According to Bryan Caplan (who links to a Karen Lewis article), having 39% of your assets be in foreign-held companies is a risk-minimizing strategy. I chose to have 40% of my investment plan go to foreign assets.
A financial winner is me.
In the comments, there is an argument that 50-50 is actually the wealth-maximizing strategy, as well as some discussion of why American foreign investment is so low. I think that one of the things they missed (at least as of when I read this last night) is that given two firms, there is a higher percentage in most foreign countries that there is a risk of government takeover. In the developed west, that possibility is rather low, and would not really constitute a big reason not to invest, but in the developing world, there is a serious possibility of “nationalization” or whatever other term you wish to use. Given that and the general weakness of financial institutions in most developing countries, it makes sense for there to be a bias against development there. In the developed world, meanwhile, there has historically been little difference between investing in Japan and the US over the past few decades—put your money in a Japanese index fund and you’ll get about the same rate of return as the US. Meanwhile, the US matches or exceeds most European stock markets over the past few decades, too.
On the other hand, the thing that makes a foreign stock fund potentially more valuable is that you get to pick from the best of a lot of different countries’ companies. You can also lower risk by investing a fraction of the fund in many different developing countries, so that if one country takes over one industry, it doesn’t hurt quite as much. Meanwhile, you can get a decent return from the good investments.
