InvestorQ : What if your entire investment portfolio loses by a high margin?
Rohan Bhadani made post

What if your entire investment portfolio loses by a high margin?

Deepali Khupte answered.
1 year ago

I think each investor’s reaction depends upon the kind of investor they are. If you are a speculative trader who invests based on gut instinct and price momentum, then the loss could be devastating. If one is a long-term investor who bets on companies based on their business fundamentals, the 10% loss might actually be seen as an opportunity to invest more. This is because no market decline is a permanent event, it is a temporary event and will surely market recover itself, it may take time. After the market recovers, the portfolio will also recover itself, and then my loss will be converted into profit.

As long as you are aware of your risk profile and have a conviction on the investment thesis that you have studied, every correction is seen as an attractive prospect. This actually did happen during March of 2020, and I added more funds to my overall portfolio because I wasn’t sure I would be getting such a chance again. A smart investment strategy includes the right asset allocation, periodic reviews, and having an emergency fund. These strategies when followed perfectly cushion any drastic fall and help you continue your investment without any major changes.