Fund manager Tom Forester says he sees the market flashing a “yellow light” rather than a green or red one, and he’s focused on healthcare and consumer staple stocks.

“Our cash position is around 18%, which for us is cautious, but not extremely so,” Forester tells Morningstar.com. “It is a yellow light instead of a red or green light.”

Forester says he sees current valuations are “neutral”, adding, “There is some concern that margins are historically very high, so if they revert to the mean it would suggest that earnings are overstated and would make the market look rich but not extremely so like in the early 2000s.”

Forester discusses some of his top picks in the healthcare and consumer staple sectors, and he also talks about some stocks that he thinks are getting unfairly beaten down by fear. Among them: Hewlett-Packard. He also talks about why the ballooning debt in the U.S. is a concern.