Stock Market Roller Coaster Leaves ETF Strategist Subs Up 12.3% for the Year!

Dear Friend,

Last week, the U.S. government announced the largest bailout of financial institutions since the creation of the Resolution Trust Corporation in 1989. That resulted in the government taking over the illiquid assets of 747 failed savings and loan institutions between 1989 and 1995.

More specifically, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke proposed moving illiquid mortgage assets from the balance sheets of financial companies into a new institution that would then attempt to dispose of those assets.

Meanwhile, members of the U.S. Congress suggested the creation of an $800 billion fund, funded by taxpayers, to purchase those assets.

In addition to the measures mentioned above, Congress is also considering the establishment of a $400 billion fund at the Federal Deposit Insurance Corporation to insure money market funds.

The government's latest attempt to resolve the fallout from the subprime mortgage debacle and to unclog the credit markets follow the Fed's extension of $59.8 billion in loans to investment banks and $33.4 billion to commercial banks last Wednesday.

Earlier in the week, the Fed loaned $85 billion to American International Group after the Treasury Department took over Fannie Mae and Freddie Mac on Sept. 8. And as if the Fed hadn't already done enough to devalue the U.S. dollar, it went a step further on Wednesday by pumping $180 billion into global markets.

As a result of all these government actions, the major stock market indices rallied sharply on Thursday and Friday of last week.

However, my models indicate that the latest rally in the equity markets may be short-lived, as the vast majority of my fundamental indicators suggest that the U.S. economy will continue to weaken over the next six months.

So, what's an investor to do?

The good news for investors is that it's possible to make handsome profits in Exchange-Traded Funds even in a volatile market like the one we're in — as my track record shows.

To do this, 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 regularly advise investors to adhere to a long-term, buy-and-hold investment strategy.

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

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 sideways pattern for the next couple of years.

The good news, however, is that you can still earn healthy profits in the current investment environment simply by strategically investing in the right sectors of the market at the right time — even when the market as a whole is trending downwards.

I've successfully used this approach for many years, and I now share that approach with subscribers to my monthly investment newsletter, The ETF Strategist.

The results have been pretty good thus far, with my Aggressive Portfolio recommendations returning 12.3% since the inception of The ETF Strategist last September through last Friday's close.

During that same period, the S&P 500 Index returned negative, –13.2%. One of my better-performing recommendations, an inverse Oil & Gas ETF, is currently up 29% since I first recommended it, on May 27 of this year.

Why Niche ETFs Can Hand You
Profits of Up to 30% in 2 Months
Even in a Falling Market!

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

The secret to my success lies in what I call Tactical Asset Allocation (TAA).

You see, most investors use either a buy-and-hold strategy or a traditional asset allocation strategy based on Modern Portfolio Theory.

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

That's insane — as millions of investors and retirees are now discovering.

In contrast, investors who use a TAA strategy periodically adjust the composition of their 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, they shift their 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, investors who employ a TAA strategy will often exit the equity markets (or, potentially, sell stocks short) and allocate a large portion of their portfolio to cash or cash-like investments, such as short-term debt.

Likewise, when economic conditions improve and stocks appear to be poised for a sustainable rebound, 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 -13.2% for the year to date.

Here are a few examples of 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 is now up a hefty 151.9% since then.

And now I've identified another group of ETFs that I believe are going to soar in the coming months even as the market as a whole trades sideways or declines and the politicians continue to tax and spend us to death...

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

ETF Blockbuster #1
How to Make Monster Profits
as Consumer Spending Declines

The most obvious side effect of the ongoing housing crash and credit crisis is the rapid decline in consumer spending.

For example, although Wal-Mart's income from continuing operations rose 3.7 percent during the quarter, its same-store sales rose only 1.9 percent — the smallest increase since the company began tracking same-store sales in 1980.

For the six-months that ended July 31, the company's same-store sales (excluding fuel sales) rose a mere 1.3 percent, versus 2.7 percent during the same period a year ago.

Home Depot also reported that its earnings from continuing operations fell 14 percent during the second quarter, as revenues declined for the first time in four years. The company's same-store sales, which is a better measure of the perfor­mance of companies in the retail industry, fell 5.2 percent due to the continuing slump in the U.S. housing market.

The company said it expects full-year profits for 2007 to fall as much as 15 percent, as a result of declining consumer de­mand for appliances and remodeling products.

It is precisely this decline in consumer spending that has helped hammer so many stocks in recent weeks!

But instead of merely wringing your hands and lying awake at night, you can actually profit from this development.

I've identified a little-known ETF that seeks invest­ment results that correspond to twice the inverse of the daily performance of the Dow Jones U.S. Consumer Services Index.

In other words, the more consumer spending goes down, the more you make!

Looking at the bigger picture, the U.S. economy continues to show signs of slowing, as employ­ment growth has fallen significantly, consumer incomes have risen only modestly, and con­sumer debt levels are near historical highs.

The recent credit crunch is adding to the economy's woes, as the subprime mortgage debacle has spread to other sectors and the housing market remains in a slump.

That's why I believe this ETF is the perfect investment for this current economic environment. It's also an example of how Tactical Asset Allocation can help make you profits even in a falling market!

To Find Out More About This Inverse Consumer Services ETF,
Join The ETF Strategist TODAY!

ETF Blockbuster #2
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. 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).

I first recommended this ETF in March of this year — and subscribers to my ETF Strategist have been delighted by the results. It's up 10.4% so far and continues to climb higher.

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

ETF Blockbuster #3
Earn 20% in the Next Six Months with
a Financial Sector Turnaround ETF

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

Bear Stearns lost 95% of its value in less than a year. Venerable investment banks like Lehman Brothers and Morgan Stanley are being forced to beg for emergency loans from the Fed. Banks in California and Texas have failed, with anxious depositors lining up outside their doors.

If ever there were stocks to seemingly avoid, it would be 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.

U.S. financial institutions eliminated more than 153,000 jobs during 2007, with about 86,000 related to the mortgage business — more than triple the 50,300 jobs eliminated in 2006, as a result of the collapse of the subprime mortgage market.

Not only that, but since January 2007, the world's largest commercial and investment banks have written off more than $323 billion worth of assets and credit losses (including reserves set aside for bad loans).

As I predicted last year, financial institutions have cleaned up their balance sheets in the first half of 2008, after three quarters of large asset write-downs.

What's more, the proposed Fed bailout of financial institutions could send stocks in some of the companies soaring upwards.

Fortunately, I've identified the ETF that I believe is the best way you can profit from the coming turnaround in financial stocks: An ETF [PSP] that tracks a little-known index known as the Red Rocks Listed Private Equity Index.

The index is comprised of a diversified mix of 33 listed private equity companies, such as BlackRock Kelso Capital, Apollo Investments, Kohlberg Capital, and Fortress Investment Group.

My research suggests that this ETF could soar 20% in the next 6 months alone.

To Find Out More About These Financial Turnaround ETFs,
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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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.

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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 5 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 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 second half of 2008, even in a down economy — simply click on the link below.

To Find Out About All of MY ETF Recommendations for the Second Half of 2008, Join The ETF Strategist TODAY!

I look forward to personally welcoming you aboard.

Best wishes,

David Frazier
Editor, The ETF Strategist