Talk:Equity home bias puzzle
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Suggestions for improvement
[edit]Off my hat to the original poster of this entry.
But the posting seems to contain incorrect information and it has room for improvement with regard to the "attempt to resolve the puzzle"
(1) It is not French and Poterba who first documented home bias puzzle. See Lewis 1999, Journal of Economic Literature. She explains that it goes back to at least 1970s (Levy, Haim and Marshall Sarnat. 1970. “International Diversification of Investment Portfolios,” Amer. Econ. Rev., 60:4, pp. 668–75.)
(2) One can enrich the "attempt to resolve the puzzle" section by reference to Lewis (1999, Journal of Economic Literature) and Sercu and Vanpee (working paper, 2007).
(3) In my opinion, "information immobility" is not implausible. The key idea is that information must be updated for every minute. Then, the curvature of information production function (as in Van Nieuwerburgh and Veldkamp) or cost differential (as in Ehrlich and Shin, 2010, Amer. Econ. Rev) can possibly explain the home bias puzzle by information differential.
(4) Van Nieuwerburgh and Veldkamp's study is published in Journal of Finance (2009)
I wish I could edit this section myself. But do not have time.
Thank you. —Preceding unsigned comment added by 64.134.71.222 (talk) 02:21, 10 August 2010 (UTC)
Okay you have got to be kidding me
[edit]Economists are the most tedious people I've ever encountered. They assume some ridiculously simplified model and then marvel at the fact that it doesn't match the data. Imagine that! This is another one of those paradoxes that has such a stupidly obvious solution that it beggars belief how anyone could even think this is a paradox. Have any of these economists ever actually tried to buy a stock listed on a foreign exchange? The friction around getting the order executed, the cost and complexity of hedging FX risk, unfamiliarity with regulatory filings of different jurisdictions, the legal ambiguity around your ownership, difficulty of getting accurate tax advice when you hold a portfolio of random countries' stocks, and holy oh fuck OBVIOUSLY the dearth of information, analysis, and news coverage available for foreign equities from usual sources... Is it any wonder that with all of that friction money tends to stay domestic? .froth. (talk) 10:54, 19 February 2019 (UTC)