NEW YORK — In today's financial world, there's nowhere to hide from each other's economic woes.

For investors smitten by the global economic story, that's something to remember. As evidence mounts that the U.S. housing and mortgage collapse isn't just a local problem, they can't expect the economies of other nations to keep chugging along without any effect.

In recent days, foreign markets have slumped along with U.S. stocks on economic concerns, and the International Monetary Fund just lowered its global growth forecast for 2008 to 4.8 percent, cutting nearly a half a percentage point from its July forecast.

All of that calls into question the "decoupling" strategy. That's where some investors bet they will get big returns by moving money into stocks with a large international presence to participate in the faster-growing global economy.

There have been rewards of going that route. For the first nine months of this year, shares of Standard & Poor's 500 companies deriving at least a third of their sales outside the United States saw a return of nearly 15 percent, on an equal-weighted basis. That's well ahead of the nearly 6 percent gain in the equal-weighted S&P 500 index over the same time, according to Citigroup.

But some cracks are starting to form in that strategy. In recent days, having a large international exposure hasn't helped some companies — notably Caterpillar, 3M and Honeywell — salvage their earnings from U.S. troubles.

It is also becoming increasingly clear that the credit crunch is spreading beyond U.S. shores. Beginning in August, the subprime meltdown set off what has turned into a full-fledged global credit crisis as lending standards have tightened all around.

Given the mounting financial turbulence around the world, the IMF revised its economic forecast last week to reflect these uncertain times and is now forecasting 1.9 percent growth in 2008 for the U.S., down from a 2.8 percent estimate in July. It also cut its 2008 forecast for China by 0.5 percentage point to 10 percent and sliced its estimate for European Union countries by 0.4 percentage point to 2.1 percent.

Yet even with all this going on, there's still plenty of interest in internationally focused investments. Citigroup's chief U.S. equity strategist Tobias Levkovich notes that there are increased volumes of requests for overseas sales exposure, which "suggests that everyone is looking in the same place for outperformance opportunity."

A look back in history, however, shows how the international investing theme can backfire. At the start of this decade, many investors argued that the U.S. economic slowdown wasn't going to affect European economies thought to have little exposure to U.S. exports. But then the technology boom went bust, and Asia — like the United States — was rocked hard by the downturn. Europe took a hit, too, because it exported into other parts of the world that were affected, Levkovich said.

That's why investors can't just throw cash overseas and count on happy returns. The world is connected in ways that might not even be obvious.