Real estate has outperformed the stock market "by a landslide," according to Richard Weiss, senior vice president and chief investment officer of City National Bank.

Investments in emerging markets crushed those in developed markets by 164 percentage points.

Small cap stocks overran large cap stocks by 73 percentage points.

Value-priced stocks have left traditionally strong growth stocks, in industries such as technology and health care, in the dust, beating them by 59 percentage points.

High-yield bonds outpaced treasury bonds by 37 percentage points, a landslide in bond market terms.

But times are changing, Weiss said, and people of wealth who want to hang onto their money must change with the market.

"If you made a lot of money this way, my message to you now is, 'Switch gears,'" Weiss said. "Each of these trends should reverse."

Weiss instructed high net worth Business Bank of Nevada clients what changes to make in their portfolios during a May 1 luncheon at the Panevino restaurant on Via Anthony Avenue. Beverly Hills, Calif.-based City National Bank recently acquired Business Bank and is planning further expansion into the Las Vegas Valley.

Weiss explained that the U.S. economy fluctuates in 10- to 12-year cycles.

The last economic dip took place in 2001, followed by an upswing. But the economy is on its way into another valley, and investors should prepare.

Growth in real gross domestic product will dip to 2 percent this year, down from more than 3 percent in 2006.

"Where are we now? Past the peak and on the down slope," Wiess said. "Whatever has just done well over an economic recovery are not the same things that do well on a down slope."

Although he stressed that economists were not predicting recession in 2007, he said the financial outlook for 2008 is still unclear.

And although the stock market is currently doing well, he said defensive stocks that do well in recession, like utilities and basic materials, are performing. Technology and financial stocks are currently performing poorly, he said.

"It's actually forecasting a slowdown. It's confirming what we already know," Weiss said. "But it doesn't matter from an investment standpoint."

Therefore 2007 will be all about reining in risk.

Weiss advised investors to put their money in safe asset classes, although never cash, which consistently underperforms a well-rounded, diversified portfolio.

A diversified portfolio, he said, always performs well, although not phenomenally well or phenomenally badly, during recession or growth periods.

Move money to large cap stocks. Although small cap stocks outperformed large caps in the first quarter of 2006, large caps did better for the next three quarters and will continue to do so in 2007.

Weiss also said the much-touted, developing "BRIC" countries - Brazil, Russia, India and China - are no longer good investment bets.

"When they give it an acronym, get the hell out," he quipped. "When it's on the cover of Newsweek and morons like my brother read it, get out."

He also advised against investing in lower rated credit.

"Now is not the time to take on credit risk," he said, referring to bonds with lower investment grades. Currently those bonds are not paying high enough returns to make the risky investment worth it, he said.

But most importantly, diversify.

"Now is always the most difficult time to invest," Weiss said.