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. 

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) and the iShares 20+ Year Treasury Bond ETF (TLT), while also shorting the yen via the ProShares UltraShort Yen ETF (YCS). 

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

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