Investment analysts use a variety of fundamental metrics to gauge whether the U.S. stock market is overvalued. One of the most widely cited is the cyclically adjusted price-to-earnings (CAPE) ratio, also known as the Shiller P/E, named after Nobel Prize-winning economist Robert Shiller.
The CAPE ratio measures the price of the S&P 500 relative to the average of inflation-adjusted earnings over the previous 10 years, smoothing out short-term fluctuations. It reached a record high of 44.2 in November 1999, just before the collapse of the dot-com bubble.
Today, a similar dynamic is unfolding. Artificial intelligence-driven spending and investor enthusiasm have pushed a handful of mega-cap tech stocks to dominate the S&P 500, while the CAPE ratio has climbed back near bubble-era levels, hovering around 39.7.
While there’s no need to abandon U.S. equities altogether, investors may want to consider a more thoughtful allocation toward better-valued international markets in 2025.
Here are seven of the best international stock funds to buy in 2025.
This post originally appeared at U.S. News & World Report.