Stock prices are still below levels seen in the wake of the collapse of Lehman Brothers and improving investor sentiment, along with the need to put cash to work, will push markets higher, Lothar Mentel, CIO of Octopus Investments, told CNBC.
“We’ve decided that we’ll drop our cautious in our cautiously optimistic. We are getting a bit more optimistic now because things are starting to brighten up,” Mentel told CNBC.
The improving outlook is not based on the outlook for the economy, just the general sentiment of investors, which is gaining positive momentum, he said.
As market participants return from their summer break, they will be eager to put the weight of cash on the sidelines to work, Mentel pointed out. Plus, because investors want the period of weakness to be over, they will push for the rally to continue, he said.
“Stock prices are probably too low at the moment, they are still below, in a lot of markets, post-Lehman levels and therefore there is quite a bit of room still for equities to rally from here,” he said.
- Watch the full interview with Lothar Mentel above.
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