Home bias shows financial understanding is still a major problem

Investors need to take off the blinkers

One of the keys to successful investing is to recognise the bigger picture.

Today, amid incessant change and churn, it is especially important to think about the long term, to think thematically and - maybe above all - to think globally. Short-termism may be the most well-known manifestation of a myopic approach to the markets, but it is not necessarily the most widespread. That dubious honour arguably goes to home bias - the tendency to invest the majority of a portfolio in domestic assets. Numerous studies demonstrate both the pervasiveness and the persistence of this phenomenon, which is most often associated with equities but can also be found in arena...