Market Performance and Portfolio Stability

This chart tracks the performance of major indices and factor indices from September 2024 to early March 2025. It includes CNX 200, Nifty Momentum 30, Nifty Alpha 50, and Gold and Silver ETFs. The data reveals significant underperformance in higher beta strategies, with Nifty Alpha 50 being the worst hit, followed by Nifty Momentum 30, which is down around 30%. Meanwhile, Gold (+13%) and Silver (+6%) have emerged as clear winners, reinforcing their role as hedging assets against equity downturns.

Gold and Silver as Portfolio Stabilizers

The data once again confirms that gold and silver are inversely correlated to equities. Historical studies over the past two to three decades indicate that portfolios with a meaningful allocation to gold (e.g., 20-25%) have seen lower drawdowns without significantly compromising returns. While such an allocation may slightly reduce CAGR, it ensures a smoother investment journey with fewer sleepless nights.

Rethinking Return Expectations

Many investors aim for 30-40% CAGR, but even legendary investors have struggled to maintain 20% over long periods. While small portfolios can benefit from agility in buying and selling, as portfolio size increases, liquidity constraints start limiting performance. Instead of chasing unrealistic returns, focusing on consistent compounding at 15%+ is a more sustainable and rewarding approach.

Balancing Risk and Peace of Mind

Investing isn’t just about maximizing returns; it’s also about managing risk and maintaining peace of mind. Having a structured investment framework that diversifies into uncorrelated assets can eliminate the constant stress of chasing market trends. Compounding at 15% means doubling capital every 4-5 years, which is an exceptional outcome when sustained over decades.

WeekendInvesting launches – Portfolio Momentum Report

Momentum Score: See what percentage of your portfolio is in high vs. low momentum stocks, giving you a snapshot of its performance and health.

Weightage Skew: Discover if certain stocks are dominating your portfolio, affecting its performance and risk balance.

Why it matters
Weak momentum stocks can limit your gains, while high momentum stocks improve capital allocation, enhancing your chances of superior performance.

Disclaimers and disclosures : https://tinyurl.com/2763eyaz