From the course: Behavioral Finance Foundations

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Home bias

Home bias

From the course: Behavioral Finance Foundations

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Home bias

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- [Narrator] Home bias refers to investors having a greater tendency to invest in stocks of companies they know, the companies in their home markets, that is the country where they live. For instance, if you're a US citizen, you might be more likely to invest in US companies, General Motors or Ford, rather than Japanese Toyota, or more likely to invest in US companies like GE or Honeywell or United Technologies rather than European ABB. Let me show you what I'm talking about. I'm here on the CNBC website, and I've pulled up the quote for ABB. ABB is a giant company. As we see in their profile they have a market cap of about 40 billion dollars or so, but they're headquartered in Zurich Switzerland because of that, investors simply aren't as familiar with ABB as they are with US companies. For that reason, ABB's stock so far today has traded right around 600,000 shares. Now that's not bad, but if we compare that…

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