What is home-country bias and why is it a problem?

Home-country bias is the tendency to overweight investments from your own country simply because they feel familiar and safe. U.S. investors often hold 80–100% of their stocks domestically, even though American companies are only about 60% of global market value. The risk is concentration: if U.S. stocks enter a long flat or declining stretch — which has happened for a decade-plus at a time historically — an all-U.S. portfolio suffers fully with nothing offsetting it. International stocks don't move in lockstep with U.S. markets, so they cushion those periods and can lead when the U.S. lags. Familiarity isn't the same as safety. A reasonable correction is allocating 20–40% of your stocks to international through a single low-cost total-international index fund. You don't need to predict which region wins; you just need to own both so you're not betting everything on one.