Three times during the 1990s emerging markets currency crashes led to broader fallout for the sector and world economy: Mexico (1994), Thailand (1997) and Russia (1998).
But more recent debt problems overseas during the current bull market have passed, though the biggest issues were in Europe. Remember the PIIGS? When Portugal, Italy, Ireland, Greece and Spain were going to sink the global markets in 2011? Maybe you forget, because they didn't.
"I'm paid to be disciplined," said Douglas Boneparth, president at financial advisory firm Bone Fide Wealth and a member of the CNBC Digital Financial Advisor Council. "The PIIGS are an example of when we expected a broader contagion, and this is the first time that EM has bitten investors," he said. "The current volatility doesn't get me depressed in any way," Boneparth added. Why? Because peak to trough, meaning the measurement of emerging markets performance from its highest highs to its lowest lows, makes one point to investors: Not including emerging markets in a portfolio is the mistake. "This is a great example of short-term thinking vs. long-term discipline," he said.
Younger investors with a 100 percent equities portfolio should have 10 percent in emerging markets equities and should maintain exposure. Even investors closer to retirement, with between a 40 percent and 60 percent equities weighting, should have an EM weighting of roughly 4 percent to 7 percent, Boneparth said.
"If you are a long-term global investor and a younger investor contributing systematically to a long-term portfolio, and dollar cost averaging in, what are you so worried about? Emotional investors make the worst decisions."
Mishra said investors that have any EM exposure should be prepared for more volatility, but most developing countries now have much better economic fundamentals, with sizable current account surpluses, strong forex reserves and well-regulated financial systems. "I don't think we'll witness a replay of the 1997 crisis," she said.