Friday, March 13, 2009

Stocks Rally as Value Investors Bid Up
Bargain-Priced Shares
—Equities Have Bottomed, Hold Onto Your Positions — 

Dear ETF Strategist Subscriber,

Last week, I told you that both my experience and my investment models indicated that a robust rally was just around the corner, as stocks had fallen to ridiculously low valuations. This week, stocks did in fact rally substantially, with the Dow Jones Industrial Average advancing 597 points (9 percent) and the S&P 500 Index gaining 12 percent from last Friday’s close.

Although I expect stocks to pull back a bit during the week ahead, my models indicate that stock prices in general will continue to trend higher during the coming months.

As I discuss in the March edition of my monthly newsletter, some key economic indicators suggest that the worst is already over for the U.S. economy and that President Obama’s government spending proposals won’t be anywhere near as bad for the economy as certain Republican members of Congress have suggested.

Meanwhile, my research has continued to indicate that total U.S. output of goods and services (gross domestic product, or GDP) will increase substantially during the second half of this year and that stocks (and equity ETFs) will go along for the ride.

I therefore advise you to continue to hold all of my currently recommended ETF or to buy them now if you don’t already own them.

Note: The March edition of The ETF Strategist is scheduled for distribution next week, so be sure to check your e-mail for the latest issue.

Sincerely,

David N. Frazier

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