— Understanding Drawdowns, Time Corrections & the Psychological Cost of Compounding
Every investor dreams of buying a multibagger, going to sleep, and waking up wealthier. Charts showing 10x, 20x, and 50x returns make us fantasize:
“2 crores will become 10 crores… life will change.”
But this fantasy hides the real truth.
Multibaggers don’t move in a straight line.
They move through chaos, confusion, deep drawdowns, and painful time corrections.
The journey of a great stock is a journey of doubt.
And unless you develop the emotional capacity—the iron gut—to sit through that pain, you will never see the end result.
This article is about understanding that pain so deeply and clearly that you accept it as normal, not as a mistake.
The Journey Begins the Moment You Buy
The moment you buy a stock, its journey and your emotional journey diverge.
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The stock will fluctuate.
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Your mind will amplify every dip.
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The stock will pause, consolidate, fall, recover, test patience, break hopes, and then—eventually—move higher.
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Meanwhile, your mind will scream:
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“Should I sell?”
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“Did I buy too high?”
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“Why didn’t I sell at the top?”
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“Was I lucky? Was it a mistake?”
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People underestimate how much emotional damage a correction can cause.
Because it hurts… in absolute money terms.
When your portfolio goes from:
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₹2 crore → ₹3 crore → ₹2.5 crore,
the logical mind says, “It’s just a drawdown.”
But the emotional mind screams, “I lost ₹50 lakh!”
And that pain feels real, even when it's only a temporary quotation.
Why We Studied Apollo Tyres: The Reality of a Multibagger Journey
You invested ₹2 crore in Apollo Tyres on 1 April 2022.
By late 2025, this amount grew to nearly ₹4 crore.
But on the journey, we plotted:
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Multiple drawdowns of 15–25%
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Falls of ₹30–₹80 lakh from peaks
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Months of time correction
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Several periods where the stock looked dead
This is the actual emotional journey of a successful investor.
Without visualizing this, an investor thinks:
“Other people made it big because their stocks never fell.
My stock keeps hurting me.”
The truth is the opposite.
The bigger the eventual gain, the more violent the path.
Normal vs Not Normal: What Buffett Never Explains Fully
Buffett says:
“If you cannot tolerate your portfolio falling 50%, you cannot earn 20% returns.”
But he never shows you the lived experience of that 50% fall.
Let’s break it down:
What’s normal
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15–40% corrections (even in the best stocks)
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2–6 months of sideways movement
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Sharp swings after hitting new highs
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Gains evaporating temporarily
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Sector narratives turning cold
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Feeling foolish for holding
These are not red flags.
They are the price of admission to long-term wealth.
What’s NOT normal
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Structural change in industry
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Revenue model breaking
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Debt exploding
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Corporate governance issues
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Permanent loss of competitive advantage
Most investors treat normal volatility as danger
and real danger as noise.
That’s why very few become rich by holding.
Apple and Google also breathe violently
Even the world’s safest large-cap giants "breathe" through volatility:
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Apple: normal 1-year drawdown range −20% to −40%
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Google: normal 1-year drawdown range −30% to −60%
These are trillion-dollar companies.
If they can fall this much without breaking…
why should smaller companies have a smooth journey?
Your Most Important Realization
You said it perfectly:
“Big money is in waiting.
To make it big, these drawdowns are essential.
One needs to develop the stomach for paper losses.
At 10 crores, even a 20% drawdown is a notional loss of 2 crores —
and most people will never accumulate 2 crores in their lifetime.”
This is truth distilled.
This is wisdom most investors never reach.
And this is the key reason so few people become wealthy from stocks.
Drawdowns Are Not Mistakes — They Are the Cost of Compounding
What prevents wealth:
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Not lack of knowledge
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Not lack of intelligence
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Not lack of opportunity
It is the inability to tolerate temporary losses.
The stomach, not the brain, decides wealth.
Every 10x story contains:
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periods where the stock is down 30%
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days where it’s down 5%
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months where nothing happens
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narratives turning negative
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headlines predicting doom
Yet the stock continues upward for the patient.
A Practical Framework to Develop an Iron Gut
1. Convert every loss into percentage, not rupees
₹1 crore down sounds scary.
A 20% correction sounds normal.
2. Study historical drawdowns
Normalize them.
Expect them.
Write down typical drawdown ranges.
3. Accept volatility as oxygen
No volatility → no compounding.
4. Review time-underwater
Every great stock has spent:
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months below its previous peak,
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sometimes years.
That's not failure — it's preparation.
5. Build a “shock absorber” mindset
When your portfolio grows, the drawdowns will grow in rupees.
If you aim for ₹50 crore net worth,
a 20% drop means ₹10 crore drawdown.
You must grow emotionally as your portfolio grows financially.
Final Thought: An Iron Gut Is More Valuable Than Stock Tips
Anyone can pick a winner once.
Very few can hold a winner long enough.
Wealth creation has a simple formula:
Hold great businesses through painful drawdowns.
Hold even longer through time corrections.
Hold even when nothing is happening.
And hold especially when doubt is highest.
The stock market rewards the patient,
but it makes sure only the emotionally strongest survive long enough.
This is why investors need an iron gut.
Because without it, even the best stocks won’t make you rich.
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