Foreign Stocks on Sale

Investing in overseas companies has gotten easier and can help diversify your portfolio. But risks still remain in some areas.

American stock investors have historically been a rather provincial lot. Why cross borders into less-well-known territory to find investments when the world's largest and most-liquid markets, packed with dynamic, world-class companies, trade right here? We'll admit to articulating that philosophy from time to time ourselves.

But this U.S.-centric investment mentality is changing. Accounting and corporate governance practices have become more standardized globally, making the analysis of foreign companies easier and investing in them less risky. At the same time, holding foreign stocks whose fortunes are closely tied to fast-growing emerging markets -- and potentially stronger currencies over time than the greenback -- can provide useful diversification to a largely domestic portfolio.

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Whitney Tilson
Contributing Editor, Kiplinger's Personal Finance