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Rohan Saha
Founder - Burn Inves...ย โขย 9m
The market might have bounced back, but I can confidently say that many peopleโs portfolios still look the same or maybe even worse. One big reason behind this is something called the advance-decline ratio. A lot of us tend to judge our portfolios based on how the index is doing. But hereโs the thing: the companies that make up the index arenโt always the same ones we personally own. Thatโs why NSE and BSE publish the advance-decline ratio every day it gives a better picture of whatโs really happening under the surface. For example, letโs say there are 100 companies listed on the NSE. If only 10 of them are doing well (in the green), that means the other 90 are in the red. What really matters is how many of your stocks fall into those two groups. If most of the stocks are declining, chances are your dayโs profit and loss (P&L) will be in the red too. And if more are rising, then your P&L will likely be green. In the end, it's your individual stocks that matter not the overall index. Sometimes, the index can drop sharply, but your portfolio might barely move. Thatโs because your holdings might not even be part of that index. Take Nifty 50, for instance it includes Indiaโs top 50 companies. But itโs not like everyone owns the same 50 stocks. It might sound a bit complicated at first, but once you understand how it works, it all starts to make sense and it's actually pretty simple.
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