Conditioned by a decade of strong U.S. growth, most investors believe they don't need foreign stocks to prosper. They're wrong.

During the 1990s, the U.S. stock market outperformed the rest of the world by a wide margin and crises in Asia and Latin America made investors wary of casting a wide net. But analysts say that wasn't normal. Indeed, for most of the 1970s and 1980s, international markets outperformed the U.S., according to Smith Barney global equity strategist Matthew Merritt.

"We would caution against viewing the 1990s as typical investment conditions," he said. "The case for broadening investment horizons across international borders is strong."

While it's possible that the U.S. will continue to beat foreign markets indefinitely, higher valuations here and an expected drop in the dollar suggest that's unlikely. Historically, the U.S. market has outperformed when the dollar has been strong, Merritt noted. So where do the best opportunities lie?

One of the most exciting places to invest right now is in Asia, according to portfolio specialist Kurt Umbarger of T. Rowe Price.

"These markets (excluding Japan) have gone through some pretty significant restructuring both at the government level but most importantly at the corporate level as a result of the very difficult economic crisis that these markets experienced back in 1997 and 1998," he said.

The initiative to clean up balance sheets and to try to reduce excess capacity coupled with a healthy rise in commodity prices, which make up a significant portion of Asian countries' GDP, paints a healthy backdrop, he noted.

Umbarger particularly likes Samsung in Korea and he's recently been buying into the Indian housing sector, citing deregulation in that area. "India is on a better economic footing with gross domestic product coming in at 8% for 2003, and we're optimistic for 2004," he said.

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