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Dear Toolbox Readers,

Now we are really seeing what many have described as the effects of the sub-prime loan debacle... or are we?

Has it occured to any of you that the collective "write downs" from the major money center banks and mortgage companies are adding up to many multiples of what can be considered "losses" in the sub-prime market?

Wall street is suffering from a leverage and derivatives problem and they just want you to believe that it's caused by some poor folks that got bad loans.

Nice try!

This problem is caused by Wall Street bankers leveraging and repackaging debt instruments that should never have been written in the first place. Now everyone is screaming for the Fed to come to the rescue and even worse... "stimulus".

The Government and Wall Street will do whatever they have to do to continue to perpetrate an economic system that in the end we all know is doomed to fail.

You do not have to be Alan Greenspan to figure it out. It is a simple economic fact that you cannot pay interest on every dollar ever printed and then continue to print more to keep up.

It's like borrowing your way out of debt. It simply will not work in the end. Now I want to talk about something really important.

Why You're Not Up 20 Percent This Year...

We all know what the market looks like so far in 2008 right... Not So Fast!

Did you know that there are ways to play a falling market and make an absolute fortune as everyone freaks out and runs for the exits?

Every day in the Research Lab we look at the Real-Time ETF Dashboard. I really have to tell you that leveraged ETFs are a beautiful thing.

Why do I say that?

Well for one thing, most people have no idea how to "short" the market. Most people have their money in 401Ks or IRAs that do not allow them to "short" in the first place.

But... Leveraged ETFs come to the Rescue

Take a look at these charts.

This is a look at the top performing ETFs in our "All Sectors Page" in the Research Lab. These Big Winners are all leveraged ETFs that are "short" the major indices.

(I also left in the GLD and SLV which represent Gold & Silver just because I found it interesting that they are also this years big winners.)

The way this works is that you buy shares of a "short" or "double short" ETF, now if the market goes down, you will go up... or "double up" depending on which one you are in.

Lets take a closer look at the DOW for example...

You may recognize the DIA symbol as representative of the DOW, but DOG is "short" the DOW and DXD is "double short". DDM is "double long" and as such is down much more than the DIA on a percentage basis.

In the chart above (at the time of these images) the DIA was down 8.79% YTD. DDM was down 17.06% and the "short" ETFs are UP 9.45% for DOG and 19.39% for DXD.

What you need to understand is...

If you are holding a 100K in the DOW you have lost almost 10 grand, if you were in the DXD you would be up almost 20 grand for a net difference of roughly 30 grand.

I think now you can see the importance of this kind of research and trading opportunities.

You may have noticed the call Jeffrey Brewer made on the 27th of December telling folks it was time to go long the QID.

Let's take a look.

The QID is up a staggering 26.46% since the beginning of the year and all this while the market is falling on it's head!

The QID is of course "double short" while the PSQ is just "short" the QQQQ. The QLD is "double long" the QQQQ and ONEQ is an "equal weighted" version of the QQQQ.

But that's a whole different newsletter.

You can also apply this strategy to the S&P as well as the Russell

Take a look.

SDS is obviously the double short in this set and it's interesting because normally the S&P does not see such large moves in the short term, but because it is heavily weighted with financials it is moving sharply.

Finally... The biggest winner of them all is "double short" the Russell 2000. Take a look te the TWM. It's up an astounding 27.36% so far in the first couple weeks of the year.

This is powerful stuff folks and you need to learn what these ETFs are all about.

IMPORTANT!

You should know that with big time gains like this it is probably not wise to try and jump in now.

This market is very oversold on a short-term basis and now might be a better time to look for entry points in the "long" or "double long" ETFs.

In the Desktop Toolbox, in the free finance portal section, there is an ETF center page that will direct you to all the best information we can find about these ETFs.

If you have not done so already, Download the Toolbox Today, It's free.

One last note...

Not all ETFs are created equal...some have crazy fees and expenses and it pays to do your own research.

Now there are even "double up" and "double down" ETFs on all kinds of sectors and commodities... even countries.

So keep an eye on this interesting new way to trade.

Finally...

This week in the research lab...

I am very pleased announce that the Research Lab has completed beta-testing and is now open for all current toolbox subscribers and users.

THIS MEANS YOU!

Only people getting this newsletter can get the "Insider's Deal".

If you have not done so already...

Download the Desktop Toolbox Today &

Become A Member of The Research Lab

Until Next Time...

Best Wishes and Good Investing,
Bill McKinley & Doug Newberry
The Investing Systems Network

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