The American Association of Individual Investors (AAII) conducts a survey each week, simply asking investors: “Are you bullish, bearish or neutral?” Consider it an appraisal of the market’s mood. A mood ring, if you will.

For 80 of the last 82 weeks, optimism has run below the survey’s long-term average. That’s a long stretch of pessimism.

Last week’s AAII survey shows that the market’s mood still falls on the negative side.

Currently…

• 37% of respondents labeled themselves “bearish” (an above-average reading).
• 39% labeled themselves as “neutral” (an above-average reading).
• And only 24% called themselves “bullish” (a below-average reading).

Considering the mounting number of global risk factors, over-inflated stock valuations and our own forecast of economic trouble ahead, it’s not at all surprising to see investors gripped with doubt and fear.

Clearly, pessimism is the market’s dominant psychological trend.

Meanwhile, though, the dominant trend in stock prices is still positive.

I explained this to readers last week when I shared with them charts that show the majority of stock markets – both in the U.S. and abroad – are in long-term uptrends.

This sounds perverse, but it’s actually the way the stock market typically works. When investors are especially fearful, stock prices tend to rise. And when investors are especially confident, stock prices tend to fall.

And since most investors are currently pessimistic and fearful, I suspect they’re overlooking the bullish opportunity in global stocks today.

Not only are investors especially nervous about buying stocks today, they’ve long favored the relative safety of U.S. stocks.

For many reasons – good or bad – U.S. investors almost always feel safer buying U.S. stocks. It’s an illusion of course… but most U.S. investors feel like they understand, and can control the risks of investing in, companies based in the United States, relative to foreign companies.

The idea of investors’ home-country bias isn’t new. It’s a behavioral phenomenon that’s well-documented and pervasive. I suppose, for some investors, it’s a case of the devil you know is better than the devil you don’t.

Either way, home-country bias causes many investors to foolishly pass over investments that are best positioned for strong performance, in favor of investments that make them feel comfortable.

U.S. stocks have had a great run in recent years – outperforming almost every other country’s stock markets by a long run. But that trend of U.S. outperformance can’t last forever. And I’m currently seeing signs that suggest foreign stocks are likely to outperform in the months ahead.

According to Nautilus Research, an institutional quant shop, something unique happened last month: more than 15% of global stock market indices hit a new one-year high. This represents the global market’s strongest breadth in more than two years.

Historically, this global buy signal has led to consistent and strong performance of global stock markets.

On average, foreign stocks have gained 1.7%, 3.1%, 6.2% and 9.7% over the following one, three, six and 12 months, respectively. And those gains are far stronger than global stocks’ typical returns over the same time-frames (of 0.5%, 1.5%, 2.9% and 5.9%).

Now, I fully realize that buying any (global or foreign) stocks at today’s valuations is scary. The cyclically adjusted price-to-earnings ratio (CAPE) for U.S. stocks is sitting around 26.5, more than 65% above its long-run median of 16.

Yes, stocks are expensive!

But that doesn’t mean you should altogether avoid buying stocks!

History shows that, despite an “expensive” CAPE ratio, stocks can still move strongly higher. Consider a number of the historical global buy signals Nautilus Research identified.

The MSCI World Stock Index returned…

• 22% between January ’93 and ’94 (despite a CAPE of 20.3).
• 12% between July ’95 and ’96 (despite a CAPE of 23.4).
• 20% between October ’96 and ’97 (despite a CAPE of 26.5).
• 18% between February ’98 and ’99 (despite a CAPE of 34.7).
• 11% between April 1999 and 2000 (despite a CAPE of 42.7).

Do you see the trend?

Between 1993 and 2000, stock valuations grew increasingly expensive. Yet, world stock markets repeatedly offered investors double-digit annual gains.

To be fair, the CAPE ratio was designed to be an ultra-long-term valuation tool. Most investors don’t realize it has little to no value if your investment strategy calls for holding investments for less than five or 10 years.

Still, the CAPE ratio is one of the most-often cited valuation metrics in the financial media. And so I suspect more than a few investors psych themselves out of buying stocks at today’s valuations, for fear of turning into the proverbial “sucker” who buys the market’s last shares at nose-bleed prices.

I hope this misconception doesn’t deter you from finding the most profitable short-term investments in today’s market.

Currently, foreign stock markets are both trending higher and showing market-beating momentum.

Our system has triggered a number of buy signals on foreign markets in recent weeks, including: China (FXI), Hong Kong (EWH), South Korea (EWY), Australia (EWA​), France (EWQ), Germany (EWG) and, most recently, Japan (EWJ).

This overwhelming convergence of buy signals in foreign stock markets is too strong to ignore.