Talk:Home country bias
Page still needs a lot of work, as currently it cites a single reference. But the idea is to have investors (1) think about their fixed income:equity split; then (2) think about how much home bias they want/need; and finally (3) start thinking about asset location, specific products, etc. --Quebec 13:08, 29 December 2014 (MST)
- Two references now (but from the same source). I've invited comments on the forum --Quebec 14:01, 29 December 2014 (MST)
- There's comprehensive discussion here: Multifactor investing - a comprehensive tutorial It's a different perspective, but may be helpful. Also note the FWF forum reference discussions. --LadyGeek 14:21, 29 December 2014 (MST)
Market weight statistics
In doing research on the specific market weights for Canada, I'm finding that care must be taken when using index provider information. From my reading they provide breakouts of the country specific weighting of the constituents of the index, not the total market capitalization. I suspect the difference is small, but would suggest that care in wording is required when using the reference. The Vanguard research paper's referenced indicate their source as "International Monetary Fund’s Coordinated Portfolio Investment Survey (2012) and FactSet. Market cap data as of February 28, 2014; holdings data as of December 31, 2012.". I tried using IMF Coordinated Portfolio Investment Survey (CPIS) for a data source but couldn't figure out Vanguard's methodology. --Peculiar Investor 17:35, 1 January 2015 (MST)
Renaming this page?
I would like to propose we rename this page something like "Domestic vs foreign asset classes", or "Global diversification". The basic question is how much to allocate to domestic (Canadian) versus foreign (global) assets. The home country bias is part of this discussion, but "home bias" is not a synonym for this discussion. Instead, "home bias" should be a section in a more ambitious page, which would include material currently spread out in several places, such as "Asset allocation" and to a lesser extent in "Simple index portfolios". --Quebec 07:06, 18 January 2015 (MST)
- My initial reaction it to disagree. I think there is clarity and focus on a single issue with this topic as is. As you note, home country bias comes into play in a variety of places. My understanding of the wiki way, from Manual of Style/Linking, is the way you deal with it in those places with internal links or using one of {{Main}}, {{See also}} or {{Further}}, or a combination of both. --Peculiar Investor 07:25, 18 January 2015 (MST)
- If you look at the current Asset allocation page, there is a sub-section called Sector diversification and index concentration in the Canadian stock market. It sorts of distracts from the main topic of AA, the stock:FI mix. Such a sub-section would fit well in a page called "Domestic vs foreign asset classes", but does not fit as well within a page called "Home country bias". --Quebec 08:40, 18 January 2015 (MST)
- There would still be short sections on "Domestic vs global" in various pages, but they would point to a dedicated "Global diversification" page, which would include a discussion on the home bias phenomenon, but would discuss more generally the pros and cons of global diversification.--Quebec 08:43, 18 January 2015 (MST)
- See User:Quebec/Global diversification for an example what what this could look like.--Quebec 14:14, 18 January 2015 (MST)
- I like the split, as the new page is at a deeper technical level. New investors can learn the concepts here, then move to the new page when ready. --LadyGeek 17:06, 18 January 2015 (MST)
- Has anyone else noticed the fact that we're proposing a new article on Global diversification, yet a diversification article doesn't exist. The fact that diversification gets mentioned in many existing articles, yet it doesn't have a standalone article begs the question of why. The same holds true on the BH wiki. One other concern, does the proposed article come close to crossing the no original research policy that we try to follow? I can only find one FWF discussion topic on 'Global diversification' (Global diversification overrated?), which is another testcase I've found helpful to gauge the importance of a wiki topic. --Peculiar Investor 21:57, 18 January 2015 (MST)
- Several points to address. First, the intent of "global diversification" page is to totally replace the "home country bias" page. The discussion on the pros and cons of global diversification, which is the real topic IMO, replaces the discussion on the pros and cons of the home country bias. People don't want to know if they are biased or not, they want to know if they should buy stocks and bonds from outside Canada, and if yes, how much? The starting point is a domestic portfolio to which we add foreign assets, not a global portfolio that we somehow "bias" with "too much" local content. So what I propose is a change of viewpoint (and a new title), NOT a new page; another advantage of the new title is that it makes it easier to move portions of the AA page here. Second, the part where I mix 2 or 3 risky assets is entirely optional, it probably makes the page too long, and could be deleted or moved elsewhere (I was just trying to see if I could integrate some of my "portfolio theory" stuff in there without all the explanations that came before these particular graphs, but probably not). Is it original research? Sort of (I've not seen these particular graphs elsewhere, people normally use historical returns, SDs and correlations, but that confuses the message because it gives you the impression that global stocks are "better" than domestic stocks, or the other way around, depending on which numbers you use). But then a page like "Multifactor investing" could be described as original research too. (I'm not saying we should delete the latter!). In the full version of "Portfolio theory", which should probably named "DIY portfolio analysis for dummies" or something, I describe the methodology in detail so that anyone with a spreadsheet software can reproduce the analysis at home. So it can be "verified" by anyone. Finally, on the topic of whether we need a general "diversification" page, about all types of diversification (including how many stocks to take away the unsystematic risk, etc.), I vote yes, it's an important topic. But it's not specific to Canada, so there are probably good treatments elsewhere (Wikipedia: Diversification (finance)). --Quebec 06:23, 19 January 2015 (MST)
- From my point of view, behavioral finance is becoming an important part of the dialog these days and home country bias does a very good job dealing with the topic.
should we be discussing multiple articles perhaps?: Home country bias, diversification and then global diversification? There would obviously be interactions between the articles and some overlap, but I'm beginning to think this may be an approach to consider as we work up these possible articles. Hence the newly created article in my user space.
- From my point of view, behavioral finance is becoming an important part of the dialog these days and home country bias does a very good job dealing with the topic.
- Several points to address. First, the intent of "global diversification" page is to totally replace the "home country bias" page. The discussion on the pros and cons of global diversification, which is the real topic IMO, replaces the discussion on the pros and cons of the home country bias. People don't want to know if they are biased or not, they want to know if they should buy stocks and bonds from outside Canada, and if yes, how much? The starting point is a domestic portfolio to which we add foreign assets, not a global portfolio that we somehow "bias" with "too much" local content. So what I propose is a change of viewpoint (and a new title), NOT a new page; another advantage of the new title is that it makes it easier to move portions of the AA page here. Second, the part where I mix 2 or 3 risky assets is entirely optional, it probably makes the page too long, and could be deleted or moved elsewhere (I was just trying to see if I could integrate some of my "portfolio theory" stuff in there without all the explanations that came before these particular graphs, but probably not). Is it original research? Sort of (I've not seen these particular graphs elsewhere, people normally use historical returns, SDs and correlations, but that confuses the message because it gives you the impression that global stocks are "better" than domestic stocks, or the other way around, depending on which numbers you use). But then a page like "Multifactor investing" could be described as original research too. (I'm not saying we should delete the latter!). In the full version of "Portfolio theory", which should probably named "DIY portfolio analysis for dummies" or something, I describe the methodology in detail so that anyone with a spreadsheet software can reproduce the analysis at home. So it can be "verified" by anyone. Finally, on the topic of whether we need a general "diversification" page, about all types of diversification (including how many stocks to take away the unsystematic risk, etc.), I vote yes, it's an important topic. But it's not specific to Canada, so there are probably good treatments elsewhere (Wikipedia: Diversification (finance)). --Quebec 06:23, 19 January 2015 (MST)
- Has anyone else noticed the fact that we're proposing a new article on Global diversification, yet a diversification article doesn't exist. The fact that diversification gets mentioned in many existing articles, yet it doesn't have a standalone article begs the question of why. The same holds true on the BH wiki. One other concern, does the proposed article come close to crossing the no original research policy that we try to follow? I can only find one FWF discussion topic on 'Global diversification' (Global diversification overrated?), which is another testcase I've found helpful to gauge the importance of a wiki topic. --Peculiar Investor 21:57, 18 January 2015 (MST)
- I like the split, as the new page is at a deeper technical level. New investors can learn the concepts here, then move to the new page when ready. --LadyGeek 17:06, 18 January 2015 (MST)
- See User:Quebec/Global diversification for an example what what this could look like.--Quebec 14:14, 18 January 2015 (MST)
- There would still be short sections on "Domestic vs global" in various pages, but they would point to a dedicated "Global diversification" page, which would include a discussion on the home bias phenomenon, but would discuss more generally the pros and cons of global diversification.--Quebec 08:43, 18 January 2015 (MST)
- If you look at the current Asset allocation page, there is a sub-section called Sector diversification and index concentration in the Canadian stock market. It sorts of distracts from the main topic of AA, the stock:FI mix. Such a sub-section would fit well in a page called "Domestic vs foreign asset classes", but does not fit as well within a page called "Home country bias". --Quebec 08:40, 18 January 2015 (MST)
- I knew the no original research comment might be problematic. It was more an attempt educate and raise awareness of the standard, nothing more. To the best of my knowledge we've never given it much thought, but as more editors get involved and start new articles, it is something that does need to be understood and considered. I would agree that Multifactor investing - a comprehensive tutorial is either on or over the line. Since the article was created it has gnawed at me whether it meets the standard.
- --Peculiar Investor 11:06, 19 January 2015 (MST)