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Photograph by Teru Onishi for Fortune

Fortune 2017 Investor’s Guide

What to buy, what to sell, and how to turn small bets into big wins.

A year ago, as we wrapped up the previous installment of our annual Investor’s Guide, many of our sources (and this editor) were feeling bearish enough to snarf a few salmon and crawl off to hibernate. Corporate profits were weakening, a long U.S. bull market had limped to a near standstill, and the angry populism of the presidential primaries made us wonder whether American capitalism was about to take a pitchfork in the gut.

We know what happened next. Earnings continued to ­flounder. Voters got angrier, not just in the U.S. but globally, and delivered two shocks—Brexit in the U.K. and Donald Trump’s victory in the U.S.—that pundits all but guaranteed would tank the stock markets. So how serious was the damage from these disasters? For the 12 months through late November, the S&P 500 was up 8.7%, including dividends. And how was Fortune punished for its bearishness? Our picks nearly doubled that, with a 16.7% return.

There’s a lesson here about the difference between panicked pessimism, in which you swap your savings for Krugerrands and move into the bomb shelter, and prudent pessimism. Under the influence of the latter, you stay clear-eyed about possible threats—and stay invested, in the faith that a long-term, calm approach to your portfolio will eventually pay off.

Make no mistake: 2017 will pose plenty of threats to investors, including ­serious headwinds for the American economy and the overpriced U.S. stock market (see “Trump: Why the Stock Market Is Stacked Against Him”). But our 2016 portfolio and our 2017 picks share some common principles that we’re confident can help you make money in the year ahead. Among them:

Diversification matters. Putting all your eggs in one basket boosts your odds of a big payoff—and your odds of needing to move back in with Mom. Diversification makes it more likely that you’ll benefit if any sector of the market rises, without losing your shirt when others fall. To see how our stock and fund picks this year put that principle into action, read “Stocks to Keep a Nest Egg Growing.”

Dividends make a difference. Almost 80% of the winners in our 2016 portfolio owed a sizable chunk of their gains to dividends. And dividend income can make a so-so year better for investors in years when stock prices are sluggish.

Timing isn’t everything. Three of our 2016 picks returned better than 40%, and two of those three reaped most of their gains over spans of just a few weeks—Virgin America, when it announced that it was negotiating with a buyer and then closed a deal; and Wynn Resorts, after a better-than-expected earnings report lured investors back to the stock. The lesson: Rather than try to time the market, buy stocks with good fundamentals at a good price, so you’ll be on the ground floor if and when good news arrives.

The year ahead will undoubtedly test your ­composure many times. We hope our guide will help you ace those tests. And for expanded coverage, visit fortune.com/investors-guide-2017.

A version of this article appears in the December 15, 2016 issue of Fortune.

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