Issuing companies must comply with SEC requirements and abide by U.S. accounting standards.
Risk of emerging markets
Due to inflation risks and heightened volatility, Thompson suggests average investors steer clear of emerging markets altogether -- or be prepared for a bumpy ride."Emerging markets are not meant for conservative investors," he warns.
In recent years, however, those willing to roll the dice were handsomely rewarded.
The MSCI EM Index, for example, which tracks 25 emerging markets including Russia, Brazil, India and China, posted an annualized return of roughly 34 percent over the last three years through August 2007. That number falls to 30 percent over the last five years and 8 percent over the last 10.
Check your holdings
When it comes to international investing, bear in mind that as global economies become increasingly intertwined, the line separating domestic and foreign stocks is fast disappearing.Many multinational U.S. corporations that investors hold in their retirement accounts, for example, derive a significant portion of their annual revenue from overseas markets.
And unbeknownst to most investors, domestic large-cap mutual funds also frequently include a small percentage of foreign stocks in their holdings.
Chances are, you already have more exposure to international stocks than you think.