The PIIGS have been the topic of our Charts Of The Day and blog posts periodically over the past few years. Of course, “PIIGS” is the not-so-affectionate acronym for “Portugal, Italy, Ireland, Greece and Spain” – the countries at the root of the Eurozone economic and debt struggles in recent years. Typically, the occasion of one of our PIIGS posts is to point out potential problems based on the behavior of the countries’ stock markets. Today, it is a different story as we are actually highlighting a potentially positive development among the PIIGS. Of course, as with most inflection points, a potential positive is often also a potential negative as well should prices inflect in the opposite direction.
So what is this potentially positive action in the PIIGS? Years ago, we constructed a “PIIGS Composite” by combining the main stock indices of the 5 countries in a equally-weighted manner. Unlike much of the world in which equity markets have, for the most part, rebounded substantially since the financial crisis, the PIIGS have continued to flounder for the past 8 years since the 2009 low. And, in fact, as measured by our Composite, the PIIGS actually went to substantial new lows during the teeth of the Eurozone crisis in 2012.
At the moment, things are looking brighter, however, as we mentioned. Specifically, we see the PIIGS Composite presently testing 7-year highs, marked by peaks in 2011, 2014 and 2015.
The iShares MSCI Italy Index ETF (NYSE:EWI) closed at $27.90 on Friday, up $0.23 (+0.83%). Year-to-date, EWI has gained 15.24%, versus a 6.91% rise in the benchmark S&P 500 index during the same period.
So what will the PIIGS do next? Will they be rejected here at the former peaks – or will momentum propel the PIIGS to new multi-year highs? We will cover our thoughts on this topic in a Premium Post at The Lyons Share, including what this current action means for European equities in general. And we will break down the 5 individual PIIGS markets in order, from least to most attractive. If you’ve been considering subscribing to The Lyons Share, now is the perfect time to join as our Spring Sale is offering members BIG savings.
Disclaimer: JLFMI’s actual investment decisions are based on our proprietary models. The conclusions based on the study in this letter may or may not be consistent with JLFMI’s actual investment posture at any given time. Additionally, the commentary provided here is for informational purposes only and should not be taken as a recommendation to invest in any specific securities or according to any specific methodologies. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.
This article is brought to you courtesy of Dana Lyons, JLFMI and My401kPro.