In a paper recently published in the Financial Analyists Journal, the authors discovered that although correlations in various international markets increase during short, sudden downturns, longer horizons reflect that investors are well-served by having broad international diversification. Asness, Israelov and Liew found that, for time frames in excess of 3.5 years, severe long tails were nearly eliminated - which is what a portfolio manager would desire if he/she were managing a portfolio for the best risk/return tradeoff. And for those of you that have to focus on the shorter horizon, they further determined that a globally diversified portfolio didn't perform much worse than a home country-biased portfolio performed for that same time period. For those of you that have heard my piston analogy about portfolio design, here's some numbers to put behind it: the average worst 5-year period for a home country-biased portfolio was a loss of 57%, but a global portfolio lost only 16% for the same five year period. I won't say that either number is exciting, but it does go to show that -- historically -- international diversification can protect against more severe portfolio swings.