Hello everyone, I have a portfolio invested in both American and Canadian equities. I monitor both the DJIA and TSX indexes. When the DJIA drops by 400 points and the TSX drops by 100 points, my portfolio drops in value by around 8K. However, when the DJIA increases by 400 points and the TSX increases by 100 points, my portfolio increases in value by around 2K. Can someone explain in layman terms why there is no correlation between how my portfolio reacts based on indexes going up or down by the same drops? Thanks.
Simple answer, the funds in your portfolio probably have broader exposure (holding more stocks) than the indexes.... And weighting (more or less shares of certain stocks or sectors) will be a lot different If you don't already know whats in your portfolio, its beneficial and fun to find out..... Morningstar is one of many websites you can go to learn about the funds you're portfolio is holding.... Each fund will have its own symbol you can look it up by
Thanks for the help Jrich. I will look into my holdings a little closer as I am investing through an Investment firm. One trend I do see happening is this. If both the DJIA and TSX have large drops, my portfolio drops by relatively the same amount on a consistent basis with these drops. However, if the DJIA and TSX have large gains, my portfolio is not consistent. Sometimes, it will have large gains and other times, very small gains. Is this just bad luck or a bad portfolio mix?
Remember: Most mutual fund managers get bonuses for "following the markets". Almost impossible not to follow the markets if the portfolio is mainly the stock market. This is why I do not own any mutual funds.
we try not to use the word "luck" in this game its really hard to say without knowing what you got in there... a lot of funds are classified by being "growth" or "value" oriented.. and right now a lot of the big growth names are getting hit hard, while some more value type stocks are getting love... so perhaps you have more exposure to growth funds I like to watch individual sector performance to give myself a clearer view of what this crazy market is doing... check out the SPDR sector ETF's by state street... don't have to buy them, just keep em on a watchlist somewhere I keep them sorted by relative strength (28 day period)... currently, in the midst of all this mess, utilities energy and real estate are topping the list (value oriented sectors)
Another possibility is that you are overweighted in a few sectors and it could be that when it drops it is due to your sector taking a hit and then when the index goes back up it is being pulled up by sectors you have less exposure to.
Thanks to everyone for your responses. Looks like my investments are dispersed between the following main sectors (financials, energy, tech). Yesterday was a good day for the DJIA and TSX. My portfolio did increase in value a little higher than what I was averaging during the last couple of positive spikes.
stocks & options I don't want to rely on someone else with my money. Like I said, they get paid to "mimic" the markets. Pretty easy job to get paid 400K a year to start.
