It's not easy being Bill Gates.

First, Yahoo! rejected Microsoft 's $44.6 billion buyout offer. Then Gates got absolutely worked in a Guitar Hero competition with Slash. And finally, Gates lost his title as the world's richest man to occasional bridge partner Warren Buffett. Can things possibly get any worse for the brainiac billionaire?

Actually, they can.

Many people were shocked to see Gates knocked from his No. 1 ranking after 10 years atop Forbes' list of the world's billionaires. (With a net worth of $58 billion, Gates currently ranks third behind Buffett and Mexican telecom baron Carlos Slim.)

But for those who are familiar with Forbes' rankings, the real surprise was not that Gates fell -- but that he didn't fall even farther.

Land of the free, home of the billionaires
For the past decade, Forbes' billionaires list has been as American as apple pie. Gates and Buffett have vied for the top spot, typically followed by the likes of Paul Allen, Michael Dell, Oracle founder Larry Ellison, and Las Vegas Sands Chairman Sheldon Adelson.

But in recent years, the upper echelons have been invaded by international businessmen who are growing their fortunes at an astonishing clip. In the past five years, Slim has increased his net worth eightfold, thanks to the stellar performance of Latin American telecoms such as Telefonos de Mexico (NYSE: TMX). With a fortune currently worth $60 billion, Slim has surpassed Gates and is nipping at Buffett's heels.

Meanwhile, a trio of Indian businessmen lurks behind Gates, poised to leapfrog into the top three slots. Over the past two years, shares of Luxembourg-based steelmaker ArcelorMittal have tripled, and that jump has helped CEO and 11% shareholder Lakshmi Mittal add $21 billion to his net worth.

As impressive as that feat is, Mittal is hardly the greatest gainer of the past 24 months. That distinction belongs to Anil Ambani, who has increased his fortune from $5.7 billion to $42 billion in just two years through his ownership stake in India's Reliance Communications and Reliance Power . Anil clocks in as the sixth-richest person in the world, just behind his estranged brother, Mukesh Ambani.

The tremendous performance of international stocks has led to a seismic shift in the composition of Forbes' list, as you can see:

2003

2004

2005

2006

2007

2008

Number of Americans in Top 10

8

8

5

3

3

2

Number of Americans in Top 25

18

13

12

12

8

4

As recently as two years ago, 12 of the 25 richest people in the world were Americans. Now only four are.

Where have all the returns gone?
The changing composition of Forbes' list only underscores what stock market experts such as Wharton professor Jeremy Siegel have been claiming for years: You need to be investing overseas.

Siegel advocates that investors allocate 40% of their portfolios to international stocks. That 40% figure is probably too aggressive for the average investor, but it's not an unreasonable target. It's certainly better than the 5% of their 401(k)s that U.S. investors currently commit to foreign fare.

Just look at the returns that domestic-oriented investors, including Gates and Buffett, have been passing up over the past three years:

Country

3-Year Returns*

Giant Famous Company

S&P 500 (U.S.)

20.8%

ExxonMobil (NYSE: XOM) Continued...