BNL Portfolio Strategy For 2017

- December 19, 2016


The last week we have published several macro outlooks. After a truly remarkable year where the BNL Portfolio outperformed the market by nearly 200%, we are changing our portfolio strategy in 2017 and being nimble with what we believe is a near certainty that markets will have a down year.

Still, I want to maintain ownership in the stocks that look to perform best both short and long-term. The key here will be ensuring the portfolio gains in an up market, but losses are limited when that correction comes. Furthermore, since we remain bullish on the economy’s general direction, it will be important that the portfolio has enough cash where stocks can be purchased after a pullback.

In other words, I want to tell BNL Members what to expect as I make changes to the BNL Portfolio and prepare for yet another great year. This will be exclusive to BNL members only.

$125,000 bet on risk

If the market pulls back 10-15%, as I anticipate, it means multiples in blue chip stocks that have performed so well will also head lower.

Ironically, many of the laggards like Valeant Pharmaceuticals Intl Inc (NYSE:VRX), GoPro Inc (NASDAQ:GPRO), Fitbit Inc (NYSE:FIT), and Skechers USA Inc (NYSE:SKX) are already trading at single digit multiples and are way oversold with catalysts ahead.

VRX, FIT, GPRO, and SKX are high risk stocks that we recently covered in our 2017 outlook series, each of which have Outperform outlooks for different reasons in 2017. While I do not believe it is a good idea to go “all in” on any one of these stocks, a diversified approach where two, three, or maybe all four equal 5-10% of your portfolio in 2017 is not a bad idea.

As for me, I will be taking a $125,000 bet on the likes of VRX, GPRO, FIT, and SKX allocated as I assess risk for each. I may not invest all $125,000 upfront, but by February my goal will be $125,000 in this “class of stocks”.

This will amount to 5% of the BNL Portfolio, and members can expect trade alerts via app, email, and text in the coming days.

A diverse bond strategy

As previously explained, I am going to adopt a diversified bond strategy into 2017 because I believe that bonds will tell a better story about the direction of stocks. What I plan to do is simple:

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