Signs recent downturn about to reverse!

Obama Spending
Spree Could Send
Stocks Soaring!

The federal government is about to begin spending more money than it ever has in history. Barack Obama's proposal for an $819 billion fiscal stimulus plan is 70% bigger than the inflation-adjusted cost of FDR's New Deal — and eight times what the U.S. spent on the Marshall Plan. When you add in the cost of federal bailouts to banks, the government is even spending more than it did fighting World War II.

Whatever the long-term consequences of this unprecedented federal spending, I believe it will send stocks soaring.

We helped investors sidestep the October crash. We also helped them pick up impressive gains of 32%, 67% and 151%. Now, we're about to do it again with our aggressive portfolio of Exchange-Traded Funds designed to catch the Obama spending rally-back.

I'll tell you about not one but FOUR ETFs that could reap windfall profits on the coming rally and help you recoup some of the losses you may have suffered last year . . . BELOW . . .

Dear Friend,

If you missed out on the chance to position yourself for the coming Obama surge in stocks, I have great news: It's NOT too late!

Following the nosedive in stocks that occurred in October 2008, the equity markets have traded in a narrow range. The Dow has bounced between 8,000 and 9,000 for the past two months.

It's clear that investors are waiting to see what form the federal government's fiscal stimulus plan will take.

But make no mistake: The U.S. government is about to spend more money than it ever has in its entire history — and this tsunami of cash will send stocks rising again.

What's more, my models continue to indicate that the recession is ALREADY more than halfway over. I believe economic conditions in the U.S. will improve significantly during the second half of this year — and that stocks will rise significantly.

If you invest in the right ETFs now, when prices are near historic lows, I believe you could make windfall profits by the second half of 2009.

The Federal Government Is About to Go
on the Biggest Spending Spree in History!

In case you haven't followed all the details, President Barack Obama is pushing Congress to pass his $819 billion economic recovery plan by Feb. 16, 2009.

In inflation-adjusted terms, this is more money than the government spent on the New Deal . . . the Vietnam War . . . the Marshall Plan . . . the Louisiana Purchase . . . the Korean War . . . the invasion of Iraq . . . the S&L crisis . . . and the Race to the Moon.

Plan	Cost	Inflation Adjusted Cost
Marshall Plan	$12.7 billion	$115.3 billion
Louisiana Purchase	$15 million	$217 billion
Race to the Moon	$36.4 billion	$237 billion
S&L Crisis	$153 billion	$256 billion
Korean War	$54 billion	$454 billion
The New Deal	$32 billion (Est)	$500 billion (Est)
Invasion of Iraq	$551billion	$597 billion
Vietnam War	$111 billion	$698 billion
NASA	$416.7 billion	$851.2 billion

Source: Jim Bianco, Bianco Research

Congressional leaders are quibbling over various aspects of the plan — the precise balance between tax cuts and government infrastructure projects — but few observers doubt it will be passed eventually.

I believe Obama's fiscal stimulus plan will lead the economy out of the recession by the third quarter of this year and that stock prices will trend substantially higher during the months ahead in anticipation of an economic recovery.

As I said in my previous e-mails, similar Keynesian fiscal stimulus programs, in the 1930s, helped restart the stock market. After FDR was sworn in on March 4, 1933, the Dow DOUBLED in value over the next 16 months, soaring from 53.84 right before the inauguration to 105.15 the following July.

In fact, the market continued to climb steadily over the next four years, flattering out only as the clouds of war began to gather over Europe. I believe the Obama stimulus plan will have a similar effect on the stock market this year.

Why My ETF Picks Could Have Handed
You Windfall Profits of Up to 25% in
3 Months Even in a Crashing Market!

My name is David Frazier. I'm the editor of The ETF Strategist.

While most investors have lost their shirts over the past year, I'm proud to say that subscribers to The ETF Strategist have not only been protected from the worst market declines in a generation . . . but also even made respectable profits along the way.

For example, one of my most recent ETF recommendations, ProShares UltraShort Consumer Services (SCC), did very well indeed.

I first recommended it on Aug. 7, 2008, for around $95.75 a share — right about the same time I told investors in my conservative portfolio to go to 60% cash.

I could see that the credit crisis was going to result in a dramatic drop in consumer spending no matter what happened with the general economy.

In October 2008, I told my subscribers to take profits when SCC was selling for $120 a share — a potential gain of 25.3% in just two months. (Subscribers who held onto SCC saw it rise to as high $148 a share — for potential unrealized profits of 54.5%).

In other words: While most investors were losing their shirts, subscribers to my ETF Strategist newsletter were instead reaping windfall profits.

And I've done this over and over again in recent years.

Here are a few examples of niche ETFs that I identified just as they were about to skyrocket:

Fund Name	Profits
iShares FTSE/Xinhua China 25 Index	up 32.4% in two months
iShares DJ Aerospace & Defense Index	up 40.8% in 12 months
ProShares Ultra Short Russell 2000	up 23.2% in one month
ProShares Ultra Basic Materials	up 27.3% in two months
iShares MSCI Brazil Index Fund	up 29.9 % in two months

And these aren't even my best-performing ETFs. For example, my model identified HOLDRS Oil Services Trust (OIH) back in July 2004 and the fund soared a hefty 151.9%.

Of course, not all of my recommendations have been winners. My recommendations have taken a few hits in the recent market crash, too.

But overall, my aggressive portfolio of ETFs has outperformed the S&P 500 by 10 TIMES! During one of the worst periods in the markets in 80 years, it posted only a small loss of -3.7% in 2008. In comparison, the S&P 500 LOST -37% in the same period.

From the perspective of many investors who have lost up to half of their retirement savings in the past year, a loss of only 3.7% looks pretty good!

Join the thousands of satisfied subscribers
to The ETF Strategist TODAY!

Why Buy and Hold Works Only in a Bull Market

To make money in a volatile market like we see today, you have to use a radically different investing approach from that recommended by the Wall Street "experts" who got us into the current mess to begin with.

You see, most of Wall Street's so-called experts and mutual fund portfolio managers continue to advise investors — even as the markets crashed to five-year lows! — to adhere to a long-term, buy-and-hold investment strategy.

They claim you should invest in a diversified portfolio of stocks, bonds, commodities, precious metals, and real estate investment trusts during all investment environments — and then ignore how these asset classes are actually performing.

That's insane — as millions of investors and retirees recently discovered.

This is a strategy that will actually earn you LESS than parking your money in a passbook savings account at your local bank.

How much less?

Since the beginning of this decade through the end of November 2008, such a strategy would have generated a -5.31% average annual return for anyone who invested in a broadly diversified stock portfolio such as an S&P 500 Index fund. That's right: -5.31% a year.

In other words, without even factoring in the effects of inflation, an investor who followed a buy-and-hold strategy over the past eight-and-a-half years would have actually lost money — a lot of money! — by following the advice of those so-called experts.

The fact of the matter is that buy-and-hold strategies work only in upward-trending stock market environments.

Fortunately, I advocate a radically different approach — one that is more responsive to the actual conditions of the market.

The Secret to My Success Lies in What
I Call Tactical Asset Allocation (TAA)

In contrast to the buy-and-hold strategy advocated by Wall Street, I use a Tactical Asset Allocation strategy to periodically adjust the composition of my portfolio holdings in accordance with the relative attractiveness of those asset classes during different phases of the business cycle or different types of investment environments.

In other words, I shift my allocations among stocks, bonds, commodities, precious metals, real estate, and cash depending upon market conditions.

For example, when economic conditions are expected to deteriorate for a lengthy period of time and equity prices are expected to decline for a prolonged period of time, I allocate a large portion of my portfolio to cash or cash-like investments, such as short-term debt.

This is what I did recently when I told my subscribers following my conservative portfolio to move to a 60% cash position in early August. That is why they missed the October wipeout almost entirely!

Likewise, when economic conditions improve and stocks appear to be poised for a sustainable rebound, as I believe they soon will be, strategic asset allocators usually re-enter the equity markets by allocating a large portion of their assets to stocks.

This is the strategy that has allowed me to identify opportunities in recent months that have gained 10%, 20%, even 50% as the market overall has dropped -37% over the past 12 months.

Now I've identified another group of ETFs that I believe are going to soar in the coming months as the market rebounds and big investors swoop in to buy up stocks at record low prices . . .

Join the thousands of satisfied subscribers
to The ETF Strategist TODAY!

My #1 ETF Recommendation
for the Next 12 Months

Why You Could Make Up to
45% Profit in the Next Few Months
Betting on Chinese Stocks! [FXI]

Chinese stock prices, as represented by the Shanghai Composite Index, fell a whopping 69% during the 12-month period ended Oct.16, 2008, in response to the global economic slowdown and the worldwide financial crisis. Yet, China's economy continued to grow at a furious pace during that period. For example, China's total output of goods and services (gross domestic product, or GDP) grew at a double-digit rate during every quarter from Sept. 30, 2007, through June 30, 2008.

Although China's economy expanded at a slightly slower pace during the third quarter of 2008, the country's total output of goods and services STILL grew at a very robust year-over-year rate of 9.0%.

And in spite of the 2008 worldwide credit crunch and some severe natural disasters that occurred in China during early 2008, China’s industrial production rose 15.2% during Q3 2008, while retail sales expanded 22.0 percent and exports grew 22.3 percent. Meanwhile, Chinese investments in capital assets rose at a 27.0 percent year-over-year rate, while the inflation-adjusted incomes of Chinese workers grew 7.5 percent (a year-over-year basis).

Make no mistake: Even if the entire world goes into recession, China's economy is still going to be surging. And that represents a historic opportunity to make windfall profits.

One of the best ways to invest in fast-growing Chinese companies is to buy the iShares FTSE/Xinhua China 25 Index Fund (FXI), an ETF that includes 25 equities of Chinese companies operating primarily in the financial, telecommunications, and energy sectors, as well as firms in the utilities, basic materials, and industrial sectors.

Those companies include China Life Insurance, the country's largest life insurance company, which provides annuity products and life insurance for more than 90 million individuals and groups; China Mobile, the world's largest and fastest-growing wireless service provider with 415 million customers and 68 percent share of the mainland Chinese mobile market; PetroChina Company, which produces two-thirds of China's oil and gas, owns or has interests in more than 17,000 gas stations, and operates 26 refineries and 12 chemical plants; Huaneng Power, one of China's largest independent power producers, operating electrical power plants in 12 of China's 22 provinces; and China Railway, which provides construction and engineering services to other companies throughout China that build the country's railways, highways, bridges, and industrial facilities. FXI also holds the securities of several large Chinese banks and wire-line telecommunications companies.

Except for China Telecom Group, all of the fund's top-10 holdings were trading at a substantial discount to their expected future earnings growth as of Oct. 16, 2008, as you can see in the table above by reviewing those companies, PEG ratios. Stocks that have a PEG ratio less than 1.0 are considered to be undervalued because they are trading at a price less than their expected return. With 84 percent of FXI's holdings having a PEG ratio less than 1.0, and 44 percent of its holdings having a PEG less than 0.50, the iShares FTSE/Xinhua China 25 Index Fund was clearly trading at a bargain price (as of Oct. 16, 2008).

As I write this, FXI is trading around $25 a share. I consider this a buy up to $35 a share. In light of the far-reaching actions that central banks around the globe implemented in late 2008 to unclog the credit markets and to restore investors' confidence in the worldwide financial system, my experience suggests that FXI may rally sharply over the ensuing months, because of its 31 percent investment allocation to commercial bank stocks.

If it bounces back to merely $35 a share, and I expect it to go much higher than that, you could make potential profits of up to 45% in just a few months — and potentially much more over the coming year.

If you bought only ONE ETF in 2009, I would recommend it be the iShares FTSE/Xinhua China 25 Index Fund.

To Find Out More About This Chinese Superstar ETF,
Join The ETF Strategist TODAY!

ETF Rally Back Blockbuster #2

Earn 37% in the Coming 18 Months
Investing in an ETF that Buys
Beaten-Down Banking Stocks [KBH]

If there is one sector of the economy that has been beaten so badly you feel sorry for it, it's financial.

All five of America's largest investment banks have either gone bankrupt or been consolidated in emergency fire sales.

Venerable investment banks like Lehman Brothers have gone bankrupt. Morgan Stanley was being forced to beg for emergency loans from the Fed. Banks in California and Texas have failed outright, with anxious depositors lining up outside their doors. Even Citibank and Bank of America have had to beg for loans from the Fed.

If ever there were stocks to seemingly avoid, it would be banking and financial stocks — which is precisely why savvy investors are gobbling them up with both hands.

The truth is, financial companies are battling back from the current crisis with admirable energy.

They're cutting operating costs . . . selling superfluous assets . . . divesting entire divisions . . . retiring excess debt . . . significantly writing down the value of assets . . . and dramatically changing how the company markets or sells its products. In a few cases, they've even filed for bankruptcy or sought mergers with other companies.

What's more, bank stocks now are selling near historic lows! Wells Fargo Bank is selling for HALF what it was a little over a month ago. You can buy shares of Citibank for almost ONE TENTH of what they sold for a year ago. What's more, the Fed bailout of financial institutions — the injection of hundreds of billions of dollars into the major banks — is sending some banking stocks skyrocketing.

While the market as a whole has struggled in the past few weeks, bank stocks have SKYROCKETED in recent days!

Fortunately, I've identified the one ETF that I believe is the best way you can profit from the coming turnaround in banking and stocks. The fund's portfolio consists of 24 national money center banks and regional banks, including the biggest "survivors" of the recent shake-up of the banking industry such as Wells Fargo, JP Morgan Chase, Wachovia, Bank of America, and Citigroup.

The fund's top 10 holdings have a price-to-book ratio of only 1.2, compared with 3 for the entire financial sector and 4.1 for the commercial banking industry.

What's more, these banks have a total risk-based capital (RBC) ratio, which is used to measure a financial institution's financial strength, of 11.9% — well above the adequate risk-based capitalization ratios mandated by the Federal Reserve.

Plus, this ETF pays a nice estimated 12-month dividend of 6.1%. My models indicate that this fund may appreciate in price by as much as 37% over the next 18 months.

To Find Out More About This Banking Turnaround ETF,
Join The ETF Strategist TODAY!

ETF Rally Back Blockbuster #3

Cash in on the Boom in
Medical Device Technologies

Most sectors of the U.S. economy have been struggling in the past 12 months, but a few have produced eye-popping profits. One of those sectors is in medical devices — such as new diagnostic testing equipment.

The reason is obvious.

No matter what happens in the stock market, healthcare spending in the United States will more than DOUBLE to $4.3 trillion by 2017, from $2.1 trillion in 2007, according to government estimates. Now that Barack Obama is president, it could increase even more.

That means spending in this arena will account for 20 percent of the nation's total output of goods and services, or $13,000 per person, by 2017, as compared with $7,000 per person in 2007.

What's more, for the first time in history, people older than 65 soon will outnumber children under the age of five.

Worldwide, that total is projected to increase to 1 billion by 2030 — one person in every eight. From 2006 to 2030, more developed countries will see a 51 percent increase in citizens 65 and older, while less developed countries will experience a whopping 140 percent increase.

In addition, the U.S. economy is now in the stage of the business cycle in which stocks of companies in the healthcare sector tend to perform best.

For example, 92 percent of the companies that comprise the Dow Jones U.S. Select Medical Equipment Index grew their revenues during each of the past two quarters (on a year-over-year basis), and 90 percent of those companies had a quick ratio — an indicator of a company's liquidity — greater than or equal to 1.0.

The companies in this index had, on average, an 18 percent debt-to-asset ratio and a median debt-to-asset ratio of only 11 percent.

Finally, a solid balance sheet gives medical-device companies the ability to easily sustain a significant and lengthy downturn in the broader economy, if one should occur. And medical-device companies are poised to grow their sales and earnings even more.

Luckily, there are now not one but TWO brand-new ETFs that track the medical device industry almost exactly. I recommend one in particular.

This ETF is composed of U.S.-based manufacturers and distributors of medical devices such as magnetic resonance imaging scanners, prosthetics, pacemakers, X-ray machines, and other medical devices.

The largest components of this ETF are companies like Medtronic, a leading maker of implantable biomedical devices; Zimmer Holdings, which designs and makes reconstructive implants used in knee- or hip-replacement surgery; and Stryker Corp., which makes artificial joints.

Many of the stocks in this fund are now selling at or below 5-year lows. What's more, they are among the few stocks that have been rising in the past three months. That is one of the reasons I expect this to perform very well when the market rallies over the coming months.

To Find Out More About This Medical Devices ETF,
Join The ETF Strategist TODAY!

ETF Rally Back Blockbuster #4 [QQQ]

The Best Way to Cash in
on the Coming Rally!

The stock market could continue lower for the next few weeks, or it could do a moon shot even as you're reading this. I can't tell you WHEN the monster rally I believe is coming will hit . . . but I can tell you, I think it's going to be HUGE.

Unfortunately, you can't just go out and buy any market index fund. The risks are too high — and, what's more, specific sectors of the economy are going to soar while others merely tread water.

I believe that small-cap and technology stocks will gain the most over the coming weeks. That's why I've chosen what I believe is the very best single ETF to gain the maximum profits with the least exposure to the general market.

This one ETF has $18 billion in assets, invests in a specific market index and has an expense ratio of only 0.2% — compared with expensive ratios as high as 2% for some funds.

The last time the market soared significantly, in 2006-2007, this particular ETF gained 44.3%. That was on a 3,000-point move upward on the Dow.

I expect this next rally to equal that if not surpass it.

If we get back up to Dow 12,000, as I think is quite possible, then this ETF could perform very well indeed — and you could reap windfall profits in a matter of months!

To Find Out More About This Niche Market Index ETF,
Join The ETF Strategist TODAY!

Here's What You Get With Your
ETF Strategist Risk-Free Trial Subscription

I believe that Exchange Traded Funds are the best way for the average investor to make consistent profits in virtually any market.

That's why I would like to invite you personally to try out, risk-free, my online advisory newsletter, The ETF Strategist.

When you accept a zero-risk trial membership in The ETF Strategist, I'll rush you detailed information about the ETFs with the greatest profit potential that I've mentioned above.

Plus, you'll get everything you need to begin profiting immediately from the tremendous opportunities ETFs offer:

• Monthly Newsletter of The ETF Strategist — Delivered via e-mail with comprehensive analyses of the ETFs we are following, two model portfolios, portfolio reviews, fund spotlights, and more.
• Weekly Updates — Sent via e-mail every Friday, with Frazier's analysis of the latest economic and financial developments.
• Action E-Mail Alerts — Our Buy/Sell Alerts are sent via e-mail, with easy-to-follow instructions explaining what ETFs to buy, how much to pay, and when to sell. We make it simple, timely, and do all the work for you.
• 24/7 Access to The ETF Strategist Web Site — Detailed analyses on all of our recommendations, access to all past newsletter issues, Bulletins, Alerts, and more.

No-Risk, Limited-Time Offer.
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At just $249 a year, The ETF Strategist is a tremendous value. Just a single recommendation from one issue or any of these valuable special reports could easily earn you 100 times the cost of the subscription.

But I have an even better offer:

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In fact, if you're EVER dissatisfied with The ETF Strategist for any reason — up to the very last day of your subscription — you can get a refund on the remainder of your subscription.

Whatever you decide, you can keep everything you received including all five bonus reports as our free gift. It's my way of saying "thank you" for giving The ETF Strategist a try.

So what are you waiting for?

To find out more about the index funds I expect to skyrocket in the coming monster rally . . . the overseas ETFs that will bounce back like crazy . . . how to profit from the coming aging demographic surge . . . the rebound in financial stocks . . . and the other ETFs I believe could make you windfall profits in the through the rest of 2008 and into 2009, even in a down economy — simply click on the link below.

To Find Out About All of MY ETF Recommendation
for 2009-2010, Join The ETF Strategist TODAY!

I look forward to personally welcoming you aboard.

Best wishes,

David Frazier
Editor, The ETF Strategist