What Is the Recovery Burden Index and Why Does It Matter?

✅ The Recovery Burden Index (RBI) measures

the true cost of a portfolio’s drawdown —

not just how deep it fell, but how long it took to recover.

It captures the time, severity,

and psychological weight of being underwater.

Why does it matter?

Because surviving a drop is one thing. Recovering from it —

in real time, with real emotions — is something else entirely.

📉 The Problem: What Most People Get Wrong

Wall Street taught us to look at Max Drawdown —

the lowest point your portfolio reached.

But here’s the truth:

Max drawdown tells you how far you fell.
RBI tells you how long you stayed down —
and how hard it was to get back up.

And when investors stay underwater for years, two things happen:

Their emotions fracture.
Their decisions spiral.

That’s how portfolios — and confidence — quietly die.

🔁 The Belief Shift

Old Paradigm: “As long as I recover eventually, I’m fine.”

New Paradigm: “The longer I’m underwater, the more risk I carry — structurally and emotionally.”

“Pain isn’t just about losses.
It’s about how long you have to carry them.”

🧱 The Structural Explanation

The Recovery Burden Index (RBI) is

one of the 12 Dimensions of Portfolio Risk.

It evaluates:

The depth of your worst drawdowns
The time it took to fully recover
The compounding penalty of being stuck below peak value

Why it’s essential:

🔻 Two portfolios may have the same max drawdown...
…but if one recovers in 6 months and the other takes 3 years,
they are not equally strong.

RBI assigns a score to that difference.

→ A high RBI = Slow, painful recoveries
→ A low RBI = Fast, adaptive rebounds

RBI feeds directly into your Gamma Score (Stability)

and affects your Sigma Score™ (0–100) —

your complete structural health reading.

📊 Why It Matters

Without RBI, you’re blind to how long your portfolio stays wounded.

That means:

You underestimate how fragile your structure really is
You overestimate your ability to stay disciplined
You risk abandoning your strategy at the worst time

With RBI:

✅ You understand the emotional time cost of drawdowns
✅ You can compare portfolios with real-world survivability
✅ You protect yourself not just from losses — but from regret

“RBI showed me why I’d always bailed at the worst moments.
It wasn’t just volatility — it was the burden of recovery.”

👥 Who This Is For

→ For individual investors who want to feel in control:
If you’ve ever felt unsure whether your portfolio is truly sound —

this is your clarity.

→ For advisors who want to lead with proof, not promises:
If you want to show clients where they stand —

and how to improve —

this diagnostic changes everything.

🛠 When You’re Ready, Here’s How I Can Help.

🧠 Further Insights to Strengthen Your Clarity

Ready to go deeper?

These aligned insights build on

what you just uncovered.

What Will the Sigma Score™ Reveal About My Portfolio?
Can a Single Number Really Reveal Portfolio Strength?
What Are the 12 Dimensions of Risk?
How Is the Sigma Score™ Calculated?

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