John Mauldin, Millennium Wave Advisors
“A healthy dose of cash and other forms of fixed income may be the best prescription for 2010.”

Mauldin recommends putting money temporarily in short-maturity corporate and municipal bond ETFs like Vanguard Short-Term Bond (BSV) and Market Vectors Short Municipal (SMB).

He sees the economy headed for a second recessionary dip later this year, and so recommends rotating into defensive funds — particularly, high-dividend-payers like Utilities Select Sector SPDR (XLU) or iShares S&P Global Utilities Index Fund (JXI).

Mauldin also likes health-care funds, especially those with biotechnology exposure such as Health Care Select Sector SPDR (XLV). He is bullish on biotech: One of the purer plays is iShares Nasdaq Biotechnology Index Fund (IBB).

“Wait for the real buying opportunity.”

Longer term, Mauldin recommends gradually shifting portfolio weights from securities of developed countries whose valuations “are out of whack” toward higher-growth markets through ETFs like iShares MSCI Emerging Markets Index Fund (EEM) or Vanguard Emerging Markets (VWO).

“Be patient and wait for markets to come to you,” he counsels. “Patience is a position, too.”

Stephen Blumenthal, President, CMG Capital Management Group
“If the recent past was the equivalent of a bungee ride, the year ahead will be more like a roller coaster. The market should continue chugging higher until April or May, when he expects a plunge, perhaps followed by another upturn before year’s end.”

“To cope with that uncertainty, it’s best to play fixed-income-based ETFs during the first quarter at least.” favorite vehicle is SPDR Barclays Capital High Yield Bond ETF (JNK)

Anticipating prolonged weakness in the U.S. dollar, Blumenthal recommends gradual acquisition of Pacific/Asia commodity producers/users represented by ETFs like iShares MSCI Pacific ex-Japan Index Fund (EPP). He finds the iShares MSCI Australia Index Fund (EWA) particularly attractive as a simultaneous play on commodity-rich Australia, its relatively strong currency, and China. A rebound in China, the world’s largest commodity consumer, should lift Market Vectors Steel (SLX) and Market Vectors Coal (KOL) as well as agriculture. CMG recommends Market Vectors Agribusiness (MOO), PowerShares Water Resources (PHO) and, for exposure to so-called soft commodities like rice and cotton, Elements/Rogers International Commodity Agriculture ETN (RJA).

“Sell the rallies and trade tactically until we get a correction,” Blumenthal advises. In other words, take profits when common measures of investor sentiment are bullish, and shop for bargains on market dips.

Thomas Orecchio, Modera Wealth Mgmt.

He uses international bond funds like SPDR Barclays Capital International Treasury Bond ETF (BWX) to balance U.S. dollar-heavy portfolios.

Even though their share prices have run up lately, developing countries have better growth prospects than developed economies, he says. Modera also is rotating into international bond funds like iShares S&P/Citi International Treasury Bond (IGOV) and SPDR Barclays Capital International Treasury Bond ETF (BWX) for fixed income, but gradually.

This year, Orecchio expects to see many more new ETFs like the IQ Hedge Multi-Strategy Tracker (QAI), which uses hedging techniques to offset risk

I also think the long term the dollar does not look so good. Especially when comparing it to emerging markets.

Read on…

You can invest in emerging-markets bonds through  Pimco Emerging Local Bond (PLBDX). “Pimco invests in 15 markets, including Poland, South Africa, Mexico, and Thailand.” It’s on the expensive side, though, with an annual cost of 1.35%. I try to stay under 1%, but this might be worth the price.

For a lower cost alternative, check Wisdom Dreyfus Emerging Fund (CEW). “This exchange-traded fund, launched last summer, uses futures contracts to provide exposure to money-market rates of 11 emerging markets currencies, including the Polish zloty, Chinese yuan and Chilean peso.” Annual fee is 0.55%.