This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

'RealMoney' Radio Recap: Playing the Pullback

It looks like everything is working in this market -- momentum and contrarian plays, big-cap and small-cap stocks -- but Aaron Task, co-executive editor at TheStreet.com told "RealMoney" radio show listeners on Wednesday that it's time to start thinking hard before chasing the market.

In this environment, fund managers will feel performance anxiety if they stayed out of stocks, Task said, because they're way behind their benchmarks if they're sitting on cash.

It's now even harder to figure out where and when to get into the game now that everything has performed so well. And managers who aren't in big plays look like they've already missed out.

For example, mutual fund managers who didn't get in on Apple (AAPL - Get Report) in 2005 and who stayed out because they were waiting for a pullback are starting to feel the heat.

They start to worry because they want to preserve their raises, bonuses and even their jobs, so they feel compelled to chase the market.

But as individual investors, we need to resist that temptation, said Task, because there will be a pullback, and that's when to get in.

For example, cyclicals including DuPont (DD - Get Report) issued a warning, and there has been negative news from Alcoa (AA - Get Report) and Phelps Dodge (PD).

Combined with lower prices from automakers and a slowing housing market, these signs show that some market segments will weaken, he added.

Waiting for Cyclicals

Brian Belski, senior equity investment strategist at Merrill Lynch, told Task that the influx of hedge funds and commodities funds has added to the performance anxiety for traditional portfolio managers.

It's better for the investor because it means more diversification and more choice, but it means more competition for the equity manager, Belski said.

Belski discussed a recent Merrill Lynch report that said cyclical sectors including materials companies should see a move higher over the long term, thanks to factors like falling fuel prices.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $130.28 0.00%
AA $13.22 0.00%
BRKS $10.90 0.00%
CHK $14.54 0.00%
CSC $65.56 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs