Why the Index Can Look Fine While Your Book Does Not
An index can hold up while an individual portfolio falls because averages conceal dispersion. A handful of large names, sectors, or factors can support the benchmark while high-beta holdings, small caps, or a crowded theme absorb the damage.
That is why the market is not a sufficient risk report. Measure the drivers of the actual book: beta, duration, concentration, liquidity, and correlation under stress.
The remedy is not necessarily to own the index. It is to know what the index is masking. A portfolio is healthy when its exposures are intentionalnot when a headline benchmark makes the drawdown look ordinary.
