Here's reality: Hundreds of hotshot money managers and analysts convened at the Marriott Marquis in New York last fall to attend JPMorgan Chase 's annual Asia Pacific and Emerging Markets Equity Conference. My guarantee to you is that they weren't there because they're scared of investing in emerging-markets stocks.

But you very well might be ... and I can't necessarily blame you.

Some very scary numbers
China, India, Indonesia, Brazil ... what do these emerging markets have in common? They were all absolutely crushed in 2008.

And even though this year has been better for these markets, it has still been a volatile year for those who naively came to believe (thanks to the 2003 to 2007 period) that emerging-markets investing was all about outsized gains. Thus, many are scurrying away with their tails between their legs.

This, however, is precisely the wrong time for that kind of reaction.

Take China, for example
The first session at the closed-door conference came courtesy of famed author, investor, and Princeton economist Burton Malkiel. His presentation, titled "Investment Strategies for the China Century," can be summarized as follows:

1. Though China's GDP growth is slowing, it will remain the fastest in the world.

2. If you're an American investor, you're lucky to have even 2% exposure to China -- and that makes you dangerously underexposed.

3. The recent decline in China stock valuations, together with the magnitude and duration of China's potential growth, makes today an "unprecedented investment opportunity."

Those are his words, not mine, though I do agree. The question, of course, is how does the individual American investor take advantage of this unprecedented opportunity?

Your four options
If you're an American investor looking for maximum returns and minimum hassle, then you have four ways to buy China:

1. Buy a Chinese index fund, such as the Xinhua China 25 .

2. Buy an actively managed mutual fund -- such as Matthews China -- that is concentrated in China.

3. Buy multinational corporations such as Hewlett-Packard (NYSE: HPQ), Estee Lauder (NYSE: EL), and even Krispy Kreme Doughnuts (NYSE: KKD) that are expanding in China and that have made doing business in China a significant part of their growth strategy.

4. Buy individual Chinese stocks such as KongZhong (Nasdaq: KONG) and Cogo Group (Nasdaq: COGO) that trade on U.S. exchanges.

Each one of these approaches comes with its own set of pluses and minuses. Though the index fund is low-cost, for example, it will condemn your portfolio to holding nothing but enormous, bureaucratic, state-owned enterprises such as China Telecom (NYSE: CHA). The actively managed fund might make more discerning stock picks, but it's also expensive -- and Malkiel's research showed that most actively managed China funds substantially underperform the index.

Can you pick your own stocks?
That leaves two options: picking your own multinationals or picking your own Chinese stocks. In fact, Malkiel recommends you do both.

Of course, you'll probably feel more comfortable researching U.S. stocks that have a CEO who speaks your language (literally), that sell products familiar to you, and that release financials you're more likely to trust. Continued...