Why is the turmoil in the equity makets having so little impact?

One of the things which has struck me as I have updated my balance sheet each month is the fact that the declines in many of the world's equity markets (and all of the ones I invest in) have had a very limited effect on my net worth numbers. No, I did not predict the down turns and did not exit the market and did not sell short or buy put options (apart from one very small and very short term trade).

Here's what has happened:

1. my portfolio of funds has declined. All of them have fallen to some extent or another (with Vietnam being the worst performer). However, I managed to add to my position in the HK Tracker fund at close to the January lows. The gain on this trade has partially off set the losses on the other funds;

2. my residual equity portfolio has fallen by less than the market in local currency terms - due to the fact that the largest shareholding by value has actually gone against the trend and increased by about 15% this year. Currency movements have also been in my favour (I benefit from a weaker US dollar). The net result is that this part of the balance sheet is almost unchanged in Hong Kong dollars (my currency of account);

3. my investments in commodities, although not large, have shown good gains so far this year. The very small loss on lean hogs is much less than the gain in silver and also less than the gain on Lyxor commodities ETF. (The decision to sell some of my silver has, so far, been a bad call);

4. my properties are fully let and show a positive cash flow and a healthy margin of income over expenses which flows through to my net worth calculation each month. As real estate represents the biggest asset class by a very large margin, the effect of this monthly profit is significant. As an aside, I do not mark property values to market in my personal balance sheet (I do in the consolidated his and hers balance sheet) but if I did this would show a material upwards adjustment already in 2008.

In short, I have been lucky enough to hold a mix of asset classes which has performed very well under the difficult conditions over the last few months. Although there is more variation in return, the individual assets have produced a number of winners which has also played a role in preserving my capital.

I am under no illusion that I have been lucky rather than good, but it is nice to know that I have (so far) managed to get through the turmoil in good shape and without suffering much in the way of financial pain.