5 fashion tips for your portfolio

You've probably always held a lot more in U.S. stocks than in foreign ones. That's sensible enough: Our country has long been the main driver of the world's growth.

But the economy beyond our borders boomed after 2002, and so did the stock markets. No surprise, then, that investors pumped more than three times as much cash into foreign-stock funds in 2007 as they did into domestics. Some top strategists, such as Pimco's Mohamed El-Erian, now argue that you should have half or more of your stock portfolio overseas. At this point, you might be flashing back to the vogue for Japan stocks in the 1980s, which ended in tears.

That's a reminder not to simply chase performance. But there's another lesson: Japan's investors would have been wise to diversify, and the same is true for you. The U.S. is expected to be just 10% of the global economy by 2050 - you'll be missing a lot if you keep too much money at home. Sure, our stock market will still be bigger and safer than most, but a foreign allocation of 20% to 40% of your stocks isn't wild.

In light of the performance streak, just avoid a big new bet all at once. Templeton's Mark Mobius, a veteran emerging markets manager, recommends small investments in regular increments.

The verdict: The globalists are right. Go abroad - but gradually.

NEXT: Bad bonds?