QUESTION: if diversification is a good idea, why don’t more American investors do it?
ANSWER: The same reason Australian, German, et al don’t…parochialism.
This The Economist article gives a few more reasons and some of the economic theory, in plain English, behind them. The bottom line is that geographic bias doesn’t make much sense. While there aren’t as many global champions outside the US as there are inside, there are plenty to add sensible diversification in a number of industries (banks, autos, commodities, industrial, consumer, etc).
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