With investors expecting another tough quarter for earnings, investors are faced with a question: hold cash and wait to see how corporate reports pan out or stay fully invested?
Corporate reports are expected to show a 6.9 percent decline in earnings per share in the first quarter of this year, according to Thomson Reuters I/B/E/S data. EPS for S&P 500-listed companies fell 2.9 percent in the final quarter of 2015.
Richard Steinberg said Monday his Steinberg Global Asset management is keeping "higher-than-normal cash levels."
Steinberg noted that earnings estimates have been falling while stock prices have been rising in the last six weeks. He said that gap needs to close.
"With a 2,100 target on the S&P, we need a little bit of a break and a rest before we can start to move back up," he told CNBC's "Squawk Box."
The market typically begins to focus on the next year's earnings around June, Steinberg said. But he cautioned there is still three months to go before investors start looking to 2017, when companies are set to face easier comparisons with the previous year.
The coming weeks will show whether or not companies are capturing more organic growth, he added.
"With new cash coming in, we'd rather miss the 1 percent or 2 percent that we think the upside is in the short run, and we would hope to see a 5 or 6 percent healthy pullback, and then we can start to focus on earnings," Steinberg said.
But the problem with staying on the sidelines is that investors are paying for being cautious, David Kelly, chief global strategist at JPMorgan Funds, said Monday.
"We've got this sort of reality rift between the actual data and the central banks, who are extraordinarily dovish, and because of that you've got a federal funds rate at a quarter of a percent. You've got a core CPI inflation rate at 2.3," he told "Squawk Box."
"You're paying 2 percent real just to sit on the sidelines. That I think is just distorting the entire market outlook because it's very expensive to do nothing when you're paying for the privilege in real terms," he added.
For that reason, investors should be fully invested in a balanced way and should not be long cash, Kelly said. While corporate earnings in the back half of 2015 and first part of 2016 reflect weakness due to falling oil prices, earnings in the second half of this year are poised for a "big bounce," provided the dollar doesn't rise and crude doesn't fall, he said.
The earnings outlook for the second half and 2017 justifies a rising market, he concluded.
Correction: This story was updated to correct the company name to Thomson Reuters I/B/E/S.