Ex-U.S. developed markets could be an interesting diversifier.
...
IMO (not worth much), it's not so much the current valuation level (e.g. current P/E, P/B) that's key, but how these levels are changing over some reasonable past stretch of time...

Looking at the valuation of individual firms makes good sense (rifle method). Some people also look at broader swaths of valuation (shotgun method).

If you're looking at ex-US markets in terms of top level valuation (The CAPE of the FTSE or Topix, etc) looking for good deals, two things to keep in mind:
(a) it's important to compare valuation levels to the historically average valuation levels of the same group, not to the US, and
(b) the group you're looking at has to be broad enough to be meaningful. A market dominated by 1-5 companies, or just 1-2 sectors, won't mean revert predictably to anything at all.

FWIW, here are some historically average CAPE values by sector for Europe and the US. Data up to 2013, I think it might have started 1973.
Top half tend to be more highly valued in the US, vice versa for the bottom half.

                Euro avg    US avg
Energy             15        18
Materials          15        19
Industrials        17        22
Healthcare         21        27

Telecom            20        18
Utilities          18        13
Financials         28        17
Tech               28        32

Here's another table, median historically observed CAPE by country index, all available data up to mid 2012. US and UK had a century, most others start in the 1970s-1980s.

Australia       17.15
Austria         26.80
Belgium         14.89
Brazil          17.34
Canada          19.85
Chile           20.93
China           24.40
France          19.92
Germany         17.90
Greece          15.91
Hong Kong       18.16
India           24.56
Indonesia       16.37
Ireland         10.94
Italy           21.66
Japan           43.89
Malaysia        18.49
Mexico          19.62
Netherlands     11.95
Portugal        16.43
Russia           9.15
Singapore       21.96
South Africa    16.22
South Korea     17.84
Spain           17.33
Sweden          19.54
Switzerland     18.16
Taiwan          19.43
Thailand        11.48
Turkey          17.02
UK              11.84
USA             14.63

So much for shotgun comments.

On the rifle front, here are some international picks of mine. Prices as of Tuesday. Do with them what you will, I don't currently own 'em : )
IFI:WSE at 23.90 PLN, yield 8.41%
KMDS:JKT at 458 IDR, yield 4.73%
6070:TYO at 2493 JPY, yield 4.79%
4481:TYO at 2815 JPY, yield 3.21%
Tickers are in the format used by FT.com

Jim

Berkshire Hathaway FAQ

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