Despite Market Volatility, Stocks a Good Place to Be: Pros

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If the volatile market has you wondering whether you should even be in it, JPMorgan’s Richard Madigan has some advice.

“It’s not a year to be out of the markets,” he told “Nightly Business Report.”

“If you’ve been waiting for the world to normalize, this is normalization. It is going to be protracted.”

(Read More: Tyler’s Musings on a Tricky Market)

The market has been vacillating for more than a month, shifting from big gains to big drops. Sometimes the rise is due to weak economic data, which could extend the Federal Reserve’s stimulus plan. Other days, it’s good numbers that send the market up.

“Some of it is just emotion,” said Madigan, chief investment officer for JPMorgan Private Bank. “We’ve had a market that for the most part has gone up in one direction for 12 months. When you go up that far and … that fast, you tend to lose perspective on how high you are.”

Madigan said he took advantage of the dips in the market this week to add a bit into equity for his clients, but he cautioned that people’s expectations on returns “need to come down a little bit.”

(Watch: Making Sense of the Market)

Ed Yardeni, president of Yardeni Research, calls the market’s varying reactions to economic news “almost comical.”

“You have to tune out the noise, and we’re getting a lot of noise not just from the economy but also form the Federal Reserve,” he said.

Since Fed Chairman Ben Bernanke hinted last week that the central bank could start reducing its stimulus program later this year, several Fed officials have spoken about the central bank’s bond-buying plan or have speeches planned.

“If I had my druthers, we would pass a gag order and stop them from all this chitchat,” Yardeni said. “They just talk too much.”

Instead, focus on the fundamentals, Yardeni said. Private sector economic activity has been growing 3 percent year over year since mid-2010, he noted. Earnings per share have been pretty strong, and while growth rates are slowing down, they are still at a record high.

“Stocks still look to be a pretty decent place to invest,” Yardeni said.

(Watch: Tune Out the Noise, Focus on Fundamentals: Economist)

For those who are in bonds, JPMorgan’s Madigan said to stick to very short durations.

“Don’t overthink bonds,” he said. “You’re not going to make a lot of money. Manage your expectations. … If you’re focused too much on income, you may end up with bonds that have longer maturities. Those are going to reprice very aggressively.”

The bottom line, Madigan said, is to be balanced in your investing.

“I would caution not overreaching for risk, either, because markets aren’t cheap. They are fairly valued right now. We feel good about that,” he said.

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