home bias

Home Bias and Portfolio Risk

Successful wealth management requires us to construct diverse investment portfolios made up of different asset classes, including stocks. In choosing our investments we often have biases that unknowingly create challenges as market cycles change. For many investors, what they know best are the stocks of their own country. They often ignore the opportunities that exist abroad. This phenomenon, referred to as “home bias”, is demonstrated in how much investors favor stocks in their own country over a more global portfolio.  

Dennis Morton and Cody Demmel recently published an op-ed piece in Lehigh Valley Business on how home bias could introduce unnecessary risk and limit opportunities for growth in a family’s wealth management plan.