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Investing only in U.S. stocks? It might be hurting your portfolio

Investors are encouraged to diversify as there are lots of opportunities abroad.

Published

5 years ago

September 20, 2017

Hear of the investing phenomenon of home-country bias? It’s pervasive across time and geography, and it can be very damaging to your investment portfolio if ignored.

It may make investors feel all warm and fuzzy inside, but it generally tricks us into accepting lower returns and higher volatility from domestically-tilted portfolios.

In the U.S., this is particularly prevalent. Americans prefer investing in U.S. stocks because, psychologically, it feels like the right thing to do.

But it’s not!

And it’s hurting your portfolio.

In the following infographic, we look at several different reasons why you should avoid falling prey to the phenomenon of home-biased investing and what could happen if you take advantage of opportunities abroad.

Home-country bias

DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.

Adam O'Dell

Adam has one purpose in mind: to find and bring to subscribers investment opportunities that return the maximum profit with the minimum risk. He achieves this with his perfect blend of technical and fundamental analysis. Tactically, he does exhaustive back-testing and probability-based research. It’s the ultimate partner to the exhaustive economic research that Harry and Rodney do in the exciting realm of the new Science of Finance. Adam has worked as a Prop Trader for a spot Forex firm. While there, he learned the fundamentals of trading in the world’s largest market. He excelled at trading the volatile currency markets by seeking out low-risk entry points for trades with high profit potential. Aiming to find the best opportunities across all asset classes, Adam expanded into the commodities, equities and futures markets. An MBA graduate and Affiliate Member of the Market Technicians Association, Adam is a lifelong student of the markets. He is editor of our hugely successful trading service, Cycle 9 Alert.