NEW YORK (TheStreet) -- Many investors follow general principals when saving their money and building a portfolio. However, Stephen Blumenthal, portfolio manager at CMG Global Equity Fund, told TheStreet's Gregg Greenberg that the traditional 60/40 split is not a solid strategy in today's market. 

Blumenthal called the stock market overvalued by about 20%. The average PE ratio is roughly 16, based on the past 50 years. Today's market trades with a price-to-earnings ratio near 21, he said. 

On the fixed-income side, it's near some of its lowest levels in history, he said. Of course, it can go lower and still presents more risk than many investors realize, especially with the low returns. 

So what should investors do, if not putting 60% into stocks and 40% into bonds? 

Blumenthal suggests dividing the portfolio into thirds; with one-third going to equities, one-third to fixed-income, and one-third to tactical trading. 

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Which leads to the next question: What is tactical trading? 

He explains that investors can use a number of different investments in the tactical trading allotment, be it long stocks, long bonds, short the Japanese yen, and a number of different tools. 

Right now, he said his tactical trading investment is mainly divided between the S&P 500 ETF (SPY) - Get Report and the iShares 20+ Year Treasury Bond ETF (TLT) - Get Report, while also shorting the yen via the ProShares UltraShort Yen ETF (YCS) - Get Report

Other investments he cycles between include: SPDR Barclay's 1-3 Month T-Bill ETF (BIL) - Get Report, PowerShares DB Commodity Index Tracking ETF (DBC) - Get Report, and the Vanguard REIT Index ETF (VNQ) - Get Report.

-- Written by Bret Kenwell in Petoskey, Mich.

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Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.