When does this stock market rally end?

Rick Pitcairn, chief investment officer of Pitcairn, based in Jenkintown, gets that question a lot these days from clients.

"I get the sense of trepidation from both institutional and retail investors surrounding the market. They're asking: 'These valuations are extended, and this feels like 1999 - tell me, when's that type of sell-off going to happen?'

"In terms of U.S. equities, it's been a stunning rally in magnitude and duration," he says. "It's continually disbelieved."

Retail investors have missed out on the rally, according to Pitcairn's anecdotal chats with CEOs of mutual-fund firms.

We remain in an era of unprecedented central-bank activity - in the United States and globally. Federal Reserve chair Janet Yellen is "reeling the balance sheet back in, and one thing that could slow down the market," Pitcairn says, "would be either a deflationary or inflationary scare based on lack of faith in the Fed's carrying out its mission."

But, currently, there's no reasonable alternative to U.S. equities, many strategists say. Pitcairn's current allocation for its clients lies in a range of 60 percent to 70 percent equities, both U.S. and global, private and public.

In bonds, CIO Pitcairn says, his firm was too early paring back fixed-income positions in 2010 and 2011.

However, "we're positioned for a future rise in interest rates, so what we've done for the vast majority of clients is push core fixed-income down and increase a low-volatility set of hedge funds," which aim to deliver mid- to high-single-digit returns and, it is hoped, are less sensitive to rising interest rates.

When do interest rates rise?

"Lower oil prices seem to make that a little further in the future," he believes, as the cost of fuel should translate into lower prices for consumers and, therefore, less inflation.

Pitcairn as a firm also traded out of a tactical position in leveraged loans and high yield, he says. "We exited that position in leveraged loans and high yield earlier this year after a nice run."

The firm uses active mutual funds, exchange-traded funds, or separately managed accounts for those investments.

"It's hard for markets like this to end without some hint or forecast of recession. That's usually shown by an inverted or flat yield curve in Treasuries, but it's still steep."