Investors are clinging to their cash even as stocks hit all-time highs, a sign that there’s plenty of room for the market to extend those gains, according to Morgan Stanley’s Andrew Slimmon.

Low expectations for equities and the preference for a 5% to 6% yield from Treasury bills suggests that markets are still in the “fear” part of the current cycle, the senior portfolio manager at the bank’s investment management arm said Tuesday in an interview with Bloomberg Television. 

“That is symptomatic of the early stage of a bull market,” Slimmon said. “In the later stages of a bull market, people expect higher returns.”

The S&P 500 Index is up 11% this year as economic data and corporate earnings remain strong, and traders are still betting on the Federal Reserve to start cutting rates this year. But conviction remains low among investors, as inflows to money markets increased by more than $16 billion in the week ended May 15 to to over $6 trillion, according to the latest data from the Investment Company Institute.

U.S. stocks rose to another record on Tuesday as investors awaited a pivotal earnings report from chipmaker Nvidia Corp., the artificial intelligence darling that has comprised roughly a quarter of the S&P 500’s gain this year.

An abundance of cash still waiting to be deployed is the catalyst for further gains, in Slimmon’s view, as the fear of missing out—or FOMO—can be powerful if stocks continue to rise. That will be an even greater incentive than a drop in Treasury yields, he said. The portfolio manager was correctly optimistic last year when the S&P 500 soared 24%.

“That’s a classic fear-to-greed cycle, and to me it just says we’re still in the fear stage,” he said. “I am completely convinced that the only thing that is going to get people off of the sidelines is ever higher returns for stocks.”

Expectations for continued growth in corporate earnings and easing inflation should prompt investors to get more optimistic, he added. That’s not to say the rise will be smooth, with Slimmon expecting pullbacks, including one as soon as this summer during a period of seasonal weakness.

His remarks come one day after his Morgan Stanley colleague Mike Wilson, the firm’s leading equity strategist, raised his 12-month forecast for the S&P 500.

This article was provided by Bloomberg News.