THE JOURNAL OF INVESTING 81 I t has become almost axiomatic that the U.S. market was overvalued during the late 1990s, experiencing a bubble fueled by hyperbole about technology and Internet stocks. Campbell and Shiller [1998, 2001], Shiller [2000], and Smithers and Wright [2000] popularized the idea that the U.S. market was grossly overvalued—and the doomsayers were validated when the market tumbled. Questions remain as to whether the U.S. market, as measured by the Standard & Poor’s 500 index, is still overvalued. One way to figure out an answer is to compare the prospective return of the S&P 500 index with likely prospective returns from investing in other countries and to ask what change in the price of the S&P 500 index would align these returns. The essence of the Campbell and Shiller argument is that the S&P 500 index is overvalued as compared with past history. We ask the same question in a cross-sectional rather than in a time series context. If the S&P 500 index is overvalued, investors will want to avoid the U.S. largecapitalization stocks that dominate the S&P 500. But where should these investors put their money in order to maximize their returns? Are foreign markets a good shelter from the dangers of overvaluation in the United States? And if so, how do investors access and exploit the opportunities available to them in foreign markets? The Gordon [1962] dividend discount model states that the real return from buying and holding a stock forever and consuming the dividends is the dividend yield plus the real rate of dividend growth. We use this formula to predict the real rate of return for three Morgan Stanley Capital International (MSCI) indexes and 37 individual country indexes. To predict future growth rates, we extrapolate past growth rates of dividends and earnings, adjusting these historical growth rates to account for divergence from historical norms. These adjustments are new twists on current methodology. To see what effect our adjustments have, we present four alternative calculations for each index.