Current wisdom on equity allocation (India vs US)

[kakinada]

In late 1990s - those of us (from my circle of friends) who went to US (the SMART ones) studied financial markets and were told that US capital markets are stable, emerging ones are risky. So put your money in US markets (large cap first) and then some money in emerging markets. My friends who continued to work in India (the DUMB ones) had access to Indian markets and invested in it.
10 years later, the SMART ones are looking at an almost flat return while the DUMB ones are looking at 10% YOY at the very least.
Despite this my erstwhile financial advisor in US continues to share the wisdom of US capital markets being stable and emerging markets being risky and that someday the US market is going to outperform the emerging market.

I am wondering the wisdom of adhering to this sentiment. I have to decide how much money to keep in US equities and how much in Indian. I stay in India now.

[androdev]

I am surprised that no one responded. I am sure this is an FAQ.

[Desi]

In late 1990s - those of us (from my circle of friends) who went to US (the SMART ones) studied financial markets and were told that US capital markets are stable, emerging ones are risky. So put your money in US markets (large cap first) and then some money in emerging markets. My friends who continued to work in India (the DUMB ones) had access to Indian markets and invested in it.
10 years later, the SMART ones are looking at an almost flat return while the DUMB ones are looking at 10% YOY at the very least.
Despite this my erstwhile financial advisor in US continues to share the wisdom of US capital markets being stable and emerging markets being risky and that someday the US market is going to outperform the emerging market.

I am wondering the wisdom of adhering to this sentiment. I have to decide how much money to keep in US equities and how much in Indian. I stay in India now.

Ask the DUMB ones to compute real rate of return and not nominal. The real rate of return subtracts out the inflation.

Risky asset does not mean that risk will always materialize, just that risk is greater.

An example is a bet at a blackjack table. It is risky, in fact very risky as one can lose 100% of the bet, but can also make upto 150% of bet. Just because someone did make 150% does not mean it is not risky. In any case, look at the real return not nominal.