Your 2016 Portfolio Playbook

My 2016 market views and prescribed positioning: moderate bullishness! I'm overweighting America but also northwestern Europe, South Korea and India, and I'm underweighting elsewhere, most heavily Japan, Canada and Australia.

I'm overweight health care (primarily drugs) and to lesser degrees tech, consumer discretionary and financials (mainly banks). I'm underweighting staples and to greater degrees telecom, utilities, energy, industrials and materials.

I'll detail my sub set reasoning over the next few issues, but regardless, I've never been an all-or-nothing category gambler--I'm always global and always own some of any major equity group I expect to lag, lest my macro views are backwards, in which case I'd get slaughtered.

I suggest that for you, too, unless you think you're awfully clever (and likely are pretty arrogant). It's more important to get equity-like returns in a bull market than to try to beat the market by a mile at the risk of getting wiped out. Overconfidence is a proven market killer.

So are consensus views that expect rising long rates and a more active Fed than will likely evolve. In our globally competitive bond world it's tough for rates to rise much while the brain--dead European Central Bank spews "Quantitative Diseasing" (which despite mythology is deflationary, since whenever QD is deployed the quantity of money grows almost not at all).

And there is a long, unnoted history of declining Fed activity as presidential elections near (barring a crisis). Fed folk hate being perceived as political, but they always are. They dislike being seen as pushing for one side specifically because the next Fed head is picked by the next President (and their choice might lose anyway, causing alienation). Doing nothing is doing something, though rarely seen as such. As November nears they will become ever less action prone. That's good. The less mucking around the better!

Finally, as bulls age I like high--quality big stocks with relatively predictable earning streams, like these five:

Visa isn't cheap but at 30 is about half the trailing P/E it sported when I last recommended it on Apr. 15, 2013--at 50% o f today's price. It's been a pretty smooth ride and likely will be in 2016. As the world's dominant electronic--payments firm it's more a tech play than its official "financial services" designation. As peers struggle, Visa dons a halo outshining most major U.S. firms. I bet that halo brightens as long as this bull market does.

Johnson & Johnson has slid largely sideways since 2013, but 2016 should be its year. Why? Growth has closed the valuation gap it suffered against smaller, less d iversified brethren. It finally enjoys multiples at or below those of many of the pharmaceutical stocks I've used in recent years--hence a 2.9% dividend yield and a likely 2016 P/E of 16.

The U.K. often provides sneak previews of U.S. financial phenomena (and vice versa). Both operate more similarly than either ever fathoms. To me the ending of Britain's "stronger bank balance sheets at any cost" policy foretells a similar loosening of American loan--growth constraint--and increased earnings. Hence Bank of America should positively surprise, ending its sideways wiggles. It's our overall best--postured big retail bank yet sells at 11 times my 2016 estimate.

Everyone knows brick--and--mortar retailers suffer from online vampires. Not so for the turf dominated by Home Depot . Think of the product, customer and, as important, in-store "figurin' " time. The more time folks aren't in other stores the more they have for HD. It isn't cheap at 22 times my January 2017 earnings estimate, but as a classic later--stage bull market winner, it shouldn't be.

Since I'm biased toward drug stocks, add to U.S. holdings with a foreign stock like France's Sanofi (SNY, 43), a global leader in vaccines, a growth market in less developed nations. It's also strong in oncology, diabetes and cardiovascular drugs. It sells at 19 times my 2016 earnings estimate with a 3.9% dividend yield.

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