With U.S. stocks hovering near pre-recession levels, a return to more normal heights seems a logical bet to many portfolio managers.

Trying to figure out just how much of a drop might be ahead and when to take advantage, however, isn't as clear cut.

"We know that people are looking for reasons to sell off. But since so many investors remain on the sidelines, it's hard to see much more than a shallow pullback at this point," says David Kudla, chief investment strategist at Mainstay Capital Management in Grand Blanc, Mich., which manages $1.3 billion in assets.

The SPDR S&P 500 ETF (SPY) hit a five-year high last week, although it stepped back on Monday. In the past 12 months, the fund's shares have gained more than 13%--nearly half of that coming in the past three months alone, according to Morningstar data. …

…At Mainstay Capital, Mr. Kudla is expecting a strong year in stocks. He agrees that corporate balance sheets appear well-positioned to absorb any temporary market disruptions and points to underlying support from "easy money" policies by global central bankers. By mid-year, he also wouldn't be surprised to see a greater migration by investors from bond to stock funds. ...

...While portfolio managers at the firm are considering putting money to work in certain sectors, Mr. Kudla says he also remains cautious about trying to time any upcoming market slide. "We're going to be very selective since so many people are anticipating a downturn," he adds. …

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