A Time For Caution

In the course of writing on my blog, I've had the opportunity to interact via email/phone/text with some of the smartest and most successful money managers in the business.  In doing so, I'm able to read and chronicle the investment philosphy's, themes, and investment decisions.  After reading the emails and the blogs and the articles and talking to these managers, I try to condense down each of their investment themes and come up with an overall investment approach to the markets (short and long term).  As of late, I have grown increasingly cautious on the markets and stocks in general.  I've made very few mutual fund and stock purchases of late and I've been taking profits on current investment positions and sitting in cash as I expect the stock market to selloff and move down in price over the coming weeks/month. 
These are some of the reasons I am (and other investment managers believe staying on the sidelines for now is the best course of action:

It's been five years since recession and the U.S. and global economies have not made many strides.

While homebuilding is improving, it still remains below expectations while unemployment remains high.

Banks are still making bad business loans which will .

The earnings improvement is all financial engineering where companies like IBM (IBM) get free (0%) money and buy tons of their stock back. Then they earn more in EPS because interest rates are so low.

If AT&T (T), Verizon (VZ) and many others were borrowing at rates from a few years ago, they wouldn't even be profitable.

In other words, we have hardly gotten out of recession, and the stock market has more than doubled.

Economic growth will continue to be anemic, and signs of deflation will appear.

This week is the beginning of the market going down.

It will be more than a correction, because it will not go higher in 2014-2015 than where it stood a few days ago.

Pension and other funds want a break and haven't had one for five years.

They will get one now.

Most traders and investors should take a summer-long vacation and, at the very least, close out many of their long positions

Consumer sentiment remains weak and retail sales continue to below expectation.

Tensions in the Middle East (Iraq) are extremely volatile and the last two times there was chaos/uprising in Iraq (1990 and 2003) stocks performed extremely badly as markets dont like uncertainty.

Simply stated, I would avoid being heavily invested, take profits on current investments, and stay in cash and wait for stocks to sell off...