Mimi’s cathedral quilt and asset class performance (1/1/19)

Details of the homemade patchwork as background

My grandmother was exceptional in many ways.  She was full of life and quick to speak her mind, despite who might be within earshot.  For as long as I can remember, she was a seamstress at a local women’s store making adjustments to colorful fashions until they fit “just right”.  It was always a special treat to visit her at Bright’s and explore the lofted balcony where she and Ms. Coreen worked to fine tune hemlines, inseams and sleeve lengths.


Mimi’s work to outfit the ladies of Paducah did not stop at Bright’s.  Many family dinners and visits included talk of fabrics, McCall’s patterns and sales at Hancock’s, the one and only fabric store in Paducah.  This love of cloth and sewing spilled over to most all family members in the form of shirts, blouses and dresses.  As a teenager, I am sure some of the outcomes – think leisure suit – and fabric choices were greeted with a forced smile and reluctant gratitude.


As her grandchildren grew and the need for attire – that she knew we would wear – waned, she shifted her attention to quilts.  I remember receiving my first as a college student and still have it today.  Years of collecting material in various colors and patterns provided a ready source of building blocks for her craft.  When gardening and warmer temperatures were a distant wish, the slow, piecemeal nature of stitching together patches of colorful textiles was an ideal diversion during the cold, leaden Kentucky winters.


One of her favorites was what she called a cathedral quilt.  I’m not a quilter but I think the cathedral reference is more about the stitching and pattern than color.  Regardless of the nomenclature, my grandmother’s cathedral quilts rivaled the first bouquet of spring.  The fabric swatches she collected and combined, formed a beautiful and warm addition to any bedroom.  My wife and I received one a few years after we were married.  I guess Mimi wanted to make sure it was going to work out before presenting us with such a labor of love.  After 20+ years she was spot on with that call.


Easily covering our queen size bed, the quilt must have over a hundred individual squares.  With the exception of a few duplicates, each has a distinct color and pattern.  Taken individually, each is unique and doesn’t seem to have any relationship with its neighbor.  When viewed from afar, the four-sided fragments form a kaleidoscope of color that brings joy and a smile.  It is a reminder of how different characteristics and styles can work together cohesively.  Similar to how a diversified portfolio and its different investments can provide positive results over time despite short-term, often unrelated ups and downs of the individual pieces.


A favorite investment illustration ties in neatly with my story.  Sometimes called the Quilt Chart (Chart), this checkerboard of colors shows individual asset class performance year over year and also on a cumulative basis over a long period of time.  Because each asset class has a unique color and often performs differently each year, the resulting picture looks very similar to my cathedral quilt.  The Chart shows the leapfrog nature of each investment type and why trying to time the market is a bad idea.  In the short-term, unknowing or less disciplined investors might be inclined to sell also rans at the bottom and buy pace setters at the top.  A closer look at the Chart shows how a current or shorter-term pace setter can be at or near the bottom in subsequent years.  More striking is the relative performance of a fully allocated portfolio.  Placing bets across the board over a 15-year period will generally result in blended returns between the best and worst.

It might be a stretch to suggest the market can bring the same joy and happiness that my Mimi’s cathedral quilt has brought to me and my wife over the years.  However, the benefits of a fully allocated portfolio and the resulting returns illustrated in the Quilt Chart, are hard to refute.  This is important to remember in times like these when it seems everything is heading down, and silver linings are hard to find.  Taken individually, specific investments can often leave the investor wondering.  When viewed as a whole and over time, those same investments can provide the investor with positive benefits.  Before settling on your own personal allocation strategy and its resulting Quilt Chart, be sure to consult with a financial advisor about risk and your long-term goals.  Both are paramount when designing the right investment portfolio and important building blocks to achieving your financial objectives.