How much can you lose in stocks?

The way back is longer than the fall

A fall is measured from the higher price and a rise from the lower one. If a stock falls from $100 to $50, it has lost 50%. To reach $100 again it must then gain $50 from $50, which is 100%. The deeper the fall, the faster the needed rise grows:

It is plain arithmetic. After a 90% fall a tenth is left, and that tenth has to become ten times larger to get you back.

How deep the largest companies have fallen

Here is the largest fall from a high to a low for each of the 20 largest US companies today, how much the stock then needed to rise, and when it was back at the high:

AMD fell 96.6% between June 2000 and July 2015. To get back, the stock needed to rise 2832%.

It was back at its high in January 2020.

Amazon fell 93.3%, then needed to rise 1397%, and was back at its high in September 2007.

These are the largest companies today. Those that went bankrupt or left the market are missing, and in a bankruptcy the owners usually lost the whole stake. How far an index has fallen and how long it took to recover is in the study of market crashes and the lesson on how long you need in the market.

When the loss can exceed the stake

All you can lose on a stock bought with your own money is what you paid. What happens to the shares when a company goes bankrupt is in the lesson on bankruptcy. If you buy with borrowed money, sell short or trade futures, the loss can be larger than the stake, see the lesson on leverage.