Clients are going to need their financial advisors more than ever for the next few months as the market grows at a slower pace, said Bob Doll, chief investment officer at Crossmark Global Investments.

The industry thought leader said in an interview Thursday that in recent months “investors could put everything they had into the stock market and sit back and enjoy the ride. But, going forward, they have to be a little more tactical, and this is where advisors can lend assistance.”

“The U.S. equity market had a fantastic run since the March 2020 bottom, delivering more than 90% returns, and is now trading at 30 times trailing price-to-earnings ratio,” Doll said in a written commentary on the first half of the year. “It seems as though markets have borrowed returns from the future. With valuations close to an all-time high, equity markets do not have much safety margin and are vulnerable to a correction.

“We think the environment still favors values and cyclical [stocks] over growth and defensive [in the] intermediate time frame, although the latter pair could outperform in the short term. The likely outperformance of value versus growth also has implications for regional allocation within a global equity portfolio,” he wrote.

Doll explained in the interview, “As good as the third quarter will be, it will be down from the growth seen in the first and second quarters. The second half of the year will be a lot choppier than the first half. We are going into a period of two steps up, one step back, in which investments will take a little bit of fine-tuning.”

Investments in cyclical market sectors get Doll’s vote for the near future, and he adds that investors should diversify their portfolios geographically.

Looking at particular sectors, Doll said industries connected with infrastructure building should not be ruled out, although President Biden’s total spending plans may not pass.

“Despite a late-quarter agreement between the White House and a bipartisan group of senators on the framework of a physical infrastructure package, the path to additional fiscal stimulus remained complicated by Democratic leadership’s insistence that the Senate also pass a separate package through the reconciliation process that includes Democratic priorities surrounding climate change and human infrastructure,” Doll said in the commentary.

Another factor affecting markets will be growing inflation. The Federal Reserve Board maintains that inflation will be short-lived. Doll does not totally agree with that prediction and feels some inflation may take hold.

“We believe the current post-pandemic spike in U.S. core inflation will soon peak but will be followed by resilience, rather than a return to sub-2% inflation. In other words, the era of 0% to 2% inflation is over,” he said.

In support of his overall optimistic view of the markets and the economy, Doll explained, “The corporate profit outlook remains as bright as it has been in a long time, and thus supportive of risk assets.”

Consumers in the United States are also optimistic. “U.S. consumers are experiencing a dramatic improvement in employment prospects at a time when there are massive sidelined savings and pent-up demand for some services,” Doll said. “Household balance sheets are in great shape, reflecting [the] last decade’s deleveraging and the current huge tailwind from asset appreciation.”

The business cycle is in a similar position to the stock market: It is at the tail end of the strongest expansion seen in recent history and will soon shift to a slower growth level, he added.

“Investors should favor international markets over the coming year. This stance is supported by our view that, despite current dollar strength, the longer-term path is downward,” Doll said. “We continue to recommend that investors should overweight risk assets within a multi-asset portfolio, and that fixed-income investors should maintain a below-benchmark duration position.”