New York — It took Marco Polo years to unlock the treasures of the Orient.
It can be almost as time-consuming for today's investors to learn the ropes of foreign stock markets. Yet both US institutions and individual investors are increasingly finding the lure of foreign stock markets irresistible. After the disappointing 10 percent drop in the Dow last year, the Tokyo market's 18 percent gain looks extremely appealing. So does the Singapore market's rise and the whopping 66 percent gain in Sweden's small stock market.
''The evidence of more interest in international investing is the start-up of new international mutual funds,'' comments Kees Schager, senior vice-president and director of international research at Arnhold S. Bleichroeder Inc., an adviser to institutions.
Katherine Stults, an investment analyst at Morgan Stanley, says: ''Funds and institutions I advise used to have a single part-time person working on foreign stocks. Occasionally they would make an exception for Sony. Today they might have four or five analysts devoted to foreign stocks.''
But is the vogue for foreign securities wise for the individual to follow?
Mr. Schager says: ''There is less opportunity in most markets than investors think. It is nearly impossible for individual investors to follow the complexities - economic, political, and social - that affect each of the 14 viable international stock markets.''
In fact, even some seasoned international mutual funds showed poor performances last year. Keystone International Fund was down 1.96 percent; Putnam International Equities Fund dipped 0.4 percent; Scudder International Fund fell 2.8 percent; and the Niagara Share Corporation, which devotes some 25 percent of its portfolio to foreign stocks, dropped 10 percent.
On the brighter side, a new international bond fund started by Massachusetts Financial Services in March - the first of its kind - showed an increase of 8.6 percent since inception.
Still, ''Investing around the world can be fearsomely time-consuming,'' Gilbert de Botton, president and chief executive officer of Rothschild Inc., told a a recent investment conference.
Mr. de Botton suggests investors take a two-pronged approach. First, observe the universe of stocks and seek swings in their varying cycles. ''The world,'' he says, ''is not in a synchronized pattern of growth. In the past 12 years, the London market was the best-performing market three times and the worst three times.''
Second, he says: ''Select industries, pinpoint the desirable companies in those industries, and make your selections according to the conventional criteria of price marketability and earnings prospects.''
Marketability can be quite significant in markets like Italy's, Spain's, or Denmark's, where the capital base is minuscule, compared with the US market's $1 .2 trillion in capitalization.
Furthermore, currency movements are also a major factor. Despite the Swedish market's 66 percent gain last year, it was ''only'' 32 percent when translated into US dollars, according to de Botton, because of a currency swing.
With so many complications, de Botton insists that ''no US investor in his right mind should ever commit more than one quarter of his portfolio abroad.''
Both de Botton and Schager agree that the average investor who can't pick market swings is best off in the Pacific basin - Japan, Hong Kong, Singapore, and Malaysia - which offers the best chance for consistent growth.
''In the Far East,'' Schager contends, ''the investor can get the biggest bang for the buck.''
Even the attractive Asian markets, however, are subject to wild lurches. ''Like all investing,'' Schager warns, ''if you play the Far East market on a short-term basis you are likely to fail. The Singapore market went up 33 percent in the first five months of 1981. Then it went through a three-month crunch and fell 33 percent. That was followed by another increase. Investors who panic during such large swings are bound to lose money. Further, since there are poor lines of communications from the Far East investment community, one is unlikely to catch short-term signals.''
But Schager doesn't think the volatility in the Far East markets is a sign of any fundamental problem. ''The volatility is just a sign of the times,'' he explains. ''It is the effect of inflation causing too much money to slosh around the world markets seeking a home.''
The Far East markets, he adds, ''have become the latest fad. US pension funds have been placing a growing portion of their portfolios in foreign markets, including Japan and Hong Kong. In the next five or six years, estimates show another $3.5 billion to $7 billion moving from them into Far East markets. That alone,'' Schager says, ''could make these markets go up.''
Adding fuel is the economic explosion occurring within the economies themselves. ''Few people realize what it means to live in a period of 8 percent annual growth (the growth rates of Malaysia and Singapore) for 20 years. It has enormous consequences in terms of local demand. . .''
Schager says that most individuals would find it easier to participate in the Far East through a mutual fund rather than choosing individual stocks (held in American Depository Receipts). Two funds that specialize in the Pacific Basin were substantial winners last year: The Merrill Lynch Pacific Fund rose 22.02 percent and the G. T. Pacific Fund was up 10.3 percent. Both were well over the average growth for US mutual funds last year.
* * * The budget and its large deficit hurt the market at the start of last week. But, the congressional testimony of Federal Reserve chairman Paul A. Volcker, and the economic reports of President Reagan and his Council of Economic Advisers had little impact on stock prices. For the week, the Dow Jones industrial average was down 17.22 points, closing at 833.81.