A slim majority of pension executives, money managers and consultants responding to a Pensions & Investments fax poll are nervous about the market's lofty heights, but think it can go higher.
Asked if the current market level made them nervous, 53% of the 144 respondents said it did, while 47% said it did not.
And just more than half of those nervous about the market level had taken action because of their unease.
The poll was conducted early last week, before the market declines of Wednesday and Thursday. The Dow Jones industrial average closed at 5921.37 on Thursday, down from the 6000 level it touched briefly on Monday and Tuesday.
When asked how high they thought the market might go before there is a 10% correction, the median estimate was 6300 on the Dow, with a high estimate of 9000 and a low of 5999.
Consultants were the most optimistic of the respondents, with their median market peak at 6327 on the Dow. The median peak for fund executives was 6250, while the median for money managers was 6200.
For all three groups, the low estimate for the market peak before a 10% correction was 5999.
Before the midweek market weakness, the respondents thought the market would be near the peak by year end. The median estimate for the Dow at the end of the year was 6100, with a high of 7000 and a low of 5400.
Again, consultants were the most optimistic, with a median estimate of 6150, followed again by fund executives at 6100 and money managers at 6000.
Among those respondents concerned about the market's record levels and who had taken action:
*A number had increased their cash positions;
*Some had changed their equity mix to add more defensive stocks;
*Others had increased their international equity exposures;
*Two said they might hedge their equity exposure;
*One had increased his exposure to fixed income; and
*One was considering Standard & Poor's 500 collars.
When asked what action had been taken, one money manager wrote: "Reduced beta, increased yield and reduced earnings variability of the portfolio."
Said another: "Taking profits, accumulating cash reserves." And a third: "Shifting some equities into fixed-income securities and cash."
Disappointing corporate earnings reports were named by 62% of the respondents as a development likely to bring about the end of the current market rise. Rising interest rates were named by 38%; 25% named fear of rising inflation; and a few named rising consumer debt levels. (Some respondents named more than one likely trigger).
However, respondents apparently expect little stock market fallout from the election results. Almost 90% believe the market already has factored a likely Clinton re-election into its valuations. However, only 63% believe the market has yet recognized and adjusted for a possible Democratic party takeover of at least one of the houses of Congress.
Only a minority (32%) of the respondents expect the Federal Reserve Bank to lift interest rates before the end of the year. Of that minority, 61% expect the Fed to take action in November, after the presidential election, while the remainder expect it to occur in December.
And 61% of those expecting a rate increase expect the Federal Reserve to lift rates by 25 basis points. The others expect an increase of 50 basis points.