Institutional Investor hall of famer Richard Bernstein sees opportunity in safety plays.
The longtime bull, who's barely overweight stocks right now, sees growth stocks outperforming economic sensitive cyclicals due to slower earnings growth.
"You want to own more stable stocks, stable growth stocks," the Richard Bernstein Advisors CEO told CNBC's "Trading Nation" on Monday. "They're the ones that tend to work as profitability begins to decelerate."
He's far from the only investor who is partial to playing defense, with groups including utilities and real estate hitting records this year. But Bernstein doesn't think the price tags have become too frothy.
"We're at the point of the cycle, though, where people generally say that stable growth is very expensive," said Bernstein, a CNBC contributor. "But, in fact, it tends to be the time where they start outperforming as profits decelerate."
He said the bearish earnings backdrop is a bigger market driver than what the Federal Reserve may do next with interest rates.
"When profitability decelerates, markets become very Darwinistic. It becomes survival of the fittest," said Bernstein. "Those companies that can maintain their growth get bid up to higher and higher multiples."
"At the peak of a profits cycle, investors always argue that technology is not cyclical. It's a standard argument at the peak of the cycle," he said. "Unfortunately, it's never true. It turns out technology is one of the most cyclical sectors and not the least."
"We've calmed down tremendously from where we were six months ago, a year ago, two years ago," Bernstein said.