Institutional Investor hall of famer Richard Bernstein is adopting a more nuanced bull stance on stocks.

Bernstein isn’t as optimistic as he was last year — citing the deceleration of corporate America’s profits.

“The most important thing in 2019 is U.S. profits growth is going to slow,” the Richard Bernstein Advisors CEO said Monday on CNBC’s “Trading Nation.” “By our estimation, it’s going to slow from about 25 percent to about 5 to 8 percent.”

It appears the trend is already impacting stocks. Wall Street is coping this week with disappointing quarterly earnings reports from Nvidia and Caterpillar. Bernstein warns they’re not isolated cases.

“One should temper their enthusiasm. We’re still overweight stocks. But I think you have to really to temper that enthusiasm with that kind of deceleration in corporate profits,” he said. “The number one factor in an equity portfolio in 2019 has to be quality and stability of earnings.”

Bernstein, a CNBC contributor, believes that ingredient should be sufficient to protect long-term portfolios.

“It’s really across the sector spectrum. There’s obviously some tech, there’s a lot of health care [and] consumer staples. You can find consumer cyclicals,” he said. “You can find all kinds of different companies that could fit that high quality.”

He also has a second strategy: Go big.

“It’s probably a time to move up in market cap. Smaller cap companies are usually more cyclical than larger cap companies,” Bernstein noted. “If you want to shield a portfolio, you move up in market cap. Right now, we have virtually no exposure to small and mid-cap stocks.”

Despite Bernstein’s more cautious tone, he isn’t predicting a recession for this year. According to Bernstein, the economic cycle is in its late stages, and it could stay there for quite some time.

“We never had the boom in this cycle. So if you never get a boom, you never get a bust. And, that means the cycle lasts longer,” said Bernstein, who expects the S&P 500 to see average or slightly above average returns by year-end.

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