Find 2009's Best Deals

If you're looking for stocks that will perform well in the future, now's a great time to find high-quality businesses trading at attractive prices. Yet if you want a shot at some of the biggest bargains available, you'll need to expand your investing horizons a bit.

2008 was an ugly year for stocks around the world. As painful as the drop here at home was for U.S. investors, it pales in comparison to some of the plunges seen elsewhere:

Source: Plexus Asset Management.

Given how many investors had hoped that international stocks -- and emerging markets in particular -- might buck the bear-market trend closer to home, 2008 was a big disappointment. But while international investors nurse their wounds, falling share prices have created values that haven't been available for years.

Getting better value
The fact that international markets didn't decouple from the economic recession in the U.S. provides strong evidence of increasingly global markets. Not only do businesses rely on global trade, but they also need clear, unimpeded capital flows. As the credit crunch has interrupted the free flow of money around the globe, so too have international capital markets felt the effects.

In many cases, foreign stocks have taken a harder hit from the slowdown. Consider some big players in widely followed sectors.

Source: Yahoo! Finance. As of Jan. 5.

So if international stocks have fallen further, does that mean they'll bounce back more strongly -- or stay beaten down over time?

The pros and cons of international investing
First, let's take a look at some of the positive points of putting some of your money to work abroad:

• If you're looking for strong growth companies, you almost have to look overseas now. Although economists are looking for contracting economies throughout most of the developed world in 2009, countries like China, India, and Brazil still expect to see growth this year -- albeit at a slower pace than in recent years.
• Despite the carnage in the U.S. stock market, most investors still have ridiculously small amounts of their money invested overseas. A recent study showed allocations of 15% or less for most American mutual fund investors.
• Global outrage over the U.S. financial crisis will persist for years -- and investors who got burned putting their money into American financial markets will be more likely to look elsewhere to invest. Meanwhile, smart countries will take steps to make their markets more inviting -- and attempt to build their economies into the powerhouses of the decades to come.

Of course, aspiring global investors have to navigate an investing world that's largely unfamiliar to them. Different accounting systems and disclosure rules, different types of government regulation, even different shareholder rights require constant attention, especially as you're just getting started.

Moreover, despite ongoing negative sentiment here at home, those who've bet against the United States in the past don't have a very successful track record. After similar economic challenges in the 1930s and 1970s, U.S. stocks bounced back strongly -- and those who gave up on stocks missed out on huge gains.

That's why investing all your money globally doesn't make any more sense than keeping it all in the U.S. But with the U.S. economy now making up just 20% of the total world GDP, a higher concentration of overseas stocks only serves to get your portfolio closer to the makeup of the overall world economy.

After seeing big losses, you can't afford to miss out on the best opportunities you can find. To make sure you take advantage of great bargains in the stock market today, go beyond the border and take a closer look at international stocks. With a little work, you'll find plenty of intriguing possibilities.

For more on finding great deals in stocks, read about:

• Is growth or value the better bet?
• Companies you should buy right now.
• These stocks are on the move.