I tend to believe this is a better allocation because it is much broader and more diversified, but there are reasons
for home biases.
This finding has important implications not just
for the home bias literature, but also more broadly for the growing research and policy interest on Internet - based crowd funding, especially as a new channel for entrepreneurial financing.
However, as Statman explains, the reasons
for our home bias are mostly behavioural.
So, what rational arguments can be made
for home bias, specifically for US investors?
That said, DeGoey has a concern
for home bias in the portfolio.
Not exact matches
By historical standards, this implies sustained double - digit losses on bond holdings, subpar growth in developed markets, and balance sheet risks
for banking systems with a large
home bias.
It demonstrates that a global equity framework can provide diversification and higher long - term risk - adjusted returns
for investors from high growth countries who often hold
home -
biased equity portfolios that can have high concentration risk.
So do the increase in the mobility of saving and investment; the increase in the desired exposure to foreign assets (the reduction in
home bias); the financial market innovation that allows
for better diversification and risk sharing; and the differentials in the pace of technology adoption or workplace practices that give rise to varying productivity trends across countries.
Canadians tend to have a
home bias within their investment portfolios, but that's not great
for diversification.
Still,
for a given level of
home country
bias, increased corporate income tax in that
home country is likely to decrease the level of investment in that country.
The portfolios of investors just after retaining a financial advisor exhibit relatively high trading activity
for restructuring to increase diversification and otherwise lower risk (less
home bias and more passive investments).
A 21 % allocation provides the
home bias that many investors instinctively reach
for to insulate against currency risk.
It's easier
for Canadian investors to achieve a portfolio with substantial
home bias because, unlike the U.S., Japan and Europe, Canada's economy and financial markets are a relatively small share of the overall pie.
He has been wrong on many of the issues on which he has opined, not least his speech on
home bias and his pleadings
for U.S. homeowners to refinance their mortgages and use
home equity as a piggy bank.
I have heard many times, as an excuse
for having such a strong
home bias portfolio, that most companies in the TSX and the S&P 500 have an international exposure.
There is no deference, celebration or
bias given to a particular team, save
for the Jacksonville Jaguars, the game's designated
home team.
One might expect such things to come about through a natural exaggeration of the
home bias that characterises football; that was what worked
for Norwich.
-- Yesterday, we published an article analyzing betting statistics
for MLB umpires and specifically, which umpires are
biased towards
home teams.
More especially (and probably in a little
biased way) I love how my 6 year old with Autism manages to sit wriggle free
for the entire show (wonder if I could buy one of those seats
for home?).
A randomised controlled trial would be the best way to tackle selection
bias of mothers who plan a
home birth, but a randomised controlled trial in North America is unfeasible given that even in Britain, where
home birth has been an incorporated part of the healthcare system
for some time, and where cooperation is more feasible, a pilot study failed.31 Prospective cohort studies remain the most comprehensive instruments available.
The slide shows an apparent and huge
bias for home birth attendants.
The absence of comparison subjects from these hospitals, which may have had fewer resources
for managing complicated clinical situations, may have
biased the analysis against the
home birth group.
Telephone interviews are usually done during the day
biasing the results towards stay - at -
home moms, retirees, and the unemployed, while most people,
for some reason, do not respond to mobile phone surveys as eagerly as they once did to landline surveys.
[The take
home lesson is that] all big databases are
biased, but by acknowledging that
bias is universal and accounting
for it we can make better use of them,» said co-author Rich FitzJohn of Macquarie University
My
bias may come from working
for one, Biscuit
Home, but I've always weighed my shopping experience heavily, thus I tend to prefer beautiful displays, curated products and getting the inside scoop on the people and passion behind small brands.
Biscuit:: I'm
biased, but this shop is a hop, skip and a jump from several of our other hot spots and is
home to a Houston designer's original bedding line and great gifts
for your Houston hostess
for the weekend.
Meanwhile, screening
for gifted programs usually happens in kindergarten, which creates a heavy
bias toward those who come from more affluent
homes.
considered of how to integrate
home visits into systems approaches
for decreasing implicit
biases.
That's why Teach Plus is offering a
home for teachers interested in an organization, as Coggins puts it, «with a
bias toward high performers» — eduspeak
for wanting to support and reward the best rather than focus on defending the worst.
That training and the subsequent
home visits have been identified in a recent study by RTI International as an effective strategy
for increasing teachers» sense of empathy and reducing their negative implicit
biases, as well as helping parents to feel more positive and confident about interacting with school officials.
I'll warn you that this post does contain some coding jargon, but it also provides a fascinating look at how
home cooks use Google
for finding recipes, and how Google's search function is
biased toward speed and low - cal diets.
Conclusion:
home bias is common
for many investors.
This 50/50 diversification reflects a world of opportunities and overcomes a common «
home country
bias» we all have
for what's familiar.
The bottom line: VXC is a useful ETF
for anyone looking to wipe out
home - country
bias with a single holding.
It's easier
for Canadian investors to achieve a portfolio with substantial
home bias because, unlike the U.S., Japan and Europe, Canada's economy and financial markets are a relatively small share of the overall pie.
«While it's natural
for investors to have a «
home bias» by overweighting your portfolio to domestic stocks, taking a Canada - only approach can hurt returns,» says Luc de la Durantaye, managing director, asset allocation and currency management, CIBC Asset Management.
As mentioned often here over the past year, people with too much maple in their accounts paid a high price
for that
home - country
bias.
For - profit entities may have a
bias toward generating revenue rather than protecting the consumer and enhancing the
home inspection profession.
That «
home country
bias» reflects their preference
for familiar company names, but also the regulatory protections of Canadian and U.S. stock markets.
There's other benefits: I'm squeezing more investment themes / asset classes into my portfolio — so I end up with far less room
for individual holdings, vs. investors who focus exclusively on (regular) equities (& possibly suffer from
home bias).
Fortunately, there's plenty of stock selection filters you can employ —
for example, to help protect against the risks posed by
home bias, bottom - up stock picking, and / or a concentrated portfolio.
It's useful
for us to be aware that
home bias is common and is not unique to US investors, but is
home bias a rational approach to investing?
Home country
bias is something to mindful of in Canada
for the reason you mentioned (3 % of world market cap, and our market is not well diversified)-- and there is another big reason
for it as well: taxes.
For an investor who may already be suffering from
home bias, this can really exacerbate their portfolio risk exposure.
Because most of the time, like
home bias, bottom - up stock picking is just another excuse
for laziness (or ignorance)-- in fact, they regularly go hand - in - hand.
If we look at the US, these people were often the same folks who got crucified on company stock in their 401Ks... Mainstream & general finance media need to be a lot more aware of
home bias, and take responsibility
for informing their readership about it, and its pros & cons.
Well, clearly I'm trying to escape «
home bias `, and I've got precious little time
for benchmarking... The UK «s at 3 %?
Heck, you may have some
bias knocking your noggin too because
home ownership can be a built - in dream or expectation
for many.
I increased the Canadian content because of
home bias and because some of our portfolio is non-registered (where we hold some Canadian dividend stocks
for tax efficiency).
This has all been, of course, a source of strong debate & interest
for citizens, but ultimately it creates an ongoing distinct
bias / pressure towards an increased rate of
home ownership.