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A Global High-Yield Portfolio For An Overvalued U.S. Market

Published Fri, 17 Feb 2017 09:02:17 -0500 on Seeking Alpha

As a dividend growth investor in the style of Lowell Miller and the much-loved SA contributor Chowder, I'm used to patiently building portfolios one position at a time over several months or years as buying opportunities arise. However, I also enjoy designing allocation models for index investors, those with a shorter time horizon, and those who prefer to utilize sector rotation to reduce risk and capitalize on the business cycle and micro/macroeconomic trends.
For this article, I wanted to address two sentiments that I've often heard from investors over the past two months: wariness that the 'Trump rally' is overdone, and fear that the U.S. market is overvalued and overdue for a major correction. I believe both are valid concerns.
With interest rates on the rise and the dollar and the Dow hitting new highs, I think it is right for investors to be cautious, especially with regard to sectors that have experienced recent run-ups based on hopes of government spending and deregulation that may or may not occur, such as infrastructure, energy, health care, and bank stocks.
With the above concerns in mind, I'd like to highlight ten sectors of the market that I believe have good potential for growth or safety over the next 12 months. I can then construct a timely, globally-diversified portfolio comprising these sectors and adhering to the following investment parameters:
Bearish stance on the dollar, job growth, consumer spending, household debt. Bullish... Read more