Tech investor Paul Meeks shares his investment strategy and top picks for 2017

Published Wed, Dec 28 201610:22 AM EST

As 2016 comes to a close, the outperformance in technology stocks may carry through next year given a variety of investment opportunities in the space. The Technology Select Sector SPDR ETF , which is the most popular alternative to tech stock pickers, rallied 14 percent compared with a gain of 11 for the S & P 500. It's important to note that all of tech's relative gains have been in the second half of the year, particularly after the U.S. presidential election. So as investors gear up for the new year, here is my strategy: First, in terms of allocations, investors must note that tech and telecom, which I think should be merged as a single sector in the S & P, overwhelm the nine other groups with their 23 percent weight. Financials are a distant No. 2 with a weighting of 15 percent. Therefore, most market participants should use a 23 percent weighting in tech as a benchmark for their portfolio allocations. I'm no "homer," which is what sportscasters call fans who are so obsessed with their home teams that they lose all objectivity. I've learned over my long tech career that the sector sometimes can be too dangerous, and therefore uninvestible, even for folks who follow these companies 24/7. My CNBC PRO model portfolio , which is up 13 percent this year, has outperformed the S & P in part because I made profitable trades in a bank ( Signature Bank ) and a health-care company ( Pacira Pharmaceuticals ). I never invest in tech because I must, and neither should you. At the beginning of 2017, I'd suggest a neutral weighting in tech (23 percent) and perhaps even modestly underweight it in your portfolio. I see tech opportunities for next year but here's the caveat: Unless you're a long-term investor — we all say that we are but then we expect immediate gains — I think that most of my favorite stocks should only be bought during the next market correction. Some of the stocks to consider include cloud computing leaders such as Adobe, Alibaba, Alphabet, Amazon, Microsoft and Salesforce. I bet that Amazon, Alphabet and Microsoft will carve up the big infrastructure as a service (IaaS) market. Adobe and Salesforce will retain their software as a service (SaaS) leads. I omit "old school" tech companies like IBM, Oracle and SAP from my list because their large, legacy client/server businesses are under siege. Among 2016's semiconductor darlings, I only like NXP Semi (I don't dispute the strong fundamentals in this tech industry, but the shares of most of these companies have moved too far too fast. Some of these names even could be shorts before too long). I like NXP particularly because it has acquired Freescale Semi, and both companies are now being merged into Qualcomm. Qualcomm is paying $110 cash per share for NXP, which trades for $99. I think there's almost no chance that this deal isn't executed, so I'm confident in an 11 percent return in 2017 based only on it closing the arbitrage spread. I can't end my 2017 predictions without commenting on tech's two biggies, Apple and Facebook. First, I think Apple will continue to tread water in the near-term, but the stock could rise later in the year after the launch of the iPhone 8. Once that happens, I believe investors may still want to take profits. The reason is that Apple is no longer a growth stock, so it's unlikely that any single product may be able to move the needle for long. Second, I'm still a buyer of Facebook . I own it in my CNBC Platinum Portfolio. CEO Mark Zuckerberg and company will see it through its issues real (some) or perceived (more). I believe Facebook's stock will eventually resume its ascent and not only beat the market, but outpace its tech peers. The company has a long runway for continued growth by increasingly monetizing Instagram, WhatsApp, and Messenger. Paul Meeks, CFA, contributes to CNBC PRO and is a Platinum Portfolio manager on "Squawk Box." He's the chief investment officer and a separate accounts portfolio manager at Sloy, Dahl & Holst (SD & H) in Portland, Oregon. Disclosures: Of the stocks mentioned in this article, Meeks owns Adobe, Alibaba, Alphabet, Amazon, Apple, Facebook and NXP.

Chris Ratcliffe | Bloomberg | Getty Images

As 2016 comes to a close, the outperformance in technology stocks may carry through next year given a variety of investment opportunities in the space.

The Technology Select Sector SPDR ETF, which is the most popular alternative to tech stock pickers, rallied 14 percent compared with a gain of 11 for the S&P 500. It's important to note that all of tech's relative gains have been in the second half of the year, particularly after the U.S. presidential election.