People often say that 'beauty is in the eye of the beholder,' and I say that the most liberating thing about beauty is realizing that you are the beholder. This empowers us to find beauty in places where others have not dared to look, including inside ourselves. - Salma Hayek
I want to keep this article short and sweet and let the charts make the case. We all know that PIIGS is an acronym for Portugal, Ireland, Italy, Greece, and Spain - all the countries with high debt and which have been the source of angst and fear in markets. There is no Portugal ETF, but let's look at the price ratios of each of the PIIGS relative to the U.S. As a reminder, a rising price ratio means the numerator/PIIGS country is outperforming (up more/down less) the denominator/S&P 500 (SPY).
Across the board, the relative performance is picking up in PIIGS. Marc Faber of the Gloom Boom and Doom Report published a piece of mine just yesterday alongside his Monthly Commentary in which I argued for 2012 to be the year of reflation. If I'm right, the PIIGS have a strong chance of being surprise performers. After all, reflation means highly leveraged countries that reached distressed levels suddenly recover when no one is positioned for it.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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