Elroy Dimson

There are some sorts of diversifications which are a little bit more difficult.

You've got to be brave in the way I was describing it earlier.

If you're going to move away from having exposure to those growth companies, we really don't know whether we are in the middle of an upward momentum or whether those stocks have become so expensive that there'll be a collapse.

We don't know whether we are in early year 2000s confronting a collapse of the technology companies of that era.

or whether we're in the middle of continued ascent by technology companies.

Well, trading costs can impair performance.

Performance over the long history that we examine has been helped by trading being cheaper.

Cost drag became something that people talked about, although the lower

The costs are the more people are willing to trade.

While I don't have numbers to share with you, my hunch is that if we looked at the aggregate of costs drag, that is what it costs to do a transaction and the frequency with which they happen amongst investors as a whole.

then I think, really for me, it may still be out.

It's much, much cheaper to invest globally.

But so many people are doing it, but in aggregate across all investors, there may be less of a benefit than you might anticipate.

International diversification involves spreading your money across different markets, different jurisdictions and so forth.

There's a lot of resistance amongst American investors to investing in markets which are less promising than the US in the eyes of individuals.

But on the other hand,

it cannot be the case that for everyone it makes sense for them to avoid diversifying out of their home market.

And so what we can see is that if you had moved into a market which turned out to do well, you prosper, and vice versa.

But people who are in the United States who bought foreign stocks may have been persuaded by people like me and my co-authors

risk reduction was worth having, and therefore they would be better off if they spread their money into other countries.