A top money manager is on pullback watch as stocks head deeper into record territory.
Cresset Capital's Jack Ablin is telling investors to brace for stocks to drop at least 15% in early 2020.
"Valuations are pretty stretched," the firm's chief investment officer told CNBC's "Trading Nation" on Thursday. "We had [a] 30% move this year on 3% earnings growth."
Ablin suggests the driver for a market setback is unclear.
"I can't see a specific catalyst unless it's higher interest rates that would precipitate a decline," he said.
Regardless, he has been limiting his exposure to stocks.
Ablin, who has $6.7 billion in assets under management, shifted 30% of the firm's assets to private equity and cash last August because he believed equities were getting too expensive. Since then, he hasn't been putting new money to work. But he hasn't been selling stocks either.
"From a valuation perspective, it's hard to see that we're going to see more P/E expansion without interest rates coming down," he said.
Despite his market warning, Ablin isn't completely abandoning his bullish views. He plans to use the next pullback as a reset that'll help him capitalize on future returns.
"I hold equities for seven years as a minimum. So, that would be my entry point," added Ablin.
His most bullish 2020 scenario is the market recovering from an early setback with some modest gains.
"2020 is probably a payback. We go back to fair value," Ablin said. "Best case for 2020, mid single digits as the market tends to follow earnings without much valuation expansion."