Portfolio Stress Test: A Simple What-If for a 20% Market Drop
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5 min read
Your portfolio is Rp100 juta. The market falls 20% next month. How many rupiah do you lose?
Most people guess "Rp20 juta" and stop there. That guess is usually wrong. Some of your holdings fall more than the market. Some fall less. You can find out before it happens, with a portfolio stress test.
A portfolio stress test is a what-if. You pick a bad scenario, apply it to each holding, and add up the damage. It takes ten minutes and a calculator. In this post you will run one on a made-up portfolio.
A stress test does not predict anything. Nobody knows when a drop will come, or how big it will be.
It answers a smaller question: "If this happened, could I live with the result?" That is a question you can only answer calmly, before the drop.
Think of a fire drill. You do not expect a fire. You practise so you do not panic if one starts.
Write down each holding and its value. Here is an invented portfolio of Rp100 juta. It is not a real account and not a suggestion of what to own.
| Holding | Value |
|---|---|
| Bank stock fund | Rp35 juta |
| Growth stock | Rp20 juta |
| Bond fund | Rp15 juta |
| Crypto | Rp10 juta |
| Gold | Rp20 juta |
Beta is a number that says how much a holding tends to move when the market moves. A beta of 1 means it moves with the market. A beta of 1,5 means it moves 50% more. A beta of 0,2 means it barely reacts.
If beta is new to you, read portfolio beta explained first.
The betas below are invented for this example. They are rough guesses, not measured numbers.
| Holding | Value | Beta |
|---|---|---|
| Bank stock fund | Rp35 juta | 1,0 |
| Growth stock | Rp20 juta | 1,5 |
| Bond fund | Rp15 juta | 0,2 |
| Crypto | Rp10 juta | 2,0 |
| Gold | Rp20 juta | 0,1 |
For each holding, multiply the market drop by its beta. That gives the holding's drop. Then multiply by its value to get the loss in rupiah.
Take the growth stock. Beta 1,5 times a 20% market drop is a 30% drop. On Rp20 juta, that is Rp6 juta lost.
Here is the full table:
| Holding | Beta | Drop | Loss |
|---|---|---|---|
| Bank stock fund | 1,0 | 20% | Rp7,0 juta |
| Growth stock | 1,5 | 30% | Rp6,0 juta |
| Bond fund | 0,2 | 4% | Rp0,6 juta |
| Crypto | 2,0 | 40% | Rp4,0 juta |
| Gold | 0,1 | 2% | Rp0,4 juta |
| Total | Rp18,0 juta |
The portfolio falls 18%, from Rp100 juta to Rp82 juta. That is less than the market's 20%, because the bond fund and gold cushion the fall.
Crypto is only 10% of the portfolio, but it causes more loss than the whole bond and gold sleeve. Small positions with high beta can hurt a lot.
Real crashes are rarely tidy. In a panic, assets that normally calm things down can fall too. Investors call this a correlation breakdown: things that usually move apart fall together. We cover it in what happens when correlations jump in a crash.
So run a second scenario. Keep the same 20% market drop, but give the bond fund a beta of 0,5 and gold a beta of 0,5. These are again invented.
The new total loss is Rp20,5 juta. The portfolio is now Rp79,5 juta.
The gap between the two scenarios (Rp18,0 juta against Rp20,5 juta) is the price of your "safe" holdings not being as safe as you hoped.
Now the useful part. Look at the number and ask three plain questions:
A loss also needs a bigger gain to undo. After an 18% fall, Rp82 juta must grow by about 22% to get back to Rp100 juta (18 divided by 82). After the nastier 20,5% fall, it must grow by about 26%. This is plain arithmetic. For how long real recoveries have taken, see max drawdown explained.
If the answers worry you, the fix is not to guess the next crash. It is to size your holdings so the number is one you can live with. That might mean a smaller crypto slice, more cash for emergencies, or simply knowing your plan.
Be honest about what this test can miss.
The test is a flashlight, not a forecast.
Open your NetWort Dashboard and look at the Portfolio Health card. It shows your beta and your max drawdown, the worst fall so far. Copy those numbers into the five steps above and see what a 20% market drop would do to you.