It is not the encouragement of one Steve Martin that has me thinking of getting small. Rather, because of my updated market view, I’m consumed with the desire to get low, small, high, fast and foreign. That is, I’m feeling the need to weight the portfolio towards stocks with low valuation, small cap, high dividend yield, fast growth, or foreign listing.

I’m not looking for all those qualities in every stock. Instead, I’ve been focusing on stocks that bring one or two of them to the party, with the goal of tilting the portfolio in those directions. This week, I’ll cover these, my five coveted qualities. Next week, staying true to the format, I will mention a number of stocks examples of each. For now, I’m simply suggesting that all stock portfolios would benefit from retooling along the following lines, for the coming 12 months.

Low Valuation

The single most important factor about any stock in this market needs to be its valuation. Specifically, high valuation stocks are still the Achilles heel of the market. Contrary to belief, valuations have not come down as much as stock prices, because earning have fallen—including even technology stocks, that have fallen the furthest in price, but also on the earnings front.

Consider Cisco (CSCO). Even though the stock is down hugely from its high at $80, the valuations have hardly budged. The PEG (P/E to Growth) at its peak was 4.5 ($80 stock over $0.51 forward earnings, on top of a 35 percent growth rate). But today it’s PEG is still a lofty 3.6 ($20 stock over $0.22 lowered, forward earnings, on top of a newly-reduced 25 percent growth rate). So while the stock price is down 75%, the valuations are only down 20%.

Right now, the broad market is still richly valued by historical standards. The S&P 500’s trailing P/E is 27, significantly above it’s long term average of about 15. I’m still bullish, and one could argue that valuations are partially justified by the low interest rate/low inflation backdrop. But the market is still vulnerable to changes in earnings growth projections, and the jury is still out in that regard. Lower valuation stocks are less sensitive to the discounting properties of future growth and inflation, and therefore less risky for the foreseeable future.

A PEG of close to 1.0 is ideal, and my portfolio is made up of below 2.0 PEGs.

Small Cap

Small and mid cap stocks have been in a dry spell for several years. But that makes them cheap. To wit, the Russell 3000 index of the largest 3000 stocks—which includes 2000 small and mid cap ones—has a P/E of 16, 40% lower than the large-cap-dominated S&P 500. The best opportunities now are in the mid cap ($1-$5 billion), and upper-small-cap ($500MM-$1B), range where there is ample liquidity and institutional coverage.

High Dividend Yield

For the first time in several years, I’m cherishing high dividend yield stocks—those with a 5% yield or better. In an environment of low interest rates, and a bull market that’s starting from a high-valuation platform, dividends will be a large part of the appreciation picture. High dividend yield stocks also tend to be lower valuation names.

Fast Growth

What if I’m wrong about my consistently bullish outlook? Will any stocks do well? Sure—one’s who trade on their own, fast growing fundamentals. My portfolio is leaning heavily on stocks with projected long term earnings growth rates in excess of 20%, compared with the 10-15% projections for the average company. But it’s important not to pay too much for the growth.

Foreign Listing

Foreign stocks that trade in the US, known as ADRs, have lower valuations than their American counterparts and bring diversification to a US-dominated portfolio. They have allowed our portfolio to beat the US indices for the last two and a half years, and will continue to do so. Focus should be on emerging markets.

This five part strategy is one that is based on the coming twelve months, and while anything could happen in that time frame, getting low, small, high, fast and foreign will likely prove to be a good way to go.

At the time of publication, the author was neither long nor short any of the stocks mentioned in this article, either in client accounts or personal ones. Positions may change at any time.