My wife and I have a very embarrassing Christmas tradition. We pop some popcorn and watch a marathon of cheesy made-for-TV Christmas movies. We get cozy on the couch and under a quilt to stay warm. Like other quilts, ours is quite colourful and loud – an eyesore perhaps to some. But underneath all the colourful chaos is a randomness of beauty (I’m obviously the beholder in this scenario). This randomness is the inspiration for an investment tool we use called an investment quilt.
The investment quilt ranks the global geographic asset classes by their performance over a specified time frame. What this tool illustrates is the unpredictable pattern of their performance and the importance of maintaining a well-balanced portfolio.
The latter half of 2014 has provided much in the way of volatility in the stock market – punctuated by a sharp drop in energy prices that has directly affected the Canadian market. Clients with underdiversified portfolios (with simply Canadian exposure) are feeling it the most and are likely to contact their advisor to make changes in reaction to what the market has done (i.e. attempt to identify the non-existent pattern in the investment quilt).
My words of advice; opt for the well-diversified portfolio. Opt for the loud and colourful eyesore of a quilt.