmetry means losses are always more damaging than equivalent gains are helpful.
Assuming that equal percentage moves cancel out, when the math always favors losses — making downside protection more valuable than upside capture.
This scenario is one of 155 in the Skillful Stock Market track. Each card states a situation, you decide true or false, and the explanation follows immediately.
- Answer
- False
- Track
- Stock Market
- Topics
- risk-math, investing-principles
Also asked as
Does a 20 percent drop followed by 20 percent gain break even? Why percentage losses and gains are not symmetric? How math works against stock market recovery?
The scenario in full
A 20% drop followed by a 20% gain brings you back to break-even.
Frequently asked questions
Is it true that a 20% drop followed by a 20% gain brings you back to break-even?
False. Loss math is asymmetric. A 20% loss requires a 25% gain to recover.
Does a 20 percent drop followed by 20 percent gain break even?
False. Loss math is asymmetric. A 20% loss requires a 25% gain to recover. A 20% drop followed by a 20% gain leaves you at 96%, not 100% — this asymmetry means losses are always more damaging than equivalent gains are helpful.
Why percentage losses and gains are not symmetric?
False. Loss math is asymmetric. A 20% loss requires a 25% gain to recover. A 20% drop followed by a 20% gain leaves you at 96%, not 100% — this asymmetry means losses are always more damaging than equivalent gains are helpful.
How math works against stock market recovery?
False. Loss math is asymmetric. A 20% loss requires a 25% gain to recover. A 20% drop followed by a 20% gain leaves you at 96%, not 100% — this asymmetry means losses are always more damaging than equivalent gains are helpful.
Where does this stock market question come from?
It is one of 155 scenarios in the Skillful Stock Market track. Each card states a realistic situation, you decide true or false, and the explanation follows immediately.
How do I practise more questions like this?
Start the Stock Market quiz. It runs about two minutes per session, the first 150 questions are free across every category, and your progress saves automatically.