The Tao of Real Estate Profits

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

Several of your bullish positions in Global Bull Market Alert — the iShares MSCI BRIC Index ETF (BKF),the iShares MSCI Chile Investable Market Index (ECH), and the iPath DJ AIG Copper TR Sub-Idx ETN (JJC) — each soared around 9%. The gains in the iShares MSCI Israel Cap Invest Mkt Index (EIS) and the iShares MSCI Hong Kong Index (EWH) and Shanda Interactive Entertainment Ltd. (SNDA) weren’t far behind. As you will see in the “portfolio update” section below, I now have moved all of your Global Bull Market Alert portfolio picks to BUYs.

This week’s Global Bull Market Alert pick combines two prominent investment themes in one, through the Claymore/AlphaShares China Real Estate ETF (TAO). Here’s why I think this ETF is set to soar over the next few months.

First, the fundamental case for real estate in China is compelling. Over the next five years, 1.5 billion square feet of space will be built in China. China is also booming, and is leading the global economy out of recession and looks set to hit its full-year growth target of 8%. Real estate investment already makes up 10.2% of China’s GDP. And that proportion is rapidly growing.

Second, the Chinese stock market has been one of the top-performing markets of the world this year, holding up well even through the recent correction. But the real estate sector has been an even more impressive outperformer. The Shanghai property sub-index has jumped about 160% this year, beating a 75% surge in the benchmark Shanghai index. Favorable government policies such as cheaper mortgages and lower down-payments for buyers have lifted housing prices in 70 major Chinese cities since March. The past few weeks have also seen a steady stream of property firms eyeing IPOs, bond and share placements in anticipation of a real estate recovery. And with the bullish factors behind the boom expected to persist for a year or more, there is plenty of upside left.

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So, buy the Claymore/AlphaShares China Real Estate (TAO) at market today and place your stop at $13.90. Full disclosure: This is a position that I hold on behalf of some of my clients at my investment firm Global Guru Capital.

Portfolio Update

The iShares MSCI BRIC Index ETF (BKF) jumped 9.2% last week as the BRIC markets recovered across the board. BKF is back to a BUY.

The WisdomTree Dreyfus Emerging Currency ETF (CEW) jumped 1.9% last week, as investors returned to emerging market currencies. CEW is now a BUY.

The iShares MSCI Chile Investable Market Index (ECH) soared 9.5% last week as investors returned to the emerging market with arguably the best fundamentals around. ECH is a BUY.

The iShares MSCI Israel Cap Invest Mkt Index (EIS) jumped 6.3% last week. I am moving EIS back to a BUY.

The iShares MSCI Hong Kong Index (EWH) jumped 7.5% last week back to levels not seen since early June. EWH is a BUY.

The CurrencyShares Japanese Yen Trust (FXY) sold off last week as nervousness about markets gave way to new found euphoria. This position is a good hedge against market downturns and will zig when the markets zag. FXY is a defensive BUY.

The iPath DJ AIG Copper TR Sub-Idx ETN (JJC) soared 9% — slicing through the $33 level like a warm knife through butter. With “Dr. Copper” hitting near record highs for 2009, this bet on global recovery remains a BUY.

Your Rydex Inverse Government Long Bond Strategy Inverse (RYJUX) jumped 6.4% as investors dumped Treasuries in favor of riskier assets. With risk appetite back in the market, I am moving RYJUX to a BUY.

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Shanda Interactive Entertainment Ltd. (SNDA) jumped 7.8% last week. With this volatile stock still far from its previous highs, I am moving this high-risk stock back to a BUY.

Rydex Weakening Dollar 2x Strategy H (RYWBX) rose ever so slightly this week. Like FXY, think of this position as a hedge against future spikes in risk aversion. RYWBX remains a defensive BUY.

P.S. The constantly changing market environment continues to present investors with some of the most challenging times in recent history. Not since the Industrial Revolution has the financial landscape seen such major shifts in how wealth is held today. The MoneyShow is the only forum where you’ll meet, hear from, and find out how to profit from leading experts. Join me at this year’s MoneyShow San Francisco, August 21-23, 2009, at the San Francisco Marriott, where I will address some of the most pressing issues facing us today and introduce you to the newest and most successful tools and strategies for managing your portfolios in these challenging times. I urge you to attend and I look forward to meeting you personally. Register FREE by calling 800/970-4355 (priority code 014319) or by going online at The MoneyShow San Francisco!

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