Get into equities, but carefully, Hugh Johnson, chairman of Hugh Johnson Advisors, told CNBC Wednesday.
He is “overweight” on equities, but is concerned the market has “come very far, very fast. We had a great quarter [but] the chances of a fairly sharp correction are fairly severe.”
When he looks at valuations he sees stocks 8 percent overvalued from what he thinks they should be in the current quarter and “6 percent above the level we’re going to end the year at.”
His advice? “Be bullish, but drag your feet on putting any new money into the markets, and when you do put money in the markets, put it into what really works, which is finance, technology, and consumer cyclicals."
Johnson’s picks include Coach, JPMorgan Chase, International Business Machines, and Oracle. He noted he has five percent of his holdings in international equities, with plans to raise it to 10 percent because of better fundamentals in some parts of the world, particularly parts of South America and Asia.
Ted Parrish, co-portfolio manager at Henssler Equity Fund, is also “overweight” in equities, but said he sees more opportunities ahead.
“If we get housing stabilization we’re off to the races,” he said. “There are a lot of good growth opportunities out there. Company balance sheets are in great shape. We’re looking forward to that ride up.”
His picks include General Electric, Emerson, and Aaron’s, which he said has a “small geographic footprint” and “a lot of room for growth.”
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