Kiplinger

Investors Face a Big Risk in Their Own Backyards: Hometown Bias

With football season here, it is a great time for hometown pride; but is your portfolio too much of a fan of companies headquartered in your own backyard, and could that be setting you up for a big loss one day?

As an investment adviser, I have managed multimillion-dollar accounts in Pittsburgh, Philadelphia, Delaware, Southern New Jersey and Greater Atlanta, and it is all too common to find concentrated stock positions of companies that are headquartered in an investor's home turf. The results can be quite unfortunate.

Investors Often Can Be Too Loyal to a Fault

Why do investors end up with large stock holdings of local companies? Several reasons, including:

Because it is given as a reward

Some of the largest employers across the United States are domiciled in

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