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Strategists Say Markets Have More Upside — But How Much?

Published: Friday, 13 Nov 2009 | 5:51 PM ET

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By: JeeYeon Park
CNBC News Associate

The stock market clawed higher on Friday while the dollar moved lower and gold prices continued to rise. What should investors expect from the markets going forward? James Shelton, CIO of Kanaly Trust, and Joe Heider, president of Dawson Wealth Management, shared their market outlooks.

“We’re cautious—we’re telling clients not to chase stocks at these levels,” Shelton told CNBC.

“Sure, they can move a little bit higher, but risks are high, so you’ve got to do some things that protect the portfolio, you need to hedge it a little bit.”

Shelton said investors should cut back on the risk in their portfolios. For example, investors who own high-yield bonds should start exiting those positions. He added that investors should focus on high-quality stocks.

“From a long-term investment standpoint, you’ve got to like the emerging markets,” he said. “Near-term, we’re a little concerned because we’ve seen this huge rally off the bottom. But there are better growth prospects abroad.”

Watch Shelton's Latest Appearance on CNBC (Sept. 9 2009)

In the meantime, Heider said he is more bullish on the markets and has a positive outlook for next year.

“There’s room to go up for the remainder of the year: 200-300 points,” he said. He believes unemployment is near or at its peak.

“We’re a more diversified investment advisor so our look is to pick a broad-based approach in technology—we think there are great opportunities across the board there in the U.S. and in particular, internationally as the world continues to recover.”