Since March of 2009 through the beginning of February 2014, the S&P 500 produced a total return of about 200%, for a 20% annualized gain in that period (Source: Tactical Rebalancing and Strategic Allocation in Overseas Equities, February 2015).  So why invest overseas when our US market is doing so well?

For one, the US market is historically overvalued when looking at the Shiller P/E, also known as the CAPE ratio.  The current ratio can be found here http://www.multpl.com/shiller-pe/  As you can see by the chart, the US stock market has only been more expensive right before the Great Depression and right before the dot-com bust of 2000-2003.

For another reason, in 2014, the US only accounts for 22% of global economic output, while emerging markets and developing countries now account for some 39% of world gross domestic product (Source: Tactical Rebalancing and Strategic Allocation in Overseas Equities, February 2015)

In plain language, the US stock market has had a really good run and is now in overpriced territory.  By comparison, several international markets have attractive valuation levels and should be added into a diversified portfolio.