Wall Street, “Main Street,” politicians and philosophers continue to debate the reason for the housing collapse/credit crisis/global economic pandemonium. The differences of opinion may rage on for decades.

Unfortunately, it will always become a “which-came-first-chicken-or-egg” argument. Was it the ever-greedy chain of business people… from the greedy mortgage broker to the greedy lender to the greedy “Wall-Streeter” who sliced/diced sub-prime loans into tradeable (now toxic) securities? If so, is more regulation of financial entities the way to stop them from deliberately misleading the public?

Despite continuing skepticism, the market continues to move higher during what many argued was the season of danger. Those following "calendar rules" advised investors to sell in May, to sell in September, and to sell in October. In a couple of weeks we will be out of the danger period. It will be interesting to see if the calendar adherents stick to their method. If they do, we should see fresh buy recommendations from some unlikely sources.

Our indicators are only mildly bullish, but there are specific sectors worth consideration. Emerging market ETF's make up most of the portfolio, but there are also other choices.

Some money managers stick to simple moving averages. Other financial advisers examine fundamental value. Still others glean ideas from history, seasonal patterns, contrarian sentiment, economics and/or behavioral psychology.

Each has his/her way of evaluating investments; each often brings something unique to the table. And yet, nobody, and I mean, nobody, “bats 1000.”

We examine markets with different time frames. Our most successful investor program takes a long view, but we also look to shorter term signals for trading programs. This week we see high risk in most sectors, but an opportunity for the careful trader to stay with the rally. This eclectic strategy has been very effective in recent months.

There is plenty of skepticism. That means that most missed last week's big move. A disciplined approach that looks for opportunity can help with this challenge.

Below are the 20 hottest ETFs at the end of July, based on the 6 month performance. Data excludes leveraged ETFs and the data source is FINVIZ.com. The theme? Asia, China, emerging markets, and more China. A link is now available on the right hand side of Scott's Investments with this data. Please note that with anything I write I'm not recommending the purchase of any particular security. This is especially true here - there is no trading strategy I am advocating with this list. However, it is helpful in determining where market trends and momentum exist:

Obviously, China and India (for whom we coined the term Chindia) are the biggest emerging economic powers. During this current recession, Chindia still has a growth rate in the high single digits, even though their combined population is nearly 2.5 billion. It's the fastest that any region of that size has ever grown in history.

Indeed, the only times America has ever grown more quickly were during World War II. But even when the U.S. grew at a double-digit rate, it lacked the enormous population Chindia has today. Moreover, Chindia has a far greater ability to sustain its high growth rate than the U.S. had back then.

India ETFs, which have already enjoyed tremendous gains this year following well-received election results in May, surged again on Monday, this time as a result of several landmark agreements sealed during U.S. Secretary of State Hillary Clinton’s first visit to the South Asian nation.

While disputes over how to address climate change have cast a shadow over U.S.-India relations in recent months, Monday’s breakthrough delivered concrete, tangible steps towards improved two-way trade and mutually beneficial economic endeavors.

Because demographics can help make or break a country’s economy, investors should pay attention to country-specific demographic trends when considering long-term investments in the global market. The “long-term” is stressed in the preceding sentence because demographic changes are relatively slow in the making; thus demographics are not especially helpful for short-term trades.

When considering demographics, more than just birthrates and population growth need to be examined, as all population characteristics–such as death rates, life expectancies, migration trends, median ages, and populations by age groups, to name a few–can impact the economy. Demographics is not an exact science with absolute numbers and is therefore not a perfect tool for gauging a country's economic prospects, but it does serve as a good barometer for the potential future strength or weakness of an economy.

Fair value may be in the eye of the beholder. And when it comes to Morningstar's assessment of intrinsic worth of exchange-traded funds, bloggers have been less than kind.

Nevertheless, Morningstar makes a valid attempt at determining a price at which... above it, you might sell, below it... you might buy. So it is interesting to note that 4 out of 5 of the most "undervalued" ETFs in the Morningstar system are healthcare ETFs.

Much of the theory of decoupling rests with the idea that China, like the United States in the past, will be the engine of growth that will help take the world especially the emerging markets out of recession. One aspect of this argument is that as the Chinese economy grows it will increase the demand for commodities especially oil from Russia, minerals from Australia and food from Brazil. So as many parts of the world remain mired in a severe recession, the commodities markets, especially oil, have surged. The surge in prices for industrial commodities like copper and lead seem to be proof that the Chinese industrial miracle is up and running again at its usual break neck pace.

Perhaps talk of a full economic recovery is premature as global unemployment issues will continue well into 2010, however many investors are again viewing their chances of growth in emerging markets as better than those of the United States or Europe. In particular, India, China and Brazil stock markets have shown leading gains since March 2009.

As a result, the Indian Nifty stock index has jumped by 64% in the last three months. China CSI 300 index of shares in Shanghai and Shenzhen have risen 37% and Brazil’s Bovespa increased 41% over the same period. By comparison, the Standard & Poor’s 500’s gained about 28% returns.

The first paper was produced for the Hong Kong Monetary Authority and written by Giovanni Ferri, of Italy’s University of Bari, and Li-Gang Liu of BBVA. Its finding was that Chinese state owned banks profits were the “product of subsidized financing by state banks, which lets them borrow much more cheaply”. The result was that capital would be allocated inefficiently and that there would be future losses.

Signs of a recovery are showing up in some surprising places - particularly, the BRIC (Brazil, Russia, India and China) ETFs. As the global economy collapsed all around us, many seemed to have written off these fledgling economies.

The BRIC countries have woven an interesting story of their own in recent years that has made them standouts among emerging markets. From 2003-2007, these regions were among the fastest-growing in the world, with funds focused on them delivering returns of at least 70% in that time frame. Then came along a Great Recession that stopped growth in markets of all types in their tracks.

The BRIC investment theme — as in Brazil, Russia, India and China — has been an enormously popular topic in international investing circles since Goldman Sachs economist Jim O’Neill coined the acronym back in 2003. It’s hard to believe it’s been 6 years. The seminal pieces of Goldman’s BRICs research along with some other interesting papers are gathered here.

Once an investment theme gets its own acronym, it’s usually the kiss of death. But BRICs have been a rare exception. Despite the fact that these markets have been insanely volatile, and despite the fact that everyone and his uncle knew about them all along, BRIC still managed to shoot the lights out. You’d be hard pressed to find any global investing theme that has worked better in recent memory.

Ed Yardeni is president of Yardeni Research Inc., a provider of independent investment strategy research and data. He has worked as chief investment strategist at Deutsche Bank, Prudential Equity Group and Oak Associates. Yardeni has also served as chief economist for C.J. Lawrence, Prudential Securities and E.F. Hutton.

His resume also includes working as an economist with the Federal Reserve Bank of New York. He also held positions at the Federal Reserve Board of Governors and the U.S. Treasury Department.

The 2008 Stock Market returns were generally a painful exercise in precipitous declines, volatility, and unforeseen high correlation that defied conventional wisdom. When the investing experts cited the "de-linking" that was forming between the US and other global markets, the exportation of our credit malaise became evident; so much so, that the U.S. was actually at the top end of global performers for 2008 even though much of the current global crisis stemmed from the US housing (note, you'll soon be able to trade on the US Case-Shiller housing index) and derivatives collapse and the subsequent credit crunch.

It is interesting to take a look back at what the major markets returned throughout the year, what's in store for 2009, and additionally, to consider some new ETFs that you probably aren't all that familiar with.

It is just about that time of year where we reflect upon the year and resolve to improve upon our quality of life in a fresh new year. Let’s just hope that ETFs have not forgotten this tradition and will resolve to undertake some New Year's resolutions for a better year.

Emerging Markets Bounce Back

By Jim Wiandt

Matt Hougan has his ETFR story. But of course Bobo is the ETFR story, and our little monkey is back.

Recently, I published an ETF performance map on a year to date basis. Numbers were hovering around -50% for European ETFs and -60% for Asian ETFs, except Japan. I think it will be interesting to see which markets benefit from last week's rally the most.