Five Sector Funds You'll Need in 2007

Top five holdings are Barrick Gold(ABX Quote), Newmont Mining(NEM Quote), AngloGold Ashanti(AU Quote), Freeport-McMoRan Copper & Gold(FCX Quote) and Goldcorp(GG Quote). In contrast, the more established streetTracks Gold Shares(GLD Quote) owns only gold bullion.

Airlines

Why: Think of this as the antioil ETF. When oil prices go up, airline stocks get crushed. This stands to reason, because fuel costs are the biggest variable cost that airlines face. If oil prices go up in the first quarter, airline stocks will plunge, especially since the winter months are low-traffic months for most airlines. (Yeah, they sell those $350 round-trips to Paris in February because everyone wants to go.) That sets up the possibility of a strong rally for beaten-up airline stocks as we head into the heavy summer flying season -- if oil prices begin one of those typical retreats from the heights near $70 a barrel in March.

When: Wait until oil prices climb to $70. And don't fall in love with this ETF. There is no more cyclical or volatile industry than the airline industry. Sell on the companies' reports of strong summer-quarter profits.

What: There is no airline ETF, although there is an airline index on the American Stock Exchange. But the iShares Dow Jones Transportation Average Index(IYT Quote) offers you a basket of transportation stocks (and a relatively small exposure to airline shares themselves) such as FedEx(FDX Quote) that themselves have big exposure to fuel costs.

Japan

Why: Something strange is happening in the currency markets. While the U.S. dollar has been sinking against the euro, so has the Japanese yen. Last week, it actually hit a record low against the euro, and it is now down 10% against that currency for the year. The yen has even been so weak lately that it has dropped against the dollar: The yen is down about 8% against the U.S. dollar since May.