Traditional asset allocation advice was to have about 20% of your investments in the International category. The reasoning was that international investments had potentially high returns, but also carried high risk.

That is changing. Sure, there are a number of risky economies like Portugal and Greece, but there are also a large number that have developing economies and middle classes.  It is the emergence of middle classes that provides the primary optimism for investors.  Middle classes tend to like what we have and use and consume. They like American styles, foods and other products. As their incomes rise, they spend more on what we make. The average annual consumption of Coca Cola products in the United States per individual is 399.  In China, the average is 32, and in India it is 9. Obviously, opportunities for growth are greater outside the U.S. than in it. We have around 300 million people, both India and China have over a billion.
 
Juices are more popular than colas in India, China and other Asian countries, Minute Maid has developed an Orange Juice product called Pulpy, using a synthetic pulp. In just under 5 years, this product has grown to a sales volume of over $1 billion in China, India, Malaysia and other emerging economies, Similar success stories exist with clothing, fast food and other American middle class products.
 
Many United States based companies derive as much as 50% of their profits from overseas sales. Look a the expansion of McDonald's, Levis and Philip Morris. While smoking is declining at home, it is expanding overseas, particularly in Asia. 
 
Diversified investors, and we all should be, need to look at both American companies that have established themselves internationally, and at companies based outside the United States that produce products desired by middle class consumers. Think of food products, electronics, clothing and other products that middle class consumers in the U.S. take for granted.
 
If your portfolio is truly diversified, you may find that as much as 50% of of the sales volume and profits of your holdings are generated by international as opposed to domestic sales. We are happy to provide specifics on countries doing well in emerging economies.  Contact us at anadolna@associatesgroupinc.com.