In 2012 the Argentine stock market plunged by 40 percent in US dollar terms. Meanwhile, the stock market of Colombia rose by 30 percent. The Egyptian market rose more than 40 percent, while that of nearby Qatar ended the year in the red. Kenya's rose 55 percent, while the Ukraine's was halved.

It may be all up and down, but this, not growth, is the prime attraction of investing part of your portfolio in stocks in developing countries. Done right, such so-called emerging- and frontier-market investing can actually reduce the risk in a portfolio, thereby increasing risk-adjusted returns. But, naturally enough, it is rarely done right. On the contrary, almost everything investors hear from the Wall Street marketing machine about investing in developing countries is wrong. As a result, when they do allocate funds to these countries, most investors typically do it for the wrong reasons, at the wrong times and in the wrong way.