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I am not sanguine on the equity markets heading into 2016 for myriad reasons. These include the continued strength of the dollar, the slowest global growth since 2009, a muddled 2 percent domestic GDP growth, and the absence of earnings or revenue growth within the S&P 500.

However, my biggest concern is I believe the market is underestimating the future impacts of the collapse in the energy and commodity complexes. My opinion is that there is at least a good possibility that a crisis emerges next year at one of the large emerging market countries with high debt levels that depends on energy and commodities for a good portion of their economy. Russia, Brazil or Argentina could easily be the source of that turmoil as their finances are taking big losses from the continued low prices of energy and commodities. I am completely out of the energy and commodity sectors as I think their pain will continue in 2016.

I am in the slow process of raising my cash position to 30% of my portfolio by the time the New Year rolls around. I began taking to this same strategy over the summer and was able to purchase many stocks on sale over the August to September selloff.

The only sector of the market I am significantly overweight right now is biotech despite the high beta nature of this area of the market. I am highly positive on the sector for several reasons.

Recent Bear Market:

The biotech sector has frequent selloffs and has had five official bear markets since 2009. These tend to hit every 12 to 18 months on a regular basis. These sharp declines tend to last two to three months and hit the small cap part of the sector much harder than the large-cap growth stocks in the space such as Amgen (NASDAQ: AMGN). After bottoming, the sector then usually outperforms the overall market until the next big pullback.

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