Isabella Walker

Back in 2016, the United States represented 56 % of global stock market capitalization, meaning a domestic investor owning the market portfolio should have allocated 44 % to international equities. Yet, the real figure sat at just 23 %. Home bias remains the most stubborn anomaly within cross-border finance, having outlasted thirty years of academic efforts to decode it. Nonetheless, an overlooked interpretation suggests this tendency might not be a total miscalculation. This piece examines the empirical findings, even touching upon the evidence indicating that keeping investments local can occasionally be advantageous.Summary: the seven findings that matterEach row names the…

Analysts' long-run earnings growth forecasts are less accurate than a naive model that simply predicts zero growth. That is not a provocation: it is the literal conclusion of an evaluation published in an accounting and finance journal. And there is more: the random walk beats analysts over long horizons and in small firms, and a naive extrapolation of their own one-year forecast is more accurate than their explicit two- and three-year forecasts. At the same time, the comparison with machine learning models concludes that analysts remain superior to the linear models actually in use. This article sets out what has…