The historic rally may be setting investors up for pain, Russell Investment's Douglas Gordon says

Money manager Douglas Gordon is worried about a potentially widespread problem in long-term investors' portfolios.

Gordon, who's instrumental in building Russell Investments' asset allocation strategies, believes many investors haven't rebalanced their portfolios to reflect the historic 2019 stock market rally.

According to Gordon, the market rally's robust gains are tilting investors too far into stocks.

The bottom line: If there's another pullback, it'll leave them wide open to losses that may have been avoidable.

"It's a good time to re-assess where you're at with respect to being diversified in a multi-asset solution," the firm's senior portfolio manager said Friday on CNBC's "Trading Nation."

Since the Christmas Eve plunge, the S&P 500 has soared 18 percent. Because of the market's sharp rebound, Gordon suspects a 3 to 5 percent sell-off could strike stocks in the coming weeks.

For protection, Gordon recommends taking some profits from the historic rally. Plus, he'd consider going overseas, a strategy he's employing right now as part of a balanced allocation strategy.

"I'd probably right now prefer to take my higher beta exposures maybe in EM [emerging markets]," said Gordon, who's responsible for $48.5 billion of the firm's assets.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's Closing Bell (M-F, 3PM-5PM ET). In addition, he contributes to CNBC and CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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