Other market gurus have been raising alarms this year, warning that wrenching stock market declines are on the horizon. Among the respected long-time market watchers who aren't buying into doom and gloom is Richard Bernstein. After 21 years as a top investment strategist with Merrill Lynch, he founded investment advisory firm Richard Bernstein Advisors in 2009, where he serves as CEO and chief investment officer (CIO). "The signs of what would really signal a true bear market are really nowhere to be seen," he asserted on CNBC. Moreover, he believes that constant talk of a "late cycle" economic environment is confusing investors and causing them to make poor decisions: "Late in the cycle makes it sound like the abyss is minutes away. That's not really where we are."

"The signs of a true bear market are really nowhere to be seen." — Richard Bernstein, CEO & CIO of Richard Bernstein Advisors, formerly of Merrill Lynch

Source: CNBC

Wrong Time for Bonds

In talking about late cycle economic developments, Bernstein told CNBC, "We are seeing stresses in the economy, tight product markets, tight labor markets, but that is normal." Elaborating on the poor decisions that "late cycle" talk is spurring among investors, he cited "massive flows into bond funds at a point when the economic environment is such that it's very poor for bonds and bond returns."

Specifically, he noted that inflationary expectations hit a trough in June 2016, and since then inflation has been moving upward, by various measures, and is likely to continue upward. While stocks have registered robust gains since then, and commodities also are up, bonds have posted losses, which is exactly what one would expect in a period of rising inflation and inflationary expectations, he observed.

"Everybody is kind of underweight pro-inflation investments," Bernstein added. He favors energy, materials, industrials and gold in this environment. (For more, see also: 6 Beaten Down Stocks Ready For Big Rebounds.)

Big Investors Are Bullish on U.S.

70% favor U.S. stocks over other regions
Net overweight position in U.S. stocks is 21% and rising
25% bearish on global economic growth next year

Source: Bank of America Merrill Lynch Global Fund Manager Survey, as reported by Barron's.

Bullish Consensus

While various well-known market watchers have been issuing dire predictions about the U.S. stock market, 244 leading institutional money managers, mutual fund managers and hedge fund managers around the world, who collectively manage over $742 billion, are increasingly bullish on U.S. stocks. Highlights of the September edition of the monthly Merrill Lynch Global Fund Manager Survey are in the table above. The 70% vote of confidence in U.S. equities is the largest in the 17-year history of the survey, and the 21% overweight tilt towards U.S stocks is the biggest since January 2015, per MarketWatch.

JPMorgan Disagrees

A contrary opinion has been offered by JPMorgan, which sees "convergence of macro fundamentals between U.S. and international markets in the coming months," and recommends that investors lighten up on U.S. stocks, while increasing exposure to emerging markets equities. Meanwhile, another team at JPMorgan has presented a plan for getting defensive in stocks, bonds, commodities and foreign exchange, in anticipation of the next recession. However, JPMorgan disagrees not just with Richard Bernstein and the investment managers polled by Merrill Lynch, but also internally. The latter JPMorgan group advises reduced exposure to emerging markets stocks, preferring developed market equities instead. (For more, see also: JPMorgan Defies Bulls, Tells Investors To Cut U.S. Stocks.)