Why Is My Portfolio Down When the Market Is Up?

Find out why your portfolio is not doing well even though the market is rising

Zain Nabih
Oct 7 · 3 min read
Photo: Courtesy of Austin Distel on Unsplash

Investing might not always be as easy as ABC. Some things might not add up and leave people breathless just to try to figure it out. One of the most common instances is how your portfolio might rise or flop depending on the market. Say the market is soaring like never before. There’s never been a better time to invest than now. New records achieved. The bar was risen. But, when you review your portfolio, it is not following the overall market. This can leave so many people breathless to figure out and there are so many factors playing in to how this might happen.

To first understand how the market affects your portfolio, you must first understand how market fluctuates. Basically market moves accordingly to demand and supply. Demands of each company is influenced by investors’ preference and interest. As an investment, you can analyze yourself to forecast future trends in stock prices. Through fundamental analysis, you can measure the intrinsic value of a stock by studying everything of the company such as their financial condition and their overall management. Technical analysis, on the other hand, uses various mediums like the news, trend of the company stock movement, and market anomalies.

For market anomalies, there is a common conception that market might change accordingly depending on the days or time of the year. An instance of this belief include how some believe that the price of an asset could have higher value on Mondays compared to Fridays. Market might also fluctuate during election season or political heat. There are several gray areas within this conception so we will not touch a little too deep within but it basically means how certain parties might make some policy that effect on huge companies, thus playing with public interest. If you’re investing in stocks, the dividend policy of your respective company also plays a part in how your portfolio might turn out.

How does this affect your portfolio? Say the opinion leaders affect rising among Big Cap value and growth. This rising will definitely impact those investing in Small Cap and Middle Cap. So, if you invest 20% of your overall assets in Big Cap and the remaining in Small Cap, the downfall of Small Cap will certainly leave bigger impacts to your portfolio. This is because the Big Cap have so much bigger values to the overall market than the remaining. Sector weighting is important.

This is why you need to really diversify your portfolio through different kinds of asset classes. For instance, 20% goes to stock, 30% to cryptocurrency like bitcoin, 40% to foreign exchange, and 10% to commodities like gold. This can help greatly through problematic market fluctuations because when a certain market is falling, the others might back it up. Another strategy you can use to trick your portfolio through unstable market fluctuation is rebalancing. Rebalancing basically means putting different weight to your each investment compared to your initial investment. So, when the cryptocurrency market lowers, you can just lower your investment from 30% to 10% for example and move your resource to another asset class that is currently rising.

All in all, you shouldn’t panic when the market goes against your side. Yes, it might seem intimidating but the loss is only temporary. It is only short-term, and there are so much waiting for you for the long-term. Also, you need to remind yourself that every market fluctuates and losses are completely inevitable. Set the type of investment goal you’re putting your assets into and focus on it. If you can keep your portfolio diversified enough, you can easily keep an eye out for the long-term.


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See also: Everything You Missed at COMPFEST


Indonesia’s First Social Trading Platform

Zain Nabih

Written by

Writer @ Lubna.io. Undergrad student of Mass Communication.



Indonesia’s First Social Trading Platform

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