Americans like to buy American stocks.
Europeans prefer European stocks.
And Chinese investors… well, you guessed it, they go heavily into Chinese stocks.
This is the essence of a phenomenon called home country bias.
As investors, we feel most comfortable buying the stocks of “our own” domestic companies. And we routinely under-allocate to foreign stocks.
That means U.S. investors are likely invested in…
I’ll note that we recommended an investment in Fomento to our Boom & Bust subscribers. Generally, though, we know well U.S. investors’ preference for U.S. stocks.
Let’s be honest… it feels uncomfortable investing in a foreign company… and it’s worse when you can’t even pronounce its name! Right?!
But sticking too close to your home turf – in the name of comfort, or otherwise – could be costing you a lot of money.
Each of the foreign companies listed above are beating the pants off their U.S. counterparts so far this year.
So, what’s an American investor to do?
Two simple things…
The first step is to acknowledge there’s nothing “special” about U.S. stocks.
They aren’t pre-ordained to be the investment world’s best market all the time. Sometimes U.S. stocks outperform foreign stocks. Other times, it’s the other way around.
