The value of local knowledge
This is all well and good, but skips over the possibly rational reasoning behind this propensity to invest locally, namely that investing locally is less risky as the investor is likely familiar with the businesses through their other interactions with the market in which the investment operates. This is, in a sense, legitimate 'insider trading', using knowledge not readily available to the foreign investor.
So the question then becomes, are local investors more successful because of this extra knowledge: do Canadians with their holding of Canadian equities have more success that say British investors who do buck the trend and invest in Canada?
Biting the hand that feeds IT
