Last month  I traveled to Marrakech, Morocco to participate in a three-day conference on investing in emerging markets. Other than the sheep's brains I ate one night for dinner--it offends the host to turn down a dish at a Moroccan dinner--I had a great time.

My most memorable sight was not the camels or the donkey carts. It was the view from a rooftop one night after dinner. In every direction I could see the tops of houses crowded along the narrow alleyways of old Marrakech. The stone wall around the city was pitted with bullet holes. Every house was the color of sand, with open windows to catch the evening breeze. As the sun went down, I could just make out the shape of a satellite dish on every rooftop.

Those satellite dishes, and the television sets at the other end of the wires connected to them, are changing the world. They mean that every Moroccan now is able to enjoy the uplifting experience of Madonna, Beavis and Butthead and Baywatch from the comfort of his own divan.

But thanks also to all these modern technologies, just about everyone in these poor countries now knows what rich people look like. They all know that rich people don't look like or act a lot more intelligently than they do, and so they want their share of the action.

Those ruling politicians who want to continue to enjoy the perks of the governing class are paying attention. They are doing something new and different, having finally figured out that the best way of satisfying these new aspirations is to attract foreign investors to bring new capital and to train their workers.

I was able to spend a day with two of the ministers who are doing all the right things to attract capital to Morocco, including reducing regulations, lowering taxes and selling government-owned companies to private investors. They are improving education to provide a good work force.

And guess what? The Moroccan economy is growing, and its stock market is doing very well. Would I put my money there? Yes, but only with exceptional local guidance.

The farther away from home you go, the harder it gets to understand local companies. At one level they are all the same--money goes in one end and out the other. But at that level, you can get murdered. Don't be foolish. If you go into an exotic place, hire yourself an expert for a guide.

I realize that the idea that an investor should actually have a deep understanding of the companies he invests in is out of fashion. The finance theory that has been taught in the schools since the early 1970s implies this work is not necessary. According to prevailing theory, each company has returns that can be summarized by a distribution of returns that is symmetric and stable, and can be characterized by its average or expected value and a measure of volatility or dispersion. Investors choose among these companies (distributions) like shoppers picking tomatoes at the food market. Since in this theory the market prices all companies' securities efficiently, it doesn't end up making a difference which stocks a given investor owns as long as he owns a lot of them.

Knowing all this will get you an M.B.A., but it won't protect you from the realities of the world. In the real world the owner is just as much a factor of production as the raw materials, the capital or the managers. A good owner will take an active hand in governance, capital management and setting the strategy of a company. You cannot, therefore, know what the future behavior of a company is until you know who owns it, because the distribution of its returns, assumed fixed in standard finance theory, depends on the quality of the owners.

This may be why small companies create jobs and FORBES 500 companies shed employees every year. It is also a good reason to be careful about investing in developing countries, no matter how good their prospects look: Unless you have a good investment manager to rely on who has an intelligent fix on the guys who run the businesses, you would be well advised to stay home.