Why Invest In International Stocks?

Should I invest in international stocks?
What are the best countries to invest in?
How much of my portfolio should I allocate to international stocks?
What are the best international mutual funds?

Over the last few decades, we have seen enormous shifts in the relative stock market capitalization of the world.  While the U.S. remains far and away the largest country by market capitalization, the availability of alternative investment opportunities has grown rapidly.

Based on data since 1972, investing outside of the U.S. has resulted in higher returns, though coupled with increased volatility.  over, many U.S. investors still tend to have substantial U.S. exposure, with an average allocations, according to Morningstar, of 72% U.S. equity/28% international equity (as of April 2010).  Because the international and U.S. market are not perfectly correlated, there are potential diversification benefits to combining the two within a portfolio.

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