Global Meltdown Creates
Historic Buying Opportunities

The One ETF to Buy for
the Next 12 Months!

Dear Friend,

As I predicted, the volatility in the global equity markets has not let up in the slightest. After its record surge of 946 points on October 13th, the Dow has whipsawed up and down so many times investors are beginning to get sore necks just watching the stock charts!

As I write this, the Dow is down over 300 points yet again and near its recent low of 8,451 that it hit on October 10th. It's the same story all over the world: Hong Kong's Hang Seng Index has lost 47.8% of its value in the past 12 months . . . the Japanese Nikkei Index is down 52% . . . and the Shanghai Composite Index has lost a staggering 68.5% of its value. European markets are getting hammered as well: The British FTSE is down 40% from its recent 12-month high . . . the German DAX is down 42.9% . . . and the French CAC-40 is down 45.4% since the summer of 2007.

But I have to tell you: I'm almost GIDDY with excitement! That's because I haven't seen buying opportunities like this in literally decades.

With patience and a little luck, I think you could make HUGE profits in the coming months and years by scooping up the right Exchange-Traded Funds (ETFs) at nearly historic lows.

In fact, one ETF has been beaten down so badly I think it's as close to a slam-dunk as we've seen in recent memory.

I'll tell you about this ETF in a moment . . . and even give you its symbol and my recommended buy prices. But first, let me explain why a crashing market can be a pot of gold to savvy investors who are willing to think outside the buy and hold box . . .

Why Niche ETFs Can Hand
You Windfall Profits of Up to 56.7% in
2 Months Even in a Crashing Market!

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

I'm here to tell you that not everyone has been losing money in the market lately.

In fact, some investors have not only been protected from the worst market declines in a generation . . . they've even made respectable profits along the way.

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

I first recommended it on August 7th 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 October 6th, 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. (As of this writing, subscribers who held onto SCC are now up an eye-popping 56.7% as of this writing.

In other words: While most investors were losing their shirts in October, subscribers to my ETF Strategist newsletter were instead reaping windfall profits instead of suffering massive losses!

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) 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 this huge sell-off, too. But overall, my aggressive portfolio of ETFs has posted a GAIN of 10.3% in the twelve months ending October 10, 2008. In comparison, the S&P 500 has LOST -37.7% 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 gain of 10.3% looks pretty good!

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Why Buy and Hold
Only Works in a Bull Market

To make money in a crashing market, however, 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 now, as the markets are crashing to historic 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 are now discovering.

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 June, such a strategy would have generated a 0.06% average annual return for anyone who invested in a broadly diversified stock portfolio such as an S&P 500 Index fund — that's right, 0.06 percent.

In other words, after adjusting for inflation, an investor who followed a buy-and-hold strategy over the past eight-and-a-half years would have actually lost 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. Unfortunately, my research indicates that stock prices could trade in a volatile pattern of large up and down movements for the next couple of years.

This requires 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 between 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 40% 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 . . . .

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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!

Chinese stock prices, as represented by the Shanghai Composite Index, fell a whopping 69 percent during the 12-month period ended October 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 September 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 percent 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: Even if the entire world goes into recession, China's economy is still going to be surging. And that represents an 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 which comprises 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, of 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 October 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 October 16, 2008).

As I write this, FXI is trading around $24 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, due to 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 this year, I would recommend it be the iShares FTSE/Xinhua China 25 Index Fund.

To Find Out More About This Chinese Superstar ETF,
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ETF Rally Back Blockbuster #2

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 is 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.

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, 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 this week, bank stocks like Wells Fargo (WFC) have jumped 30% or more in a matter of 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 shakeup 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 to 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 percent — 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 percent 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 throughout 2008, 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, health care 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. If Barack Obama is elected 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 to $7,000 per person in 2007.

What's more, for the first time in history, people over age 65 will soon 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 aged 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 health care 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 comprised 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. 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,
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ETF Rally Back Blockbuster #4

The best way to cash in
on the coming rally!

I expect the stock market to continue lower for the next few days, perhaps even for a week or more, and then stage an enormous rally back.

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 do a moon shot 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 to 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 upwards on the Dow.

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

If we get back up to Dow 12,000, as I think quite possible, then this ETF could perform very well indeed.

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 (ETFs) are the best way for the average investor to make consistent profits in virtually any market.

That's why I would like to personally invite you 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.

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So what are you waiting for?

To find out more about the consumer services ETF that makes DOUBLE when the consumer spending index declines . . . 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 Recommendations
for 2008-2009, Join The ETF Strategist TODAY!

I look forward to personally welcoming you aboard.

Best wishes,

David Frazier
Editor, The ETF Strategist