downside

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noun down·side \ˈdau̇n-ˌsīd\
Updated on: 26 Jul 2017

Definition of downside

  1. 1 :  a downward trend (as of prices)

  2. 2 :  a negative aspect the downside of fame

Examples of downside in a Sentence

  1. He could find no downside to the car.

  2. the downside of living in the country is, of course, the long commute to work

Recent Examples of downside from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'downside'. Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of downside

1930


Financial Definition of DOWNSIDE

downside

What It Is

Downside refers to an investment's potential loss in value.

How It Works

Let's pretend you purchase 100 shares of Company XYZ at $5 per share, for a total investment of $500. If the shares subsequently fall to $1 per share, your downside equals ($5-$1 = $4) per share, or $400.

The reverse is true for people who short stocks: For them, upside comes when the stock price falls.

Why It Matters

Downside is the fundamental motive for avoiding any investment. The size of the downside, of course, varies with the investment -- and with the risk associated with that investment. Higher-risk investments generally have more downside (but they have more upside, too); low-risk investments generally have less downside and are thus primarily concerned with preserving the value of the original investment.

Ultimately, expected upside and downside are based on estimates and educated guesses. No analyst or investor can predict the future, thus making upside and downside inherently unpredictable.




DOWNSIDE Defined for English Language Learners

downside

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noun

Definition of downside for English Language Learners

  • : a part of something that you do not want or like : a drawback or disadvantage



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