- "There is a decent chance that, due to inflationary pressures and higher interest rates, the market will be up somewhat less than earnings," Strategas chairman Jason DeSena Trennert says.
- "Forget about what has worked the past few years and think about what might work the next few years," Citron Research's Andrew Left says.
- "It's time to be defensive," says Fred Hickey.
Investors may need to lower their expectations for stock gains this year after celebrating the ninth birthday of the bull market Friday.
The S&P 500 bottomed at 676.53 on its March 9, 2009 close. It has risen around 300 percent since the low.
We are at a pivotal moment for the financial markets — the tax reform plan is behind us, Wall Street-favorite Gary Cohn resigned from the White House and there are rising prospects for a Democratic wave in the November midterm election.
What should people do with their money amid the uncertainty?
CNBC asked several smart analysts and traders what advice they would give to average investors with a 12-month time horizon.
One Wall Street veteran still recommended stocks but said investors should expect a smaller gain than last year.
"I would say simply that those with a one-year time horizon should stick with equities although their expectations for returns (particularly from multiple expansion) should be lower," Strategas chairman and CEO Jason DeSena Trennert wrote in an email Thursday. "There is a decent chance that, due to inflationary pressures and higher interest rates, the market will be up somewhat less than earnings."
Trennert predicts corporate earnings will rise more than 12 percent in 2018.
A noted short seller suggested traders may want to avoid high-flying growth stocks and focus on value names.
"FANG" stocks, a widely followed basket of high-growth technology stocks — Facebook, Amazon, Netflix and Google parent Alphabet — have crushed the S&P 500 over the past 12 months with an average gain of nearly 70 percent versus the market's roughly 17 percent return in the time period.
"Forget about what has worked the past few years and think about what might work the next few years. Knowing everything goes through cycles, there could be a return of value investing which would mean everyone who has owned momentum should think about lowering exposure," Citron Research's Andrew Left wrote in an email. "Just because you love the product does not mean you have to love the stock."
Another industry analyst said investors should avoid equities altogether due to high valuations.
"This is one of the top three most expensive stock markets in history. On some [valuation] measurements … it is the highest," Fred Hickey, editor of High Tech Strategist, said in an email. "The other two comparable markets (1929 and 2000) ended in crashes. The Fed is raising rates and selling off bonds. Long-term interest rates are rising on record U.S and global debt levels. It's time to be defensive."
Hickey recommended cash and gold to survive any market turmoil.
Shiller CAPE PE Ratio Chart
A widely following market valuation metric called the Shiller CAPE ratio is at 34, which is above the 1929 level before the market crash that year.
The "cyclically adjusted price-to-earnings ratio" (CAPE) is calculated using price divided by the index's average historical 10-year earnings, adjusted for inflation.
Yale economics professor Robert Shiller's research found future 10-year stock market returns were negatively correlated to high CAPE ratio readings on a relative basis. He won the Nobel Prize in economics in 2013 for his work on stock market inefficiency and valuations.