Thanks--this is a good reminder that potential doesn't always get realized. I guess that's the point of diversification (both within a single country and between countries). I just bought shares in an emerging markets index fund; it currently holds over 5200 companies. The latest information I can find specifies that there are 27 different countries.
This emerging markets fund represents approximately 5% of my overall investment money, and my
total international exposure is a little over 15% of my overall investments.
So I definitely have plenty of room to expand my international investments. The million-dollar question is
how much to expand them.
Since I'm relatively young (in my early thirties), and have spent half my life believing that the United States is a declining power and therefore has less growth potential than it used to, I believe it would be prudent to invest more heavily in international markets going forward. You suggested that might be a possibility for someone with a long time horizon, so it would seem that we're in agreement.
Currently, over half my equities are held in U.S.-based companies, and my bond fund is U.S.-only [at least as far as I can find].
I'm not necessarily a pessimist regarding the future of America; I simply believe that America's biggest periods of growth are behind it and that other countries have more opportunity to grow.
Probably the clearest way to put it is that I believe America is mostly a matured country at this point--there's not so much room for growth. Other countries have vastly more room for economic growth, but the flip side is that they face more challenges and difficulties as well. Will they overcome those challenges? I'm sure that some will and other won't. Hence, broad diversification