Great read! What are your thoughts on the paper Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice? The paper touches on home bias and mentions it can be rational as it allows investors the ability to access capital during black swan/tail events. That is, government might restrict the flow of capital to foreign investors when a war breaks out.
Perhaps some level over bias is justified for this reason? Although it would be difficult to quantify and I'm not so sure it fits the traditional risk/return framework as such risks are almost impossible to measure. (perhaps prediction markets could be used as a proxy). That said, in the rare event that such controls were imposed, the ability to access my own capital would be invaluable
Hi Fabricio,
Great read! What are your thoughts on the paper Beyond the Status Quo: A Critical Assessment of Lifecycle Investment Advice? The paper touches on home bias and mentions it can be rational as it allows investors the ability to access capital during black swan/tail events. That is, government might restrict the flow of capital to foreign investors when a war breaks out.
Perhaps some level over bias is justified for this reason? Although it would be difficult to quantify and I'm not so sure it fits the traditional risk/return framework as such risks are almost impossible to measure. (perhaps prediction markets could be used as a proxy). That said, in the rare event that such controls were imposed, the ability to access my own capital would be invaluable
Best,
Josh