Is Home Country Bias a Mistake?

Опубликовано: 21 Февраль 2024
на канале: Ben Felix

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Home country bias - overweighting your home country’s stocks relative to their capitalization weights - is detrimental at the extremes, but modest home country bias is theoretically, practically, and empirically useful.

It can reduce fees and taxes, it may hedge the cost of local consumption, and it reduces exposure to the potential mistreatment of foreign investors when times get tough.

It may also be helpful psychologically due to the role of social comparison in determining individual happiness.
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