Dear Fellow Investor,

I just returned from the World Money Show in Orlando, Florida, last week. As always, it was great to meet many of you in person and hear what's on your mind. Usually, the questions I'm asked at Money Shows vary from specific industries and companies to Asian markets and political events. This year, however, there seemed to be one question on everyone's mind: When we can start buying again?

As you know, I've been cautious about buying stocks since autumn. Back in November, I had China Strategy members sell half-positions in several of our biggest winners because I wanted us to preserve our gains. We've been defensive ever since then, selling two more stocks and beefing up our position in a tried-and-true hedge against the U.S. dollar. I also advised China Strategy members to keep 40% of their portfolios in cash.

Our capital preservation strategy has worked—the Chinese metals monopoly that we sold three months ago is down 32% since then. And the energy play that we sold at the same time has fallen 19%. In the same time period, our U.S. dollar hedge is up nearly 15%. Want to know more about our capital preservation plan? Click here to get the details.

When to Sell

The last several months have shown us that having a sell strategy is just as important as knowing when to buy. If you've found yourself questioning when to let go of your losers or take profits in your winners, congratulations, you're just like every other investor in the world. However, you have a chance to distinguish yourself from millions of others by joining China Strategy today. We have rules for selling stocks that has been proven over and over again. We've avoided losses and put our money into more productive companies at key exit points. Don't question yourself any longer. Be a part of a winning strategy now! Join China Strategy today and build your wealth along with me and my subscribers.

But no matter how disciplined an investor you are, having a significant cash position feels like a missed opportunity. The good news is that things are looking up for investors who are trying to capitalize on the China Miracle. I don't think it's safe to go out and invest all of your extra cash right now, but my indicators are telling me that the fundamentals of Chinese stocks are improving.

Economic Indicators Looking Up in China

Aggressive rate cuts from central banks in both the U.S. and Hong Kong combined with a 30% correction in the past three months have brought high-quality Chinese stocks back down to attractive levels again. In the past three months alone, the average P/E ratio of Chinese companies trading in Hong Kong has dropped from 28 down to 21. 

Last year China's government increased interest rates six times in order to help curb inflation. But in the past two weeks, I've seen signs that the government will likely stop its rate hikes. The pause in rate increases will help ease money supply in China again.

China's government has also approved the creation of new mutual funds that will invest in Hong Kong-listed stocks. The new mutual funds will funnel more liquidity from Mainland China to Hong Kong. Increased money flow into Hong Kong will boost Hong Kong-listed shares of Chinese companies, which back the New York-traded ADRs that we own in China Strategy. As you can imagine, our China Strategy stocks will likely benefit from this situation. Click here to learn which China Strategy companies will profit from the coming liquidity shift. This is a story that we've been following in China Strategy for almost a year now, and I expect it to continue paying off for us.

To top things off, I'm expecting our China Strategy companies to bounce because they're continuing to grow their earnings at an average of 20%–25% a year. This is a sharp contrast to what's happening here in the United States. According to Bloomberg, overall fourth-quarter earnings from the S&P 500 have fallen almost 20% on average, with 367 companies having released results so far. Earnings are down mainly because financial giants like Merrill Lynch and Citigroup have posted record losses. So as you can see, high-quality Chinese companies offer U.S. investors a good alternative to sluggish stocks here at home.

What to Do Now?

So how can we take advantage of these recent favorable developments in China? I believe the safest strategy is to put 10% of your cash to work in one of our China Strategy companies that has been oversold.

This company is a well-run monopoly in its industry, and none of its competitors have even come close to its success. Here's what I mean: Our company added a record 6.6 million customers in December and a total of 68.1 million in 2007, increasing its total customer base to 369.3 million. Its biggest rival gained just 1.4 million customers in December for a total of 160.3 million overall. As you can see, our company is the clear and undisputed winner in its field.

It also has shares traded in Hong Kong, which will benefit from the new Hong Kong-traded mutual funds that the Chinese government has authorized. This company is a household name in China, and investors will snap up funds that include shares of this big Chinese blue-chip. When this happens, our U.S. shares will also rise.

Don't miss out on this company's next run-up! Click here to get all of the details on this Chinese monopoly, including my recommended buy price. When Chinese companies rally in the next few months, you don't want to be left behind. And with the economy here at home struggling, there's no better way to boost your returns that to invest in the world's fastest-growing economy.

P.S. Last week I told you that the time to buy could come as early as the end of February. It has come a bit sooner than expected, but it has come. Don't miss out on the gains to be made in select companies that will be the first to move. Join me today and get back in the market with the right stocks.