SHOCKER: Housing Sales UP in February!
S&P 500 Soars 18% on
News Housing Crisis
May Be Nearing an End!
Key economic indicators point to a massive REBOUND in stocks during the next several months. The housing market finally may have hit bottom . . . credit markets finally are thawing out . . . and the unemployment picture is improving.
Dear Friend,
Stocks continued to soar last week and into this week, with the S&P 500 Index skyrocketing from 676.53 on March 9 to above 800 — a gain of 18% in just two weeks!
Although I expect equities could pull back slightly in the coming weeks, I believe stocks and equity ETFs will continue to trend higher during the months ahead.
That means that, if you haven't bought my recommended ETFs yet, I strongly advise you to use any such pullback to invest in those ETFs.
Reason: We're beginning to see some very encouraging data about the U.S. economy.
On March 23, the National Association of Realtors announced that sales of existing homes grew 5.1 percent to an annual rate of 4.72 million last month, from 4.49 million units in January.
It was the largest sales jump since July 2003.
That came on top of reports from the U.S. Department of Commerce that both the construction of new homes and building permits for home construction rose during February, after declining during each of the past seven months.
That's a very important development, because U.S. stock prices historically have moved in the same direction as new housing starts.
It looks like the tide may be turning for the housing market when combined with the Federal Reserve's surprise announcement that it would buy $300 billion of longer-term Treasury securities during the next six months, on top of its earlier plans to buy $1.25 trillion worth of mortgage-backed securities — pushing interest rates for mortgages to historic lows.
Those actions bode well for both the housing market and the overall economy, as they likely will cause home mortgage rates to fall further and credit conditions to continue to improve.
Now is the Time to Buy the
Right Exchange-Traded Funds!
Here's why. Every stock market crash in the past 113 years since the creation of the Dow Jones Industrial Average, WITHOUT EXCEPTION, has been followed by a HUGE rally. Investors who take action when index funds have bottomed out can make enormous fortunes. For example:
- The February 1906 to November 1907 bear market was followed by a 90% rally in the Dow between November 1907 and November 1909.
- The infamous September 1929 to July 1932 bear market was followed by a 352% advance in the Dow from July 1932 to March 1937.
- The January 1973 to December 1974 bear market was followed by a 53% rally in the Dow from December 1974 to July 1975.
- And, the January 2000 to October 2002 bear market was followed by a 94% rise in the Dow from October 2002 to October 2007.
That's why proven long-term investors such as Warren Buffett and Ken Heebner recently have been buying stocks with both hands!
Although Buffett's Berkshire Hathaway lost 32% of its value and Heebner's CGM Focus Fund lost 48% of its value in 2008, both Buffett and Heebner have been adding beaten-down financial stocks to their portfolios. Heebner's CGMFX generated a 17.7% average annual compounded rate of return during the 10-year period from December.
In addition, stocks now are trading at rock-bottom prices relative to their book value.
The forward price-to-earnings ratio for the S&P 500 Index has fallen to its lowest level since March 1989, while the average price-to-cash flow ratio for companies whose stocks comprise the S&P 500 is currently at its lowest level since mid-1982.
And finally . . .
Companies Finally Have Stopped
Laying Off Employees, Pointing to a
Coming Rebound in the Economy!
It appears that companies finally are hiring again! Last week, the Department of Labor reported that first-time claims for unemployment benefits fell by 12,000, as compared to the previous week.
Meanwhile, employment recruitment firm Challenger, Gray & Christmas announced that planned layoffs by U.S. companies fell substantially during February.
Specifically, the recruiter reported that U.S. companies surveyed in its February study announced only 186,350 cuts during February, compared with 241,749 in January — a 23% decrease!
What's more, credit conditions continue to rapidly improve. For example, the difference between the yield on 90-day U.S. Treasury bills and the London Interbank Offer Rate — the so-called TED Spread — has fallen sharply since October 2008.
That is a sign that lenders are finally making loans again, a sign that the economy is rebounding.
In addition, the Federal Reserve began disbursing funds on March 25 to lenders under its new Term Asset-Backed Securities Loan Facility (TALF) facility. The TALF is intended to help lenders meet the credit needs of households and small businesses by supporting the issuance of asset-backed securities collateralized by student loans, auto loans, credit-card receivables, and loans guaranteed by the Small Business Administration.
Bottom line: After adding up all of the major components of GDP — consumer spending, business pending, government spending, and net exports — my models indicate that total inflation-adjusted output of goods and services (real gross domestic product, or GDP) will rise at a 6.8% annualized rate during the third quarter of this year and a 3.3% year-over-year rate during the quarter ending Dec. 31, 2009.
That would be a very positive development! Stock prices historically have trended higher during periods when the nation's real GDP increased substantially.
When you combine that fact with the ridiculously low prices of stocks at the moment, it looks like the coming months could be a HUGE opportunity for savvy ETF investors.
Discover the ETF Investing
Service That
Could Have Saved
Your Butt Last Year!
My name is David Frazier. I'm the editor of The ETF Strategist.
I'm very proud of my track record — and of guiding my subscribers through the worst economic catastrophe since the Great Depression.
The fact is, had you followed my Aggressive Portfolio of exchange-traded funds, you would have lost a grand total of 3.8% in 2008.
Although losses of any kind are undesirable, a small 3.8% decline is a heck of a lot better than the 37% loss investors took in the S&P 500.
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 actually perform.
That's insane — as millions of investors and retirees discovered last year.
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, 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 actually would have lost money — a lot of money! — by following the advice of those so-called experts.
During the Stock Market Crash Last Fall,
My Subscribers Were Making HUGE
Profits Instead of Taking Losses!
In contrast to the buy-and-hold strategy advocated by Wall Street, I use a Tactical Asset Allocation strategy.
I shift my allocations between stocks, bonds, commodities, precious metals, real estate, and cash depending upon actual market conditions.
For example, when the U.S. economy began to nose dive last fall, I recommended subscribers buy ProShares UltraShort Consumer Services (SCC). This ETF rises in value as consumer spending plummets!
I first recommended it on Aug. 7 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.
On Oct. 6, 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 — even though I expected it to go higher.
In other words: While most investors were losing their shirts in October, subscribers to my ETF Strategist newsletter were instead reaping huge profits instead of suffering massive losses!
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 |
These aren't even my best-performing ETFs. For example, my model identified HOLDRS Oil Services Trust (OIH) before oil took off 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 a HUGE margin!
During one of the worst periods in the markets in 80 years, it protected nearly 100% of subscribers' capital (a 3.8% loss in 2008) when the S&P 500 lost a staggering 37%!
From the perspective of many investors who have lost up to half of their retirement savings during the past few years, that represents a minor miracle.
Join the thousands of satisfied subscribers
to The ETF Strategist TODAY!
Cash in on the Biggest
One-Year Rally in History
Despite the recent rally, the S&P 500 is STILL down -43% from its highs in 2008. Some emerging markets are even lower.
The Brazilian Bovespa Index is down -44.3 percent, the BSE Sensex (India) index is down -43.5 percent, and the Shanghai Composite (China) Index is still down a whopping -61.4 percent since the highs of 2008.
But make no mistake: This represents a HISTORIC OPPORTUNITY to make enormous profits very quickly.
Investors with big pocketbooks finally are swooping in to buy up equities at fire-sale prices. P/E ratios of the S&P 500 haven't been this low since the early 1990s.
With the federal government committed to spending nearly $10 trillion in bailouts and fiscal stimulus, I believe a market rally in the second half of 2009 is virtually a slam-dunk.
If you play your cards right and invest in the right ETFs, it's possible you could recoup everything you lost last year — and then some!
I've identified a 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!
ETF Rally Back Blockbuster No. 1
Earn 37% in the Coming 18 Months Investing in
an ETF
that Buys Beaten-Down Banking Stocks
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, Wachovia, Citibank, Bank of America, even Wells Fargo all were 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.
If ever there were stocks it seemed wise to avoid, they would be banking and financial stocks, which is precisely why savvy investors such as Warren Buffett and Ken Heebner are gobbling them up with both hands.
The truth is, financial companies are battling back from the 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 are now 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.
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, JPMorgan 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 the Federal Reserve mandates.
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% during the next 18 months.
To Find Out More About This Banking Turnaround ETF,
Join The ETF Strategist TODAY!
ETF Rally Back Blockbuster No. 2
Cash In on the Boom in Medical Device Technologies
Most sectors of the U.S. economy have been struggling during the past 12 months, but a few have produced eye-popping profits. One of those sectors is 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, with his ambitious plans for universal health coverage, it will 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 a person by 2017, compared with $7,000 a person in 2007.
What's more, for the first time in history, people older than 65 soon will outnumber children under 5.
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 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 in 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 sustain easily 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 includes 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 such as 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 selling at or below five-year lows. What's more, they are among the few stocks that have been rising in the past three months. That is one reason 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 No. 3
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 was certainly true in recent 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, which 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!
ETF Rally Back Blockbuster No. 4
Why You Could Make Up to 45% Profit in the
Next Few Months Betting on Chinese Stocks!
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 has slowed somewhat, the World Bank on March 18 predicted its economy would STILL grow at a 6.9% annual rate throughout 2009.
And in spite of the 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 (on year-over-year basis).
Make no mistake: Despite the global recession, China's economy is still 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 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 I write this, the ETF I am recommending is trading around $28 a share. It's up 13.3% from where it was only a few weeks ago. The recent trend is UP! I consider this a buy up to $35 a share.
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.
To Find Out More About This Chinese Superstar ETF,
Join The ETF Strategist TODAY!
Here's What You Get With
Your
ETF Strategist
Risk-Free Trial Subscription
I believe that ETFs 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.
Save $170 and Get Five Bonus Reports — Free!
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You'll save more than 40% off the regular price.
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:
Accept a risk-free subscription and I'll send you not one but up to FIVE bonus gifts, completely FREE, to help you cash in on the ETF Revolution. These five reports are my personal guide to making consistent profits in ETFs no matter what's happening in the world economy.
BONUS GIFT No. 1: Cash in on the Global Aging Profit Wave — a $49 value, FREE. These are the ETFs that I have identified as having the best potential to make windfall profits on the most unstoppable demographic and economic trend in a century: the retirement of the baby boom generation. As the millions of baby boomers retire, health costs will soar — and the companies a particular ETF invests in could skyrocket in value. Don't miss this wealth-building stock surge!
BONUS GIFT No. 2: Cash in on the New ETF Boom — a $49 value, FREE. This valuable report explains the many advantages of ETFs over mutual funds and other types of investments. Plus, it also reveals my proprietary Asset & Sector Allocation Model and my Relative Performance Model — the methods I use to identify ETFs that will skyrocket in value during the next six to 18 months.
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BONUS GIFT No. 4: The ETF Lemon List — a $49 value, FREE. This report could save you thousands of dollars during the coming year. It contains a list of 99 ETFs that you should DUMP immediately — funds that are in sectors that I believe will continue to get hammered. Why keep your money in dogs when there are so many opportunities to make 25%, 50%, even 100% or more during the next 12 months?
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Try Out The ETF Strategist
Completely Risk-Free!
Best of all, you can try out The ETF Strategist without any risk or obligation whatsoever.
If for any reason you don't like the service, just let us know within the first 60 days and you'll get a full 100% refund, no questions asked.
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 2009 and into 2010, even in a sluggish economy — simply click on the link below.
To Find Out About All of MY ETF Recommendations for 2009-2010,
Join The ETF Strategist TODAY!
I look forward to welcoming personally you aboard.
Best wishes,
David Frazier
Editor, The ETF Strategist
