🌍 Global Markets · Lesson 5 of 6 · 7 min
Home Bias — Betting It All on Your Own Backyard
🏡 Most people invest almost entirely in their own country's companies for the same reason most people think their hometown has the best pizza: it's familiar. The market does not award points for familiarity.
💡 Key idea
Home bias = over-investing in your own country because it feels safe. The US is ~60% of the world's market — owning only it is one big country bet.
🧠 Why it matters
HOME BIAS is the tendency to pile most of your money into your own country's stocks just because they feel familiar and safe. But the US is only about 60% of the world's stock market value — so an all-US portfolio is, mathematically, a giant bet on one country. There are long stretches (like 2000–2010) where international stocks beat the US badly. Spreading globally isn't unpatriotic; it's just not putting all your eggs in one geography.
🌍 In the real world
💡 From 2000 to 2010, US stocks went roughly nowhere while many international markets posted solid gains. Investors with only US exposure sat through a 'lost decade' that global diversification would have softened.
📌 Takeaways
- Home bias = over-weighting your own country out of familiarity
- The US is only ~60% of the global market
- Going global spreads risk across geographies
📖 Terms in this lesson
Home bias: Holding mostly investments from your own country, and missing the rest of the world.
✅ Test yourself
What is home bias?
- Investing globally
- Over-investing in your own country because it feels familiar
- Buying real estate
- A tax
Answer: B · Over-investing in your own country because it feels familiar
Familiarity makes people overweight domestic stocks, concentrating their risk in one country.
Roughly how much of the world's stock market is the US?
- About 10%
- About 60%
- Basically all of it
- About 90%
Answer: B · About 60%
The US is around 60% of global market value — so an all-US portfolio is one big country bet.
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