Capital Allocators · Monday, June 29, 2026
A manager experienced their worst year in 2020, with a drawdown approaching 50%. The podcast host detailed spending extensive time with the manager, who was resilient and focused on earning back investor capital, which ultimately led to a decision to stay invested. This faith was rewarded, as the manager compounded significantly, achieving a 5x return from 2021 to 2026.
“2020 was this manager's worst year. He was down an additional 30%. We thought 2019 was the worst year, but it turns out 2020 was the worst year so far. That led to a real moment of soul searching. You have a drawdown that's starting to get close to 50% at the trough.”
“He kept saying, I really want to earn back your capital. I want to reward you for your patience.”
“It doesn't always work out this way, but things started to turn in 2021 and from 21 to 26, it's been a 5x. So he's compounded significantly over this period.”