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‘Lack of Conviction’ in Market: Godfrey

'Lack of Conviction' in Market: Gemma Godfrey
'Lack of Conviction' in Market: Gemma Godfrey

Investors should be cautious about a lack of conviction in the market for three reason, Brooks Macdonald Asset Management Head of Investment Strategy Gemma Godfrey said Wednesday on CNBC.

The first reason Godfrey noted was increased flows into exchange-traded funds.

"The reason why this is crucial is, ETFs provide very quick, very easy access to broad exposure to the market," she said. "This isn't high-conviction, stock-specific, long-term trading."

On "Fast Money," Godfrey said that this wasn't indicative of a "great rotation" into stocks.

"Actually, we see these flows out of money market funds into equities, so that's the first stage," she said. "We have yet to see from bonds to equities."

Godfrey's third point was that flows are heading into emerging markets, not U.S. stocks, which makes these investors "momentum followers that are trying to catch up."

"The lack of conviction, the complacency in the market, all do give us cause for concern," she added.

Trader disclosure: On Feb. 20, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Mike Murphy is long FB; Mike Murphy is long TOL; Enis Taner is long GS; Enis Taner is long TSLA CALL CALENDAR; Enis Taner is long QCOM PUT SPREAD; Enis Taner is long C PUT SPREAD; Enis Taner is long SPY PUTS; Pete Najarian is long AAPL; Pete Najarian is long BAC CALLS; Pete Najarian is long JPM CALLS; Pete Najarian is long MS CALLS; Pete Najarian is long YHOO; Pete Najarian is long BBRY; Pete Najarian is long SBUX; Pete Najarian is long FB; ;Pete Najarian is long MSFT; Pete Najarian is long PFE; Pete Najarian is long MRK; Pete Najarian is long MRK CALLS; Pete Najarian is long GSK CALLS; Pete Najarian is long JOY CALLS; Joe Terranova is long VRTS; Joe Terranova is long SJM; Joe Terranova is long MJN; Joe Terranova is long AXP; Joe Terranova is long JPM; Joe Terranova is long DIS; Joe Terranova is long FB; Joe Terranova is long BRKb; Joe Terranova is long GS; Joe Terranova is long SWN; Joe Terranova is long XOM; Joe Terranova is short EMINI S&P Futures March.