The U.S. stock market dropped 8 percent

In May and June of 2006, there was a slump in global stock
markets, triggered by a sudden spike of inflation jitters in the
United States. The U.S. stock market dropped 8 percent, developed
markets outside the United States fell 14.9 percent, and
emerging markets plunged 24.5 percent, based on MSCI data.
A study by economists at the International Monetary Fund
highlights the diminishing benefits of diversifying abroad very
bluntly. The study shows that although American investors are
the least diversified of the investors in the four-country study
(United States, Germany, United Kingdom, and Japan), they have
only a “limited amount” to gain by diversifying more