When markets fall apart and sentiment is at its worst, could that actually be the best time to invest?In this episode, we explore the surprising opportunities that emerge during deep market drawdowns. Using real-world examples like Netflix, Meta, and Apple, we dive into the psychology behind investor overreaction, the concept of mean reversion, and a data-backed investment strategy that targets companies down 50%, 75%, even 90% from their highs.We unpack:

- Why dramatic selloffs often lead to powerful rebounds

- How to distinguish between temporary setbacks and permanent decline

- What historical backtests tell us about the potential returns — and risks

- And a practical checklist for identifying recovery candidates

Whether you're a seasoned investor or just market-curious, this deep dive will challenge your instincts and offer a fresh perspective on downturns. Sometimes, the magic happens when things look the bleakest.

Find the full research paper here: https://community.quantopian.com/c/community-forums/the-magic-of-drawdowns

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Quant Radio is an AI-generated podcast, intended to help people develop their knowledge and skills in Quant finance. This podcast is not intended to provide investment advice.