Five-star fund manager Barry James says it's a tough time to be putting money into the stock market, but an investor would be wise to focus on large-cap stocks.
"I think we've reached the end of this rally, and we're likely to back into the bear mode. Large stocks are the right place to be in this type of market," the president of James Advantage Funds told CNBC.
"But," he added, "to jump into stocks wholeheartedly at this juncture, I think, is probably a mistake."
James thinks bonds are the best investment, particularly Treasurys, but he has some favorite equities as well.
"We like things that have a lot of international [exposure], have good earnings, are relatively cheap and have been holding up better than the market," he said. "Stocks like AT&T, which you also get some dividends with; Wal-Mart, ExxonMobil and Owens-Illinois, so there's some industrial in there. A lot of international play and companies that are buying back shares are pretty important at this juncture in the market."
James personally owns shares of AT&T, ExxonMobil, Owens-Illinois, and Wal-Mart.