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Being 'optimistic' about stocks doesn't mean you're 'unrealistic,' JP Morgan's Mary Erdoes argues

  • J.P. Morgan Asset Management CEO Mary Erdoes gives a bullish case for stocks, saying optimism about the booming market isn't impractical.
  • Erdoes says fears cause investors to "walk away, and say, 'Oh, I should stay in cash or I should be out of the markets.'"

J.P. Morgan Asset Management CEO Mary Erdoes on Friday gave a bullish case for stocks, saying optimism about the booming market isn't impractical.

"Just because people are optimistic doesn't mean they're unrealistic," Erdoes told "Squawk Box" from the World Economic Forum in Davos, Switzerland.

Erdoes spoke as U.S. stock futures were higher, with the Dow, S&P 500 and Nasdaq on track for a fourth straight positive week. The Dow and the S&P 500 haven't had back-to-back session losses so far in 2018, marking the longest such stretch in history at the beginning of a year.

The stock market has been strong for such an extended period of time, people are worried about a major pullback, Erdoes argued.

"We will have a 5 percent correction. That's normal," said Erdoes, who leads J.P. Morgan's strategic partnership with Highbridge Capital Management and Gavea Investimentos. "That doesn't mean you shouldn't be invested in the market."

A man incarnating a 'Toro de Fuego' (bull of fire) chases people during the San Fermin Festival on July 8, 2017, in Pamplona, Spain.
Ander Gillenea | AFP | Getty Images
A man incarnating a 'Toro de Fuego' (bull of fire) chases people during the San Fermin Festival on July 8, 2017, in Pamplona, Spain.

Erdoes said the fears cause investors to "walk away, and say, 'Oh, I should stay in cash or I should be out of the markets.'"

On Tuesday from Davos, Bridgewater Associates founder Ray Dalio predicted investors will see "a market blowoff" rally, fueled by cash from banks, corporations and investors.

"If you're holding cash, you're going to feel pretty stupid," said Dalio, whose firm Bridgewater is the world's largest hedge fund, managing about $160 billion.

Not everyone at Davos was bullish about the market.

In fact, American billionaire real estate investor Jeff Greene said Friday the titans of global finance at the forum are too optimistic about the stock market.

"There are 2,000 people [here], and I don't think I've met one person who's been negative," he told CNBC.

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