Do strong overseas investments show U.S. equities are a bargain?

With the U.S. stock market off to a pretty rough start to 2008, investors can take comfort of sorts in this: foreign investors are buying stakes in our companies at a record pace.

According to the New York Times, "With a growing share of investment coming from so-called sovereign wealth funds -- vast pools of money controlled by governments from China to the Middle East -- lawmakers and regulators are calling for greater scrutiny to ensure that foreign countries do not gain influence over the financial system or military-related technology. On the presidential campaign trail, the Democratic candidates have begun to focus on these foreign funds, calling for international rules that would make them more transparent."

The political aspects and long-term questions aside, the rapid growth in foreign investment would seem to indicate that U.S. equities are undervalued.

The factors driving down stock prices may be short-term or localized, but record foreign investments demonstrate that cash-rich investors think they're a compelling value -- and maybe we should too.