Let's look at some of the most popular questions you and your fellow investors are asking:

What do you consider to be the areas and industries that will benefit most from the stimulus support during this economic crisis?
     Infrastructure, alternative energy and health care were the big winners in the stimulus bill.

     I've identified the winners in each of these areas. But government action is more than the stimulus bill and the bailouts. There are dozens of other sectors that will benefit from government action long after the stimulus is behind us and the nation has resumed its solid financial footing. There's no end to the profit opportunities!

Will bank stocks recover?
     Yes. The financial system simply cannot function without healthy, profitable banks. And though we hear lots of dire news about banking, in the long term this will prove to be an extremely profitable sector to invest in.

     All banks face challenges during downturns, and most have managed well during this one. A few of the larger banks whose misjudgments helped create this crisis will face a long hard slog. But the banks that are already clamoring to pay back their TARP funds have come through the woods and are ready to get back to business -- and get the government out of their hair! In the meantime, many banks are trading at a discount and will be superb investments.

Government spending is but one "big trend." When this trend plays out (even when companies become fully valued), what next?
     Government spending has been a "big trend" --and an upward one -- for more than 200 years. It's not going anywhere.

     The country won't need massive stimulus forever. But that doesn't mean the end of the profitable investing opportunities. Consider: The stimulus package was $787 billion. But the current federal budget, on the other hand, is $3.5 trillion. That's for one year. Uncle Sam's annual spending will amount to fully one quarter of GDP. Every time one of those public dollars is spent, a private-sector profit is realized. This "big trend" isn't a flash in the pan. It's not going to abate or subside. There will always be government-driven profit opportunities, both in this country and around the world.

How much is the government going to control usage of funds?
     Down to the penny. The Treasury allocated funds for what it is told to buy, and all spending bills, according to the U.S. Constitution, must originate in the House of Representatives. Richard Nixon tried impounding funds that were destined for programs he opposed, but the courts overruled him. (And Congress was less than pleased.)

How come they did not let Warren Buffett become the Treasury Secretary?
     That might not be a bad idea. Buffett has an obligation to the shareholders of Berkshire Hathaway that he takes very seriously. He's often written about how much he loves his job -- that he "tap dances" to work every morning. Buffett is evidently satisfied to have moved on from working in Washington, where his last job was delivering newspapers when he lived there as a boy (his father, a Republican, represented Nebraska in Congress).

     Buffett supported Obama's candidacy: Campaign databases show he and all three of his children gave thousands of dollars to the campaign. And Buffett is not shaking off his patriotic duty: He serves as an economic adviser to the president.  You can bet that, unlike the auto executives, no one is going to complain if Buffett comes in Washington in his private jet.

Does government involvement ever work? Can we find instances that it has worked in the past?
     Samuel Broder, the former director of the National Cancer Institute, shared your dim view of the government's ability to do anything right. "If you had demanded that the National Institute of Health solve the problem of polio, the odds are very strong that you would get the very best iron lungs in the world, but you wouldn't get the vaccine."

     In many ways I share this viewpoint of the government's abilities, such as they are.

     But this assessment notwithstanding, the fact remains that the government, setting aside its outcomes, spends $400 million an hour. When those dollars are spent, wise investors profit even if the problems the government was seeking to address remain unsolved. Does government involvement work? Depends on your perspective. I see a lot of profits to be made. That's my perspective, and it works for me. 

Any mutual fund available for this?
     No. There isn't a mutual fund that focuses on profiting from government action.  Nor is there an ETF that is specifically designed for this express purpose. This method of investing requires active participation and a thorough study of executive priorities, legislation, regulation, budgets, court cases and the like. Fortunately, Government-Driven Investing condenses that vast subject matter into readable, digestible form. It analyzes which companies will be affected and clearly and explicitly shows investors how to profit.

Since ethanol does NOT work-why is the land still not used for corn, beans or other useful crops to help the world feed the masses?
     Ethanol -- the typically corn-based fuel additive -- certainly has its drawbacks. But the administration is devoted to biofuels. And remember, the only place ethanol doesn't work is on a profit-and-loss statement. But the government isn't in the business of making money, it's in the business of printing it. That's a critical distinction. Ethanol is an area that the president likes, and he's in a position to direct funding to it. Savvy investors can put themselves into a position to profit from that.

Does it matter whether the government is liberal or conservative?
     No. We made recommendations for defense and homeland security stocks that did very well under Bush. We've made picks since Obama came to the White House that have delivered even bigger results. It doesn't matter whether there is a Democratic or Republican president in the White House, or who controls Congress. Both sides spend, spend, spend. Both sides create opportunity for immense profits. Government-Driven Investing shows how to capture them.

How can we tell what stimulus spending is one-time-only funding and which amounts are to be followed up with continued government sponsorship?
     All of the stimulus spending -- every cent -- was a one-shot deal. The $787 billion will be spent and, after that, the stimulus is over. The thinking is that there are enough dollars going to enough parts of the economy to help pull the entire nation out of its slump.

     That said, many of the things that the government is spending stimulus money on will indeed have a long-term effect. Take digital medical records. The stimulus package has a one-time $19 billion earmark for this area. But once the system is in place, it will have to be continually maintained and upgraded. When new hospitals or clinics open, they will need to buy digital-medical records software. The $19 billion shot in the arm is simply a catalyst for a major industry change. It will generate business -- and profits for years. I identified four companies that will benefit the most from the push to digital medical records in the inaugural issue of Government-Driven Investing. We will continue to follow this and other areas that will reap windfalls from government spending going forward.

My biggest fear about government-driven investing is that spending will be cut or priorities will change.
     Both of those are very real possibilities. Now, on the whole, I don't think we're going to see any spending cuts for some time -- the era of the trillion-dollar deficit is here. (Say what you want about Bill Clinton, he delivered budget surpluses.) But when I hear investors express fear that spending will be cut or priorities will change, what I hear is that they aren't sure how to keep track of the federal bureaucracy. And who can blame them? They federal complex is massive. Millions of bureaucrats spend trillions of dollars each year -- it's a lot to say grace over. The rules for successful investing are the same as the rules for success on the battlefield: Good intelligence assures victory. That's where Government-Driven Investing comes in.

Won't all this spending cause inflation?
     This was the No. 1 question we received. The answer is a resounding YES.

     Inflation is inevitable. Governments can't create 13-digit budget deficits without engendering some devaluation of the currency. At this point, no one knows the exact degree to which the stimulus plan will effect inflation. But while $787 billion is a mind-blowing amount of money to you and me, the appropriation "only" amounts to 22.5% of the government's annual budget. That's a big number, but whether it is large enough to significantly impact inflation remains to be seen.

     Bear this in mind, though: The historical inflation rate in this country for the past 10 years averages out to +2.6%.  During the same period, the S&P 500 index has achieved an annual gain -- almost invisible to the naked eye -- of +0.68%. Say inflation doubles. At that point, the question is this: Can you beat a 5.88% return? If so, you're in the plus column: You outpaced both inflation and the market. Our Obama-related picks have already seen gains three, four, five times that -- just since Obama took the White House! Some of those stocks are just getting warmed up, too.

     Inflation can be scary, and it's all the more reason why you need to find a way to generate the strongest gains you can. Investing in companies that will see double-digit returns -- or more -- as a direct result of government action is the surest way I know of to keep inflation at bay.  

- - -

     I hope today's issue has helped answer your questions. All investors should devote a portion of their portfolios to capturing the gains generated by government action. To learn how you can profit, click here.

     Many happy returns!

Disclosure: Andy Obermueller does not own any shares mentioned in this article.

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