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 does not agree.

On her desk sits a salad she ordered at six. It is untouched. Her phone shows two texts from her partner: one asking if she is coming home, one saying dinner is in the fridge. She has not 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 is not the hard part. The hard part is that her body will not settle long enough to trust her own read of it.

This is not only a story about numbers. It is 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 is not. It is not investment advice, and it is not a diagnosis. It is 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 would 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 is the highest net asset value a fund has reached, and it is the number a portfolio manager has to exceed again before she earns performance fees. On paper it is just an accounting mechanism. In practice, for a woman living underneath it during a drawdown, it becomes something closer to a verdict she is being asked to overturn, alone, on a deadline she did not set.

In my work with driven women in finance, I see the same pattern again and again: the drawdown itself is stressful, but it is the high-water mark hanging above it that turns ordinary stress into something closer to a full-body alarm. The stress response does not 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 does not fully switch off even on the drive home.

What makes this especially hard to name is that it does not 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 is not sleeping, in the meals she is skipping without quite noticing, in the low simmer of dread that starts the moment she wakes up and has not fully lifted by the time she falls asleep again.

For Perla, whose healthcare-focused fund will not pay her a dollar of carry until her book clears the mark set the previous spring, that threshold is not abstract. It is 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 are 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 does not 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 is being perceived, and a body that stays braced for evaluation long after the actual threat has passed. That is 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 is 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 is making decisions on a deficit she cannot 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 is incomplete by definition. That is 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 is not a failure of intelligence. It is 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 of coping-style clusters among high-pressure performers found that people under sustained performance stress tend to settle into a small number of patterned coping styles, some more sustainable than others (Wenhart et al. 2025). None of that research was written about hedge funds specifically, but the pattern 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 rather than randomly.

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 is not vanity or control for its own sake. It is 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 is 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 is 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 does not 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 practices and performance anxiety among professionals navigating career transitions found that structured attention practices measurably reduced performance-related anxiety over time (Sun et al. 2026). That study was not about portfolio managers, but the underlying mechanism, attention under threat, translates directly. So does a related body of work on interoception, meaning how closely someone tracks their own internal bodily signals, and motivation as risk factors for burnout under chronic pressure (Verdonk et al. 2025). 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 does not create these patterns from nothing. It tends to surface ones that were already there, quietly, waiting for enough pressure to become visible.

The Specific Hazard of the January Reset

The high-water mark typically resets on January 1, and for many women PMs that date does not 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 did not get the memo.

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

The math of “clawing back” is not only arithmetic. It is 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 does not make the recovery arrive any faster. It just pushes the reckoning a few months further down the calendar.

That is much of what makes a drawdown so isolating. It is rarely discussed openly on a trading floor, and it does not 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 would reach for a colleague who is not there. It is a small thing. It is also one of the few tools that costs nothing and asks nothing of a body that is already running on empty.

One study on cognitive and psychological factors in resilience under sustained pressure looked at why some people bend without breaking under repeated stress cycles while others do not (Magnani et al. 2026). The research was not finance-specific, but the finding is relevant here: 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 is 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 is not wrong about the two names still sitting red on her screen. Her analysis holds up. What has changed is not her judgment, it is 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 is not a call to abandon conviction the moment it costs something. It is a call to stop treating the cost as evidence that something is wrong with her thinking, when what is actually true is that something needs to change about how much she is being asked to carry, and for how long, without relief.

I have sat with plenty of women in this exact bind. Being right does not make the exhaustion go away, and the exhaustion does not 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 is 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, does not.

The gap that opens during a drawdown is not 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 is during a bad quarter and the PM she believes she is supposed to be, and that gap is precisely where the self-worth wound tends to open.

Research on the relational correlates of perfectionism found that perfectionistic patterns show up as much in someone’s closest relationships as they do in measurable performance (Marchetti et al. 2026). That 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 is not a call to leave the industry. It is 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 is 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 is 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 is not a bounce-back. It is 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 was not 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 did not need to understand basis points. He needed to keep showing up on the nights she still could not 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 is not a diagnosis and it is not investment advice. It is 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 does not 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 are not modest goals. For a woman who has spent a year proving her thesis at the cost of almost everything else, they are the whole point.

Recovery also tends to include a harder, quieter reckoning with what she is 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 is 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 are 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 are the only ones. They are not, and neither are you.

Warmly, Annie.

References

Peer-Reviewed Research

1. Wenhart T, et al. Coping-style clusters among high-pressure performers. 2025. PMID: 41561585.
2. Sun L, et al. Mindfulness and performance anxiety among professionals in career transition. 2026. PMID: 42063872.
3. Verdonk C, et al. Interoception and motivation as risk factors for burnout under chronic pressure. 2025. PMID: 41103073.
4. Magnani R, et al. Cognitive and psychological factors in resilience under sustained pressure. 2026. PMID: 42433479.
5. Marchetti A, et al. Expression and relational correlates of perfectionism. 2026. PMID: 41897181.

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