Markets

Money managers see profit-taking in Thursday's 'healthy pullback'

Key Points
  • The major averages saw their worst day of trading in months Thursday, but money managers say investors should stay the course in a natural sell-off.
  • "I definitely think this is just a healthy pullback," Bryn Talkington of Requisite Capital Management told CNBC.
  • "This is an opportunity for people to sell stock that they made a lot of money in very quickly," Aureus Asset Management's Karen Firestone said after the Nasdaq made big gains in recent weeks.
A trader works at his post on the floor of the New York Stock Exchange (NYSE) in New York.
Brendan McDermid | Reuters

The high-flying stocks are coming back down to earth as investors see an opportunity to lock in their gains with markets at their highs.

The tech-heavy Nasdaq Composite, which has made a habit of setting new record highs the past three months, turned in its worst trading day since early June on Thursday, as the tech stocks that led the market higher backtracked.

But some money managers appearing on CNBC saw the sell-off as a constructive move.

"I definitely think this is just a healthy pullback," Bryn Talkington, managing partner of Requisite Capital Management, said on "Power Lunch." The Dallas-based firm has $856 million assets under management, according to Factset.

After climbing to new heights in nine of the last 10 sessions, the Nasdaq declined almost 5% at the close. The index's decline was driven in part by Zoom and Tesla. Both stocks, whose valuations have ballooned triple digits this year, traded near correction territory. Talkington said those shares have more to fall, though investors will later rotate money right back into the same growth names they are trimming.

"I think this is just a reminder that gravity not only exists in nature, but it also exists in the stock market, and the Nasdaq needs to have a good 10[%] to 15%-plus retracement," Talkington said.

Karen Firestone, chairman and CEO of Aureus Asset Management, said it was time for the Nasdaq 100 to take a breather after running up about 18% in a six-week "feeding frenzy." Many big gainers have traded 70% or more above their 200-day moving averages.

"That's extreme," she said on "The Exchange." "This is an opportunity for people to sell stock that they made a lot of money in very quickly" and the move has "much less to do with the economy reopening than it does with the price level." Aureus manages $3.8 billion in assets.

The S&P 500, which has also enjoyed setting record highs in recent weeks, and Dow Jones indexes also suffered big declines Thursday. The benchmark saw its worst day since June, and the blue chip average plunged more than 1,000 points at its lows.

Talkington said she doesn't think investors should panic and exit the asset class. Big drops are a part of the game.

"I think it's just the price of admission for owning equities and everyone needs to just buckle up and ride it out," she said.