Benjamin Felix

The evidence on country economic growth and industry economic growth with respect to stock returns, it seems like it's just kind of noisy.

There's maybe even a negative relationship, but it just seems really messy.

Why is that?

Why doesn't economic growth translate into higher stock returns?

can't know the future.

In your data, for example, we can look and see that there has historically been a quantitative diversification benefit to global stocks.

And I picked this question up from reading one of your yearbooks.

What effect could frictions like foreign markets being less accessible to investors historically than they are today have on the perceived quantitative benefits that we see in the data of diversification?

On international diversification, why do you think, and I will note that we do have a home country bias in our portfolios.

We weight more than the Canadian market capitalization.

We have about a third of our portfolios in Canadian stocks, and we have reasons for that, which we can talk about if you want.

But why do you think investors, and actually one more note on that, our home country bias in our portfolios, which we think is reasonable, is much less than a typical Canadian investor's home country bias, who might have 60% of their portfolio in Canadian stocks.

Why do you think investors continue to exhibit home country bias when the benefits of international diversification that you just described are so well known?

That's one of the things that we had Gina Fama on this podcast years ago.

There's a tax efficiency, cost efficiency, local currency argument for home country bias, which I think are fine.

But Fama brought up that more geopolitical expropriation risk of investing in foreign stocks that I hadn't thought about before.

But when he described it, it

Gave me another reason for a bit of home country bias, I guess.

Oh, it's a tough one.

We look at different papers and writings, including yours and some of the yearbooks, and it's a tough one.