Hedge Fund Women and the High-Water Mark: When Drawdown Season Breaks More Than Your Book

WOMEN IN FINANCE • April 27, 2026

Perla Has Not Answered the Texts and Has Not Eaten

Perla’s office is quiet at 11pm on a Wednesday, the kind of quiet that only exists after everyone else has gone home. Two of her largest longs are down double digits this month, and she has been staring at the same two lines on her screen for an hour. She built the thesis on both names over a year ago. She still believes in it. Her stomach doesn’t agree.

On her desk sits a salad she ordered at six. It’s untouched. Her phone shows two texts from her partner: one asking if she’s coming home, one saying dinner is in the fridge. She hasn’t answered either one. This is day four of the drawdown, and she has been running the same loss in her head on a loop since Monday: if she sells tomorrow, she caps it and keeps a clean story for her investors; if she holds, she risks her worst year at the fund. The math isn’t the hard part. The hard part is that her body won’t settle long enough to trust her own read of it.

This isn’t only a story about numbers. It’s what happens when a driven woman’s private experience of a bad month collides with a compensation structure built entirely around one invisible line: the high-water mark. What that line does to her, quietly, over the course of a season, is the subject of this post.

I want to be clear about what this essay is and isn’t. It’s not investment advice, and it’s not a diagnosis. It’s an attempt to name, in plain language, the experiential and relational weight that a drawdown season places on a woman PM, the same way I’d name what sustained, layered stress does to anyone carrying it for months without relief. Perla’s night is one version of a pattern I see across the industry: capable, well-trained women, quietly buckling under a structure that was never built with their nervous systems in mind.

What the High-Water Mark Actually Does to a Woman PM

The high-water mark is ordinary fund-economics language. It’s the highest net asset value a fund has reached, and it’s the number a portfolio manager has to exceed again before she earns performance fees. On paper it’s just an accounting mechanism. In practice, for a woman living underneath it during a drawdown, it becomes something closer to a verdict she’s being asked to overturn, alone, on a deadline she didn’t set.

In my work with driven women in finance, I see the same pattern again and again: the drawdown itself is stressful, but it’s the high-water mark hanging above it that turns ordinary stress into something closer to a full-body alarm. The stress response doesn’t distinguish neatly between a market loss and a personal one. When a woman PM is under the mark, her system reads it as a threat to identity and standing, not only to a number on a ledger, and it responds accordingly. Sleep and appetite tend to go first. Then comes a kind of low, persistent vigilance that doesn’t fully switch off even on the drive home.

What makes this especially hard to name is that it doesn’t look like a crisis from the outside. She still shows up. She still runs the numbers. She still sounds articulate on the afternoon call. The cost is showing up somewhere quieter: in the hours she’s not sleeping, in the meals she’s skipping without quite noticing, in the low simmer of dread that starts the moment she wakes up and hasn’t fully lifted by the time she falls asleep again.

For Perla, whose healthcare-focused fund won’t pay her a dollar of carry until her book clears the mark set the previous spring, that threshold isn’t abstract. It’s the summit she has to climb before she can call this year a win by any definition the fund recognizes. Every missed target between now and then registers less like a data point and more like a small personal failure, which is exactly the kind of repeated, low-grade threat that keeps a nervous system in high alert long after the trading day ends.

What tends to go unnamed in fund culture is how unevenly this lands. Women PMs often describe a heightened sensitivity to being evaluated, to being watched for how they’re holding up, on top of the ordinary cognitive load of the drawdown itself. The high-water mark becomes a kind of tripwire that fuses a financial metric to something much older and more personal: whether she still gets to belong at the table if this year doesn’t resolve in her favor.

Some of what I see in this population overlaps with what I see in women navigating anxious attachment patterns more broadly: a hyper-attunement to how she’s being perceived, and a body that stays braced for evaluation long after the actual threat has passed. That’s not a coincidence. Both patterns share a nervous system that has learned, often early and for good reason, that being carefully watched is safer than being at ease.

The Three Drawdown Patterns That Wreck Women PMs

Across years of working with women in high-stakes financial roles, I see the same three patterns recur during drawdown season. None of them is a character flaw. All three are what happens when a genuinely capable mind is asked to keep functioning at full capacity while the body underneath it’s quietly failing to recover.

The first is conviction doubt: the gap between what her analysis says and what her gut is screaming, night after night, until she can no longer tell which signal to trust. The second is a collapse in sleep, where racing, looping thoughts about the position fragment her rest until she’s making decisions on a deficit she can’t make up on the weekend. The third is a slow drift in her closest relationship, as the bandwidth she has for connection gets quietly rerouted into managing the drawdown.

When a model breaks down mid-drawdown, a woman PM is often forced to make high-stakes calls with information that’s incomplete by definition. That’s where Gerd Gigerenzer, a German psychologist known for his research on bounded rationality and heuristics in decision-making under uncertainty, offers something useful: falling back on fast, simple heuristics under pressure isn’t a failure of intelligence. It’s what any well-functioning mind does when time and information both run short. Naming that can quiet some of the self-blame that piles onto conviction doubt.

One recent study identified distinct coping-style clusters among music students navigating high-stakes performance evaluation, finding that people under sustained performance pressure tend to settle into a small number of patterned coping styles, some more sustainable than others (Wenhart et al. 2025). That research was conducted with music students, not hedge fund managers, and the finding shouldn’t be read as a direct finance-sector result. But the underlying mechanism, that people under repeated evaluative pressure settle into patterned rather than random coping styles, maps closely onto what I see in women PMs: the same three drawdown responses, conviction doubt, disrupted sleep, and relational withdrawal, showing up in a fairly predictable, patterned way.

The compounding effect matters more than any single pattern. Conviction doubt makes sleep worse. Poor sleep makes the drift at home worse. The drift at home removes the one place she might otherwise have processed the day. Each pattern feeds the next, which is why a drawdown that starts as a professional event can end up touching nearly everything else in her life within a matter of weeks.

I want to name a fourth thing that often rides alongside these three, because it rarely gets named on its own: a quiet, low-grade over-functioning that shows up as an inability to delegate, to ask for help, or to admit the toll out loud. This has the same texture as people-pleasing as a trauma response in other driven women I work with. It’s not vanity or control for its own sake. It’s a learned belief that needing support is itself a risk, which makes an already isolating season even more isolating.

Why Women PMs Often Experience Drawdown Differently

It’s a common misread that women PMs are simply more risk-averse than their male peers during a drawdown. What I actually see is different: not less appetite for risk, but a different relationship to sustained, evaluative stress, compounded by often being one of few women in the room while it’s happening.

Women PMs frequently carry an unspoken expectation to look composed and unshaken while managing the same stakes, or higher, as everyone around them. That expectation doesn’t reduce the stress. It just moves it underground, where it has nowhere to go except into sleep, appetite, and the body’s baseline tension.

A drawdown spikes state anxiety in almost anyone holding real risk. What concerns me clinically is what happens without adequate recovery between cycles: an acute, situational spike can gradually harden into something closer to a chronic baseline, a level of alertness that follows her into the next quarter and the one after that, regardless of what the market is actually doing.

Research on mindfulness and music performance anxiety among early- and mid-career musicians in transition found that structured attention practices measurably reduced performance-related anxiety over time (Sun et al. 2026). That study was conducted with musicians, not portfolio managers, so it should be read as suggestive rather than direct evidence for finance. What it does support is a general mechanism, that attention under threat is trainable, which is a reasonable hypothesis to extend cautiously to other high-stakes performance settings. Separately, and on a different topic, interoception, meaning how closely someone tracks their own internal bodily signals, has been studied as a risk factor in physically extreme conditions like exertional heatstroke among athletes and military personnel (Verdonk et al. 2025). That research is about physical heat-injury risk, not workplace burnout, and it isn’t being cited here as burnout evidence. It’s mentioned only because the broader construct, blunted interoceptive awareness under exertion, is clinically relevant: women who have learned, often for good reason, to override their own internal signals in order to appear composed may be paying a steeper long-term cost for that override than anyone around them realizes.

None of this reframes women PMs as more fragile or more cautious by nature. It reframes the actual difference: not risk appetite, but the added weight of chronic, low-visibility evaluative stress, layered on an already demanding job, with fewer places to set that weight down.

Some women PMs describe the drawdown as the first time in years that their usual coping has stopped working. That description often overlaps with what I hear from women asking themselves why certain patterns keep repeating in their lives more broadly. A high-water-mark drawdown doesn’t create these patterns from nothing. It tends to surface ones that were already there, quietly, waiting for enough pressure to become visible.

What Acute Stress Does to a Decision, Not Just a Mood

It’s worth being precise about what a drawdown actually does inside a decision, not just inside a mood, because the two get treated as the same thing far too often. Feeling stressed and thinking differently under stress aren’t the same event, and the second one is the one that actually touches her book.

I want to be exact about what this means clinically, because it’s easy to hear this as an argument for self-doubt, and that’s not the point. The point is the opposite: once a woman PM can name that acute stress is altering her risk processing in a specific, documented way, she stops treating a shift in her own judgment as a personal failure and starts treating it as data about her current physiological state. That reframe alone changes what she does next.

In my sessions with women in trading and portfolio management, I see this play out almost exactly the way Porcelli and Delgado’s work would predict. The drawdown doesn’t just feel worse on day four than day one. The thinking is functionally different on day four, running on a nervous system that has been in some form of sympathetic activation for ninety-six hours straight, with the body diverting resources away from the kind of slow, integrative thinking a real thesis review actually requires.

This is why I ask the women I work with to build in a specific pause before any drawdown-driven decision that wasn’t already part of the plan before the losses started: a brief, deliberate somatic reset, three slow exhales, feet flat on the floor, a hand on the desk to reestablish a felt sense of the present moment, before touching the position again. Not because the pause guarantees a better call. Because it gives the decision back to the regulated part of her brain instead of leaving it entirely with the part that’s still convinced there’s a predator in the room.

None of this replaces a real recovery period, and none of it is a substitute for the somatic and clinical work covered elsewhere in this guide. It’s a narrow, specific tool for the narrow, specific moment when a decision has to be made inside the drawdown itself, before there has been any chance to fully come down from it.

The Specific Hazard of the January Reset

The high-water mark typically resets on January 1, and for many women PMs that date doesn’t feel like a fresh start. It feels like a second, quieter drawdown stacked directly on top of the first, because the calendar changed but her nervous system didn’t get the memo.

Brisa treats the new year as a clean slate. On January 2, she’s back at her desk before markets open, telling herself last year is over and this year starts at zero. By the second week, she’s white-knuckling through the same vigilance and the same sleep disruption she had in December, except now there’s a new layer of pressure: the quiet expectation that she should already feel recovered simply because the page turned. Three weeks in, she’s not clawing back losses. She’s barely functioning, and she can’t understand why a fresh calendar year didn’t fix what an actual rest never got the chance to.

The math of “clawing back” isn’t only arithmetic. It’s a second full cycle of the same stress response, layered onto a body that never fully came down from the first one. Treating January 1 as a true reset, rather than a continuation, is one of the more reliable ways I see driven women walk straight back into the same wall they just spent months hitting.

Brisa’s pattern is common enough that I think of it as its own small category of what healing actually requires, which is almost never speed. It requires the opposite: a willingness to slow down at exactly the moment the calendar, the fund, and her own inner critic are all telling her to accelerate. Skipping that step doesn’t make the recovery arrive any faster. It just pushes the reckoning a few months further down the calendar.

That’s much of what makes a drawdown so isolating. It’s rarely discussed openly on a trading floor, and it doesn’t look like a crisis from the outside. A woman PM can be sitting three feet from colleagues and still be entirely alone with the loop running in her head. Carrying that alone, quarter after quarter, is its own form of cost, separate from and layered on top of the financial one.

On the hardest nights, some women tell me they reach for words that steady you on hard days the way they’d reach for a colleague who’s not there. It’s a small thing. It’s also one of the few tools that costs nothing and asks nothing of a body that’s already running on empty.

One exploratory study of cognitive and psychological performance across levels of cognitive reserve looked at why some older adults with subjective cognitive decline maintain function under strain while others don’t (Magnani et al. 2026). That research was conducted with older adults being evaluated for cognitive decline risk, a very different population and question from a working portfolio manager, and it shouldn’t be cited as finance- or burnout-specific evidence. It’s mentioned here only for a general, much-replicated principle in stress physiology that the study touches on: resilience is less about raw willpower and much more about whether a person gets real recovery time between stress cycles. A January that starts without any actual rest behind it is, functionally, a body being asked to run the same test twice with no time to reset in between.

Both/And: Your Thesis Can Be Right and Your Body Can Still Be Breaking

Here’s the paradox I want to name directly, because I think it gets flattened too often in finance culture: a woman PM’s investment thesis can be entirely sound and her body can simultaneously be unable to keep absorbing the cost of proving it, cycle after cycle, for the same pay. Both things are true. Neither cancels the other out.

Perla isn’t wrong about the two names still sitting red on her screen. Her analysis holds up. What has changed isn’t her judgment, it’s her capacity to keep paying the physical price of holding that judgment steady through a fourth straight day of this. That distinction, between being wrong and being depleted, is one that gets lost constantly in how drawdowns get talked about, including by the women living through them.

This isn’t a call to abandon conviction the moment it costs something. It’s a call to stop treating the cost as evidence that something is wrong with her thinking, when what’s actually true is that something needs to change about how much she’s being asked to carry, and for how long, without relief.

I’ve sat with plenty of women in this exact bind. Being right doesn’t make the exhaustion go away, and the exhaustion doesn’t make her wrong either. Learning to hold both without collapsing one into the other is a skill nobody actually teaches a new PM on her way up.

Naming that distinction out loud is often the first real move a driven woman makes toward a different relationship with a bad year, one where she’s allowed to be both right and running on empty at the same time.

The Systemic Lens: Why the Structure Sets Women Up to Break Quietly

Step back from any one woman’s drawdown and a structural pattern comes into view. High-water-mark compensation architecture is standard across the industry, and it quietly rewards whoever can sustain repeated cycles of this particular kind of pressure without visible cracks. Over time, that selection pressure shapes who stays in the seat and who, eventually, doesn’t.

The gap that opens during a drawdown isn’t only financial. E. Tory Higgins, an American psychologist known for self-discrepancy theory and the concept of regulatory focus, the difference between a promotion orientation aimed at gains and a prevention orientation aimed at avoiding losses, offers a useful frame here. The high-water mark is, structurally, a prevention-focused system built entirely around not losing ground. Living inside it widens the distance between the PM she’s during a bad quarter and the PM she believes she’s supposed to be, and that gap is precisely where the self-worth wound tends to open.

A multicenter study of Italian university students found that perfectionistic patterns show up as much in someone’s closest relationships as they do in measurable academic performance (Marchetti et al. 2026). That study was conducted with undergraduates, not finance professionals, so the generalization to working women PMs is clinical observation, not a direct research finding. Still, the pattern it describes tracks with what I see in codependency in driven women who have built their sense of worth around performance under a prevention-focused structure: the same vigilance that keeps her thesis defensible at her desk often follows her home and quietly narrows how safe it feels to be imperfect anywhere, with anyone.

None of this is a case against ambition, and it’s not a call to leave the industry. It’s an argument for naming the structure honestly. A system engineered around loss-avoidance will always produce more of this particular strain in the women inside it than a system built around growth would. Seeing that clearly is different from simply enduring it in silence, and it’s often the difference between a woman who eventually gets support and one who quietly self-selects out.

I think about this systemic layer the same way I think about trauma-informed therapy for driven women more broadly: the individual work matters, and it’s not the whole picture. A woman can do everything right in her own recovery and still be operating inside a structure that keeps generating the same pressure year after year. Both things need attention. Neither one, on its own, is enough.

What Recovery From a Drawdown Year Actually Looks Like

Recovery from a drawdown year isn’t a bounce-back. It’s closer to a reorganization, one that touches the portfolio, the body, and the closest relationship in her life, usually in that order of visibility and reverse order of importance.

Mayra is eighteen months out from the worst year of her career. Her fund recovered months ago. She took longer. What actually shifted for her wasn’t a single decision but a slow accumulation of smaller ones: a standing boundary around answering messages after 8pm, a return to eating dinner at an actual table instead of at her desk, and a harder conversation with her partner about the months she had gone quiet on him without explaining why. None of it fixed the drawdown. The drawdown was already over. What it repaired was her capacity to come back from the next one without disappearing the same way.

For the people closest to a woman coming out of a drawdown year, patience matters more than problem-solving. Mayra’s partner didn’t need to understand basis points. He needed to keep showing up on the nights she still couldn’t talk about it, and to notice, eventually, when she started answering the texts again.

Some of what Mayra worked through in that year overlapped with what I see in women recovering from trauma bonding in other contexts: a slow untangling of the belief that constant vigilance is what keeps her safe, and that letting it go, even briefly, means something bad will happen. Loosening that belief a little at a time, rather than all at once, was part of what let her rest again without waiting for permission from a P&L statement.

The same research on relational correlates of perfectionism cited earlier is part of why relationships can feel outgrown after a season like this, even when nothing dramatic happened between two people. Nothing broke. Something just went quiet for longer than either partner realized, and the repair takes more than a resolved profit and loss statement.

If you recognize yourself more in Perla’s fourth night at the office than in Mayra’s eighteen months of steadier ground, that gap is worth taking seriously rather than waiting out. This isn’t a diagnosis and it’s not investment advice. It’s an observation, made across many years of clinical work, that a licensed therapist or an experienced coach can help a driven woman rebuild the parts of a drawdown year that a recovered book doesn’t automatically repair, including trust in her own read of a situation, her sleep, and the relationship that went quiet while she was surviving the numbers.

A drawdown year is real and so is the body underneath it. Recovery rarely announces itself the way a rally does. It shows up smaller: a text answered the same night it arrives, a meal actually eaten, a Sunday that stays a Sunday. Those aren’t modest goals. For a woman who has spent a year proving her thesis at the cost of almost everything else, they’re the whole point.

Recovery also tends to include a harder, quieter reckoning with what she’s willing to keep paying to stay in this seat. For some women that reckoning ends with staying, on different terms, with new boundaries around sleep, weekends, and how much of a bad quarter she’s willing to carry alone. For others it ends somewhere else entirely. Both outcomes can be the right one. What matters clinically is that the decision gets made from a rested, supported place, rather than from inside the same depleted state that made the drawdown feel unsurvivable in the first place.

If any part of this essay described a night you have actually lived through recently, I want you to know you’re not alone in it, even on the nights it feels that way. Women across this industry carry versions of Perla’s fourth night and Mayra’s slow repair, mostly in silence, mostly assuming they’re the only ones. They’re not, and neither are you.

Warmly, Annie.

References

Peer-Reviewed Research

1. Wenhart T, Hildebrandt H. Music students’ psychological profiles: unveiling three coping clusters using schema mode inventory. Front Psychol. 2025. PMID: 41561585. (Music-student sample; cited for its coping-cluster mechanism, not as finance-specific evidence.)
2. Sun Y, Xu Y, Wang J. Mindfulness and music performance anxiety among early- and mid-career musicians in transition. Front Psychol. 2026. PMID: 42063872. (Musician sample; cited for its attention-under-threat mechanism, not as finance-specific evidence.)
3. Verdonk C, et al. Feeling the heat: investigating interoception and motivation as risk factors for exertional heatstroke. Physiol Rep. 2025. PMID: 41103073. (Exertional-heatstroke risk in athletes/military; cited only for the general interoception construct, not as burnout evidence.)
4. Magnani C, Pierobon A, Torlaschi V, Fundarò C, Maffoni M. Why some minds bend, not break: an exploratory study of cognitive and psychological performance across levels of cognitive reserve in subjective cognitive decline. Front Psychol. 2026. PMID: 42433479. (Older-adult cognitive-decline-risk sample; cited only for the stress-recovery-cycle principle, not as finance-specific evidence.)
5. Marchetti A, De Benedictis I, Sandri E, Micheluzzi V, Piredda M, De Marinis MG. Exploring the expression and perceived relational correlates of perfectionism in higher education: a multicenter study. Healthcare (Basel). 2026. PMID: 41897181. (University-student sample; extension to finance professionals is clinical observation, not a direct research finding.)
6. Porcelli AJ, Delgado MR. Acute stress modulates risk taking in financial decision making. Psychol Sci. 2009;20(3):278-283. PMID: 19207694.

Related Reading

• Meynell, Alice. “Solitude.” In The Rhythm of Life and Other Essays. London: John Lane, 1893.
• Gigerenzer, Gerd. Gut Feelings: The Intelligence of the Unconscious. New York: Viking, 2007.
• Higgins, E. Tory. “Self-Discrepancy: A Theory Relating Self and Affect.” Psychological Review 94, no. 3 (1987): 319-340.
• Spielberger, Charles D., et al. Manual for the State-Trait Anxiety Inventory. Palo Alto: Consulting Psychologists Press, 1983.

Medical Disclaimer