Diversification in an investment portfolio is generally recommended. Can my portfolio benefit from avoiding investment in my local economy?
When browsing several US sites for investment advice, they usually allocate a significant amount of resources to US stocks. I'm Dutch, and Dutch sites i know of seem to allocate a significant amount to Dutch stocks. I can imagine this pattern holds for any local stock advise service.
Recommending investing in local/regional stocks seems to me to be countering the goal of diversification, because you're already significantly exposed to your local economy just by living there: Your job ties you to the performance of a local company, the value of your house is dependent on local factors, and your groceries reflect a local price level.
This would lead me to think that any discretionary investments should not be in local stocks, but instead in other regions than the one you live, in other sectors than the one you work in, in other products than the ones you buy, etc. But I have never seen such a strategy advocated anywhere (am i looking in the wrong places?)
I would like to hear some opinions on this: what are the advantages and drawbacks of staying away from investments in your own region or investments tangential to your own line of work?