While there have been reports of portfolio managers easing back into stocks, one-third of them are still sitting on record amounts of cash, SmartMoney reports.

Until the housing market stabilizes and corporate earnings become strong, they say, they are not convinced the market will deliver consistently strong returns, even though the S&P 500 has risen some 40% since its March 9 low.

“I’m not sure it’s so far away, but I don’t think we’ve seen the bottom yet,” said Nick Kaiser, a portfolio manager with the Amana funds who has a whopping 30% of his holdings in cash.

Dave Ellison, manager of large-cap and small-cap financial services funds at FBR, said, “This is not about making the bottom. It’s about making a fundamental judgment that companies can grow and be profitable again.” He is waiting for banks and asset managers to rid their balance sheets of toxic assets and for the government to stop buying these toxic assets.

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