Home Bias Harm

Talking Real Money - Investing Talk

Don McDonald

Business, Education, Investing, How To

4.2 • 680 Ratings

🗓️ 17 June 2025

⏱️ 42 minutes

🔗️ Recording | iTunes | RSS

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Summary

Don and Tom tackle the behavioral trap of “home bias” in investing—why U.S. investors tend to overinvest domestically and why it’s dangerous. They compare global fund allocations across countries, poke fun at nationalist investing instincts, and explain why international diversification is essential. Listener calls cover early Social Security regret, 72(t) withdrawals, covered calls on Palantir, and what happens to target date funds after they “expire.” 1:52 Home bias explained: Americans (and Australians) overweight U.S. stocks 2:58 U.S. vs global stock market value debate 3:42 Fund companies pander to investor bias 4:14 Vanguard Australia fund: 42% Aussie stocks?! 5:25 Why home bias hurts—Australia’s 25% bank exposure 6:26 Dimensional and Avantis global tilt: 70% U.S. 7:52 Long-term global diversification reduces volatility 8:17 The 2000s: Global funds outperformed U.S. funds 9:21 Call: Donna in AZ – Regret over early Social Security filing 11:29 Don confesses he took his at 69: “I’m weak” 12:02 Donna’s still in great shape—no panic needed 13:04 Timing Social Security: Only critical if it’s most of your income 14:45 Emotional investing vs logic—why home bias persists 15:51 Japan: Home bias disaster, zero returns since 1990 16:07 Call: Kyle in TX – 72(t) withdrawals and bond reluctance 18:21 Tom explains why bonds matter when pulling from a shrinking stock portfolio 19:51 Call: Jason the Tesla Bull – Covered calls on Palantir 21:15 Covered call mechanics explained 23:14 Don’s 1980s crash story: When covered calls fail 24:14 Covered calls appeal to greed, often backfire 25:20 Palantir’s PE ratio? Try 1,058—yikes 26:30 Meme stocks vs megacaps: Palantir’s government dependency 27:05 Call: John in OH – Fidelity fee confusion update 28:16 John’s advisor can’t see the same statements—sus? 30:32 Make sure to bring statements and get written answers 31:29 Don’s birthday, Father’s Day gripes, and Twain wisdom 32:22 Call: Elizabeth in SC – What happens to a 2010 target date fund? 33:37 Vanguard 2010 funds merge into 70/30 “retirement income” fund 35:14 Performance? ~5% annualized—above inflation Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	I had the absolute pleasure of speaking to Pamela Anderson.
0:04.2	All thanks to the Dove Self-Eesteem Project.
0:07.1	We speak about the impact Y2K has had on women's body confidence and how Pamela has regained control.
0:12.9	The Dove Self-Esteen project is an amazing initiative supported by science-backed methodology
0:17.8	to help us improve our relationship with our bodies.
0:20.8	To find more
0:21.4	body confidence-building exercises, go to dove.com forward slash Y2K. That's Y2K spelled W-H-Y-2K.
0:34.7	Reality Radio for a really great future.
0:38.0	We're talking real money.
0:39.6	Hello again and welcome to the radio show and the podcast that have been scientifically and specifically designed to help you become better at managing money.
0:54.1	We call it talking real money because we talk about the
0:57.0	reality of money. Not the myths and legends and the stupidity and the emotional biases we have.
1:05.2	We want to put it in scientific, academically based perspective that is simple to follow.
1:14.6	It's going to be a lot easier on you if you pay attention to what we're talking about
1:19.8	as opposed to what most of Wall Street likes you to believe.
1:24.2	Wall Street, and by the way, not just Wall Street, but all of the financial markets
1:27.7	around the world. We're going to talk about the financial markets around the world today.
1:31.7	I'm Don McDonald. I'm in Florida. Tom is briefly in Bellevue. Briefly. No, not Belvie.
1:38.6	You're in Duvall. You're in Duval. Yeah. He's in Duval. I forgot.'s in Duvall. He's by the lake. Yeah. Yeah. But he's getting
1:44.6	ready to not, he's not going to be by the lake. He's going to be hopping the pond. Actually,
1:48.7	you're not even going to be hopping the pond. You're going to be jumping the ice cap.
1:52.6	That's right. Yeah. Anything bad happens will be cold for a long time. That's right. So if you're playing loses lift, you're going to be ice skating back.
	...

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