Let's Find Your Portfolio’s "Smooth Curve"

Market Update - Friday, 20 Feb

After yesterday's drubbing, the market was in a better mood today. While small caps didn't really perform, the rest of the market tried to come back, and there was no panic in the market like yesterday's market. Some of the sectors that were beaten down brutally yesterday also came back. It seems like there is some lull before the next storm, but we are holding that.

The market IT index was down once again, marginally though, but it is creating a pattern which, if it plays out, will dramatically cause IT stocks to come down.

There are bouts of weakness and bouts of strength coming in, and the market primarily is directionless right now. Nifty was up 0.46%.

• Mid caps were up 0.48%, and again, here the gap is maintained.

• Small caps were down 0.18%, acting slower than the other market.

• Nifty Bank is recovering quite well, up 0.7%.

• Gold is inching up 0.53% at 15,586, and silver is up 2.3% at 251,992.

Other Market Triggers

• Last evening, what has happened is that private credit giant Blue Owl and several such companies which are private equity are losing ground. They have lost significant ground in the last many weeks also because some of them are heavily exposed towards software companies and some of them are debt funds where the redemption is not being allowed right now.

• There are murmurs of some kind of cracks in the system in the US, and that is causing some turbulence in the Indian context.

• This is despite so many days now having gone by, despite the AI Summit having gone through, and despite top leaders of various companies assuring that IT companies are taking care of this need of AI intelligence in terms of their capabilities having partnered with top companies.

U.S. Market Updates

• The IT index was down 0.98%, and negative U.S. markets are also reeling. Dow Jones was down 0.5%, S&P 500 down 0.2%, and Nasdaq down 0.4%.

• Booking Holding, which has been running up very hard, was minus 6%. Accenture, Charter Communication, General Motors, and Mondelez were all down 2% to 4%. Some of these stocks could be part of the Weekend Investing U.S. stock strategy, though these are not recommendations. The small cap part of the market was not bruised at all. In the heat map, chip makers and big companies were losing ground.

• Apple was down 1.4%, and while most larger M7 companies were not really impacted yesterday, Costco and Walmart continue to bleed badly. Netflix, Intel, ASML, and Micron were also down, with only AMD gaining ground in that space.

What to watch next ?

• Last evening, what has happened is that private credit giant Blue Owl and several such companies which are private equity are losing ground. They have lost significant ground in the last many weeks also because some of them are heavily exposed towards software companies and some of them are debt funds where the redemption is not being allowed right now.

• There are murmurs of some kind of cracks in the system in the US, and that is causing some turbulence in the Indian context. This is despite so many days now having gone by, despite the AI Summit having gone through, and despite top leaders of various companies assuring that IT companies are taking care of this need of AI intelligence in terms of their capabilities having partnered with top companies.

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What To Read This Week ?

The Power of One-Third: Finding Your Portfolio’s "Smooth Curve"

The Chaos of Asset Performance

If you look at the data presented by The Economic Times, one thing is clear: the market is a revolving door. One year, 70% Equity portfolios are soaring with 26% returns (like in 2017); the next, they are struggling with intense volatility. Predicting which asset class—Equity, Debt, or Gold—will take the crown each year is a guessing game that even the pros struggle to win.

The Winning Consistency of "Equal Weight"

The standout performer in this data isn't the most aggressive portfolio, but the most balanced one. By looking at the "Blue Boxes"—portfolios split equally at 33% Equity, 33% Debt, and 33% Gold—we see a fascinating trend:

• Dominance: This well-diversified mix topped the charts in 6 out of the last 10 years (including 2019, 2020, 2022, 2024, 2025, and 2026).

• Resilience: Even in "off" years like 2017 or 2021, the returns remained positive (between 10% to 15%), providing a safety net when aggressive strategies faltered.

Customizing Your Mix

While the "One-Third" rule is a powerhouse, the strategy is flexible. If you have a distaste for Debt, a 50-50 Equity and Gold split has historically shown great results. For those looking for tangible assets, substituting Debt with Real Estate to create an Equity-Gold-Real Estate trio can also provide that "smooth curve" every investor craves.

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