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Where to Invest Now: Two Strategists' Views

Stocks started Monday higher on positive economic data. Will the trend continue—and where should investors be looking now? Thomas Karsten, president and chief investment officer of Karsten Financial, and James Paulsen, chief investment strategist at Wells Capital Management, shared their insights.

“Overall, we’re seeing good signs we’re in the first quarter of what appears to be a recovery,  with some good broad news with GDP figures and good news with individual earnings news with Ford this morning,” Karsten told CNBC.

However, he said there’s still a lot of pain in the job market that might affect earnings in the following quarter.

Karsten said he is currently “heavily weighted” in the energy sector and is not buying in the area right now.

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“Longer term, energy is going to be an important sector,” Karsten said.

“We’ve seen a lot of productivity gains just in the broad economy with the implementation of technology in broad businesses. As we look forward into the future, there’s going to be improvements in technology that apply to the oil and gas industry and going to open up some new areas that were previously unexplorable.”

In the meantime, Paulsen said the next major economic data that will move markets will be jobs.

“Either they’re going to come back and turn positive as we start next year, in which case the sentiment will turn toward sustainable recovery, which will boost stock prices even more,” he said. “Or we’ll see a failure to create jobs and that will create more downside pressure on this market. I go with the former, but worry about the latter.”

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Paulsen said he likes the industrials and consumer cyclicals, but disagrees about energy.

“I think a lot of the inflation plays are overbought, including the price of gold, but also energy is ahead of itself. I would look for a better entry point next year when people calm down a little bit about imminent inflation pressures,” he said.

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No immediate information was available for Karsten or Paulsen.