Table of Contents

1.  Market Update
2.  WisdomTree Middle East Div. (GULF)
3.  Citigroup ELKS 11% Celgene (EHC)
4.  Additional Investing Ideas
5.  Investor Trivia -- Catching the Big One
6.  Featured Topic -- Olympic Host Could Bring Home the Income-Investing Gold
7.  Free Investing Resources

Today's Top Stock Picks

Hunting ELKS for 10%-Plus Yield
These ELKS give you a double-digit yield, trade like a stock, and are protected by the share price of a high-flying biotech company. Read More. . .

Unlock the Riches of the Middle East
WisdomTree's fund gives U.S. investors new access to the rich dividends and rapidly rising markets of the Middle East. Read More. . .

Market Update

Without enough ammunition to bolster the case for either buying or selling, the market has gone into a holding pattern -- with the S&P beginning the week at 1258 and ending at 1260.

Stocks were under pressure from the beginning, with the major averages scurrying right back into official bear market territory on Monday after having bounced cautiously higher in prior weeks. Better-than-expected earnings and upbeat comments out of companies like Kraft (NYSE: KFT) were nice, but easily overshadowed by the sudden shuttering of two failed Nevada banks.

Fortunately, those losses were recouped the very next thanks to oil's continued retreat, with crude futures sinking as low as $122 per barrel -- a stunning $25 decline in just two weeks. Clearly, sagging energy prices are welcome news for tapped-out consumers and have begun to ease some of the pain at the pump.

Nevertheless, the latest GDP report still shows an economy under siege. Second quarter growth came in at a respectable +1.9%, but that was well below expectations. Even with about $80 billion in tax rebate checks working their way through the system, gross domestic purchases were still negative and much of the overall increase was attributable to soaring exports and a favorable trade balance.

Adding to the pessimism, the Labor Department announced that payrolls around the nation shrunk by about 50,000 jobs in July -- the seventh straight month of losses, some half-million in total. As a result, unemployment has now ticked up to a worrisome four-year high of 5.7%.

With traders finding little to cheer about, the major averages gave back their early gains and ended the week mixed.

Just as they have for over a year, credit and housing related woes remain a major question mark. But on the bright side, with over 250 of the S&P 500 companies having checked in so far, fully two-thirds outpaced their respective second-quarter earnings targets, dwarfing the number that came up short.

Still, while domestic companies are struggling against a weakening economy, those in the oil-soaked Middle East have the wind at their back. But have you tried investing directly in Kuwait, Quatar or Egypt? To say these least, these markets haven't always been the most receptive to foreign investment. But that has begun to change, and the new WisdomTree Middle East Dividend Fund (Nasdaq: GULF, $24.74) provides instant exposure to dozens of the region's most promising companies in one convenient place.

Also in today's digest, High-Yield Investing editor Carla Pasternak discusses an ELKS currently yielding more than 10%. Citigroup ELKS 11% Linked to Celgene; due 4/6/09 (AMEX: EHC, $10.60) may sound exotic, but this structured stock/bond hybrid is actually quite tame and definitely worth hearing about.

Good Investing!

-- Nathan Slaughter
Co-Editor
TopStockAnalysts Digest

Citigroup (NYSE: C) is the big name behind ELKS, an acronym for "Equity-LinKed Securities." ELKS are structure product based on an underlying common stock. They have a maturity date (usually a year from the issue date) and offer either cash or the underlying shares back at maturity. Typically, ELKS pay quarterly or semi-annual dividends to investors. One of the ELKS I particularly like is Citigroup ELKS 11% Linked to Celgene (AMEX: EHC, $10.60).

Snapshot: These ELKS are based on the common stock of biotech giant Celgene (Nasdaq: CELG). Citigroup issued 2.96 million shares of EHC in March 2008 at $10 a piece, raising $29.6 million. The security matures in April 2009, at which point you will either receive your principal back, or shares of Celgene.

Dividend and principal payments are secured by Citigroup's investment-grade rating of "A1" from Moody's and "A" from Standard & Poor's. The ELKS rank as senior unsecured debt, and debt holders have a claim on Citigroup's assets before equity holders in case of insolvency. Although the bank has been under pressure from bad mortgage loans, it has more than $2 trillion in assets and is generally considered well-capitalized.

Dividend: EHC pays a total dividend of $1.1275, divvied up into two payments -- one on October 6, 2008 and the second on April 6, 2009. At today's share price, that equates to a yield of 10.6%. To capture the payments, you'll need to own the shares before they go ex-dividend, usually five business days before the payment dates.

The payments consist of $0.8226 a share coming from option premiums (fees from option sales), which are treated as short-term capital gains and taxed as regular income. The balance of $0.3049 is paid as interest, which is also taxable at your ordinary income tax rate. Thus, the shares are suitable for a tax-deferred account.

Outlook: The "downside threshold price" for shares of Celgene is $36.17. That means so long as CELG shares stay above that price during the next nine months, you'll get back $10 in cash as principal repayment for every equity-linked security you own. If you'd prefer to receive Celgene stock, you can use these ELKS like warrants and opt to get the equivalent value in shares instead.

In the unlikely event the shares fall to the threshold price or below, you'll get 0.16589 shares of Celgene for each ELKS. If Celgene's shares were to go down below the threshold price of $36.17 and stay there, at maturity you would receive less than your original principal in equivalent CELG shares. Say Celgene declined to $36.17 a share. At the 0.16589 exchange rate, you would receive just $6 worth of Celgene shares for each ELKS ($36.17*0.16589).

The risk of that happening appears low at this time. Selling today at $73.92, the shares have traded above $40 since early 2006. Over the past year they've defied gravity, gaining more than +20% while the S&P 500 has lost close to -13%.

Looking ahead, Celgene's future appears bright. It has a blockbuster blood cancer drug Revlimid and a dynamic pipeline of psoriasis and cancer drugs that should ensure future growth.

With the shares trading near their $10 par value, we see little downside and good upside in EHC. Since only 2,200 shares change hands daily, interested investors may want to consider buying small lots over several days, so as not to move the price.

WisdomTree has just launched a new fund targeting the oil-soaked Middle East region. WisdomTree Middle East Dividend (Nasdaq: GULF, $24.74) is aptly named GULF and will join a small, but growing, contingent of funds targeting stocks in Egypt, Bahrain, Kuwait, Jordan and several other countries.

Though still tiny by Western standards, these markets are growing rapidly and are already home to companies with a combined market capitalization of $815 billion -- about 2% of the world's total. That is a figure that will almost assuredly be rising swiftly in the years ahead.

While the S&P 500 has been stuck in neutral over the past three years, Middle East markets have flourished. According to Bloomberg, over that time stocks have jumped +66% in Kuwait, +97% in Egypt, and a stunning +153% in Morocco.

As you might expect, soaring crude prices have played a role. Three of the fund's target markets (Kuwait, Qatar and the United Arab Emirates) produce a combined 5.75 million barrels of oil per day, almost one-fifth of OPEC's total production.

And with massive amounts of wealth being transferred from the developed world into this oil-producing region, governments are flush with trillions in petrodollars -- which are being heavily spent on infrastructure and other projects to stimulate economic growth. As a result, per-capita incomes are rising, foreign capital is flowing in, and countries across the board are all projected to enjoy racy GDP growth of around +5% or better over the next five years.

Yet, investors unnerved at the prospect of being overly dependent on commodity prices can relax. Most oil companies are state-owned rather than publicly traded, so energy stocks only account for a small portion of GULF's portfolio -- banks, telecoms and materials all carry a much heavier weighting.

For an expense ratio of 0.88%, investors can track the performance of dozens of the region's premier companies -- which, until recently, were essentially off-limits to outsiders. The index itself is set up to ensure that components are liquid (they must have a monthly trading volume of 250,000 shares or more), well capitalized (market caps of $200 million or greater) and pay solid dividends (minimum annual dividend payments of $5 million).

The 100 largest companies that meet these requirements are eligible to be included in the index, and members are weighted according to dividend distributions. In other words, those with heftier payouts have a larger weighting and greater impact on returns. Backtested data suggests this approach is working wonders -- the index is showing gains of +26.7% over the last three years. The underlying index also sports a yield of 5.3%, so shareholders can reasonably expect to see a payout in that neighborhood before expenses.

All of the evidence points to continued long-term success for Middle East markets. For now, GULF looks to be a worthy contender in this group. Expenses are competitive for this particular asset class, backtested returns are superior and the focus on dividends should lead to both steady income and reduced volatility.