This Day On The Street
Continue to site right-arrow
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
TheStreet Open House

Taking Profits as Pricey Stocks Rely on Fed Juice

NEW YORK (TheStreet) -- As stocks hit new highs after new highs and the Federal Reserve appears poised to maintain the central bank's stimulus plans, Kim Forrest, a senior equity analyst at Fort Pitt Capital Group, is instructing her team to take profits.

Forrest, who helps oversee $1.45 billion in funds, says the comparatively high valuation of most stocks is making it more difficult to buy equities.

"We're adding fewer new names as the [rally] is all due to multiple expansion," Forrest said in a phone interview, voicing concern on the lack of strong earnings growth to justify the market run. "We've been taking some profits off the table - as a value investor there are still bargains, but you have to be very careful about what you pay for a stock."

Forrest is one of many portfolio managers selling positions to lock-in profits while guardedly buying equities as valuations rise. The Standard & Poor Index trades at 16.7 times earnings, the highest level since May 2010, according to data compiled by Bloomberg.

"Earnings are ok and we are seeing a lot of momentum in the market [but] the rally is getting long in the tooth," Channing Smith, managing director at Capital Advisors said in a phone interview. "We are paring back some positions and it's become a lot more difficult to find good opportunities." Tulsa, Oklahoma-based Smith helps oversee $1.2 billion in funds under management.

Smith doesn't expect the Fed to change to its monthly purchases of $85 billion in securities given the disruption to the economy caused by the government shutdown and the slowing signals from key economic data issued in recent weeks. Smith says Fed stimulus is likely to continue at its current pace at least until December and mostly likely into early next year. The manager said he is focused on large cap blue-chip companies.

Bill Mann, chief investment officer at Motley Fool Asset Management and manager of the Epic Voyage Fund, says he is also holding more cash as they too suggest that its become harder to find good stocks at attractive valuations. Mann helps oversee $550 million in funds under management. 

David James, director of research at Ohio-based James Investment Research, said he's been adding to positions over the past six weeks, viewing the government shutdown as a temporary disruption.

"The indicators [various indicators of economic confidence] are still favorable, though not as favorable," he said. James helps oversee $4.5 billion in funds. "But short-term, we would not be surprised to see a sell-off," he added. Neither Mann nor James expect a change in Fed Reserve policy today.

--By Jane Searle in New York

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
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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 $123.25 0.00%
FB $83.30 0.00%
GOOG $548.34 0.00%
TSLA $185.00 0.00%
YHOO $45.10 0.00%

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs