US Markets

Analysts defend riding the rally through a dip

Riding the rally on good fundamentals: Pro
VIDEO3:1503:15
Riding the rally on good fundamentals: Pro

It's OK for investors to be nervous in a market running high, but the chance of a correction doesn't always mean you should divest, Ed Keon, of Quantitative Management Associates, said Wednesday.

"We're a little nervous. Anytime you have a big run in a short period of time, there's a chance of a pullback, but you could say that at any time about the stock market. It's the nature of the beast," he told CNBC's "Squawk Box."

But investors shouldn't shy away from a potential pullback, even if they're bound to lose money, said Keon, a portfolio manager and managing director at QMA.

"If you're concerned that if you buy today, you may be down 5 percent a couple weeks from now, you're never going to buy stocks," he said.

'Illusive' correction lurking in markets: Pro
VIDEO3:2303:23
'Illusive' correction lurking in markets: Pro

And getting out of the market now would be a mistake, said Michael Tyler, chief investment officer at Eastern Bank, in a separate "Squawk Box" interview Wednesday.

"Stay invested. You really can't afford to be out of the market," Tyler told CNBC. "If you stay invested but you ride through the down blips, you'll make it back up fairly quickly."

Tyler contended that because the fundamental aspects of the economy are still strong, the market is an attractive place for investors to be.

"We're looking at home prices. We're looking at construction. We're looking at business investment starting to pick up, finally. The consumer is very strong. So there's no reason not to be fully invested right now," he said.

Tyler said that potential long-term risks may be of growing concern, but insisted that they don't provide sufficient cause for investors to flee the market.

Such risks are both political and economic considering the market's optimism that favorable policies could come out of both areas, Mark Luschini said on "Squawk Box."

"The market's bid and bought about every piece of good news that could possibly come out of the administration and/or economically, and I think we're ripe for some disappointment on either front" the Janney Capital Management strategist said Wednesday.

"We've bid on deregulation and corporate tax reform. Nothing to do with trade, nothing to do with protectionistic policies, nothing to do with the strength of the dollar as a consequence of a border adjustment tax," he continued.

Following that, the market could see a pullback, "not necessarily deep or long in duration," if only to restore value to some of the most outpriced or underpriced stocks, Luschini said.

Tyler added that if the Federal Reserve hikes interest rates more than expected, it could pose a risk to markets.

But as long as prices stay level and the administration's tax policy changes are clear-cut, the market will maintain its run, he said.

Disclaimer