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Antoine Russi

Ten money-making tips for 2016 - Bacall Investment Tips

As Jim Cramer of CNBC's Mad Money always says: "There's always a bull market somewhere." In the spirit of that bullish way of viewing markets in both good and not-so-good times, here are 10 investment ideas that panelists from USA TODAY's 2016 Investment Roundtable say can help you build a winning portfolio in 2016.


  1. FOCUS ON INDIVIDUAL STOCKS. If David Kostin of Goldman Sachs is right and the broad S&P 500 stock index posts flat returns next year, owning an index fund that tracks and mimics the performance of the large-company stock gauge may not be the most profitable strategy. To increase your odds of posting double-digit percentage gains next year, pinpoint individual names that have what it takes to outperform the S&P 500.


"Stock picking will become much more important," says Kostin, who favors growth stocks with strong balance sheets and companies that the bulk of their revenues domestically.


  1. LOOK BEYOND FANTASTIC 'FANG' STOCKS: Tech stocks Facebook, Amazon, Netflix and Google got so hot, so hyped and so dominant that they earned the acronym "FANG" stocks. The big four also posted big gains this year — so sizable, in fact, that they were responsible for most, if not all, of the gains in the market-cap weighted Nasdaq composite. Next year, however, tech leadership is not likely to be as narrow, says Josh Spencer, manager of the T. Rowe Price Global Technology Fund.


"I think the tech market will broaden next year," he says, adding that tech names that will benefit from the cyclical uptick in the economy will get a fresh look from Wall Street. Examples include companies that make semiconductors and semiconductor equipment and which are breaking into new growth areas, such as high-tech gadgetry now found in the modern auto fleet.


  1. REJECT USA BIAS AND GO GLOBAL. The U.S. stock market faces a host of headwinds — such as coming interest rate hikes from the Federal Reserve, a strong dollar and full valuations, to name a few — that could limit gains in 2016. Those domestic obstacles bolster the case for putting more cash to work in foreign stock markets, such as Europe and Japan where central bankers are more market-friendly and valuations are less pricey, says Russ Koesterich, global chief investment strategist at BlackRock.


"There are certain headwinds in the U.S. that are actually tailwinds in other parts of the world," Koesterich says. "In terms of valuations, I don't think we are in bubble territory, but U.S. valuations are a bit stretched. They are less stretched in Europe and Japan."


  1. BENEFIT FROM "BIFURCATED" MARKET. Even if the broad U.S. stock market posts flat returns again in 2016, it's because the winners will be offset by the losers, says Kostin of Goldman Sachs. The key, therefore, is to zero in on stocks with three characteristics that will give them a better chance to climb up the performance charts.


First, "focus on companies with strong balance sheets, as they typically outperform in a rising interest rate environment," Kostin says. Second, "with the strong dollar weighing on foreign sales of large U.S. companies, invest in stocks that are generating revenue domestically, as compared to those that book sales via exporting." Lastly, go for growth stocks not value names. "When economic growth is tepid, that is when you want to own equity growth," he says.


  1. CONTRARIAN PLAY: BUY BONDS. Sure the Fed is on track to start hiking interest rates for the first time in nearly 10 years. And there's no shortage of talk about the eventual bursting of the bond market bubble. Despite all the scary bond talk, Kate Warne, investment strategist at Edward Jones, says there's a still a place for bonds in every investor's portfolio.


"Nobody likes bonds, and people are saying, 'oh my gosh I will lose money in bonds,' " says Warne. But bond performance might not be so bad if the Fed moves slowly with its rate hikes and inflation remains low, she argues. Under that scenario, "bonds actually do OK," she explains. "If David Kostin is right and we get zero returns from stocks, you may do just as well in bonds and you have a lot less volatility then if you are fully invested in stocks. Bonds may not be a great investment, but they may actually not be too bad compared to everything else."