Goldman Sachs came out this week and stated it saw little upside for the overall market during the next 12 months. This confirms the same view I have articulated on these pages since the back half of 2015. The overall market sells at a bit over historical valuations which would be fine if we were seeing decent growth both from an economic and earnings perspective. Unfortunately, that growth has not materialized at the present moment.

Global demand sits at levels not seen since 2009, and both the European and Japanese central banks are experimenting with negative interest rate policies to ignite growth and with little result so far. Domestically, GDP posted just a .5% reading in the first quarter. Although, growth should pick up in coming quarters; we are still looking at below trend growth in what continues to be the bleakest post-war recovery recorded here in the United States.

Companies struggle to produce any kind of profit growth. In addition to anemic worldwide demand, firms are dealing with a dollar that has appreciated markedly over the past year and a half and the collapse in demand from the energy and mining sectors. Operating margins are coming down from all-time highs as well. This should continue thanks to increases in compliance costs as well as various minimum wage hike movements. The second quarter should be the fifth quarter in a row that earnings within the S&P 500 fall collectively on a year-over-year basis. It will be the sixth straight quarter of negative revenue growth.

So, what is an investor to do within a market that has little collective upside over the next 12 months? I think it is time to go “Old School” with one’s equity allocation. What do I mean by that? Simply put, this involves tilting your portfolio to concentrate on solid companies that pay generous dividends. This may seem quaint now but up until the “Nifty Fifty” days of the late 60s and early 70s, the majority of returns within the market were made up of dividend payments, not capital appreciation. Over the past 40 or so years, that has flipped with the market constantly enamored by the Amazon’s, Facebook’s, and Google’s of the market that provided significant growth at a pricey valuation and with no dividends.