Home Bias
A quick disclaimer: I am on vacation this week, but we have committed to a weekly blog, and I want to stick with that schedule. However, we didn’t commit to a LONG weekly blog, so I am mailing this one in a bit. Doesn’t that encourage you to read on? 😊
Investors are inclined to invest a disproportionate amount of money into their own country’s companies (stocks). It’s human nature to invest in areas that we know and are more comfortable with. In fact, there is an actual investment strategy that employs just that notion: invest in the companies whose products you use. See the chart from Charles Schwab below:
That can be counter to the benefits of a diversified portfolio, especially since we are entering a period where global stocks are becoming less correlated; meaning they don’t move in the same direction at the same time. Here are some great supporting charts in a recent post from Charles Schwab:
We are enjoying some time at the beach this week, and with the exception of a few child meltdowns, everyone is having a great time. Here’s a picture of Molly when I told her she had too much of her money invested in US-based companies:
Have a great week!