"Most people are under exposed to global assets, including foreign stocks, bonds and currencies"

In the quote, "Many people are under exposed to international possessions, consisting of foreign stocks, bonds, and currencies", Mohamed El-Erian highlights a substantial pattern within the financial investment landscape: the absence of diversification across worldwide markets amongst individual investors. This observation highlights the propensity of numerous investors to concentrate their portfolios within domestic possessions, thereby missing out on the more comprehensive chances and diversity benefits that worldwide markets offer.

First of all, El-Erian's remark suggests that a significant variety of financiers have portfolios greatly manipulated towards their home country's financial instruments. Home predisposition is a well-documented phenomenon where financiers choose to invest in familiar, locally-listed securities. This predisposition can result in suboptimal portfolio diversification, as relying solely on the domestic market suggests losing out on possibly greater growth or various risk-return profiles that international markets may supply.

Furthermore, by not purchasing international properties like foreign stocks, bonds, and currencies, financiers can unintentionally expose themselves to greater systemic threat. Economic downturns or political instability in one's home country can badly affect a portfolio concentrated domestically. On the other hand, worldwide diversity can alleviate such dangers, as global markets frequently react differently to various economic stimuli.

El-Erian's quote likewise subtly suggests that international investment can be critical in capturing growth chances in emerging markets. Many emerging economies exhibit higher development rates compared to developed countries, driven by elements such as rapid industrialization and increasing customer bases. By being under-exposed to these markets, investors might miss out on considerable development potential.

In addition, foreign currencies can function as a hedge against domestic currency devaluation. Holding assets denominated in different currencies can secure purchasing power, especially throughout periods of domestic currency volatility.

In conclusion, El-Erian's quote is a call to action for financiers to widen their investment horizons. It advocates for thoughtful diversification beyond domestic borders, highlighting that global possession exposure can enhance portfolios by balancing threats and seizing chances not available in one's local market.