Investment strategist Jim Paulsen contends that there are many reasons to still love this bull market, which some experts warn could be on its last legs.

Among his laundry list of reasons to remain optimistic is that President Donald Trump “could become a positive surprise for the financial markets.”

“There are good reasons to be cautious. After all, this bull market is already one of the longest on record, valuations are stretched, volatility has been uncommonly low suggesting investor complacency, U.S. real GDP growth slowed significantly in the first quarter, and the Federal Reserve has raised the Fed funds rate twice since December, threatens more hikes yet this year and is about to begin to shrink its balance sheet,” the former chief investment strategist for Wells Capital Management wrote for CNBC.com.

“For these reasons, some near-term turbulence in the stock market would certainly not be shocking. However, rather than suggesting increased investor caution is warranted, we believe the trendless stock market of the last few months is underscored by several factors combining to refresh this rally,” wrote Paulsen, who has spent more than three decades on Wall Street.

He said since market optimism and investor expectations about the Trump administration “have evaporated” amid uncertainty over tax and healthcare reform, the market could be pleasantly surprised if the president achieves his goals.

“Many believed the post-election surge in the stock market was due to expectations of forthcoming government policy changes which would prove favorable for the financial markets. The ‘Trump Bump,’ therefore, was widely perceived as a risk for the stock market should policy changes not occur as fast as most anticipated. Currently, though, optimism surrounding the Trump administration has evaporated and few expect any near-term positive policy outcomes,” he wrote.

“Indeed, many now fear the administration has become a quagmire. For much of this year, investors feared the ‘Trump Bump’ would unravel. Now, however, with expectations dashed, perhaps Trump could become a positive surprise for the financial markets,” he predicted.

To be sure, investors last week fled risky assets amid uncertainty about Trump's ability to deliver on his tax and banking reforms and infrastructure spending, as the Dow industrials plunged more than 370 points last Wednesday.

Reports that Trump asked then-Federal Bureau of Investigation Director James Comey to end a probe into the former national security adviser have raised questions over whether Trump tried to interfere with a federal investigation, Reuters said.

Optimism over pro-growth economic policies under Trump helped drive a sharp rally in U.S. stocks after the Nov. 8 U.S. election. 

Let’s spotlight two of his other reasons to remain fond of this bull market:

Skittish Investor Sentiment

“A significant slowing in U.S. economic reports in the first quarter, widespread disappointment in the lack of successful policy results from the new administration, increasing concern about high valuations and worries surrounding the Fed as it finally begins to normalize monetary policy have kept investor sentiment relatively cautious,” he said.

“While bullishness may have risen briefly during the post-election rally, it has faded in recent months,” he wrote.  “Despite recent record highs in the U.S. stock market, domestic equity fund flows remain lethargic relative to strong bond fund flows. In our view, rather than being overly giddy, investor sentiment probably has room to improve.”

US Economic Momentum Could Surprise Again

“As economic reports have turned disappointing, expectations for future growth have declined. This increases the possibility U.S. economic surprises could again turn positive later this and provide a foundation for yet another leg higher in the stock market,” he wrote.

In conclusion, Paulsen urged savvy investors to “remain over-weighted to stocks focusing primarily on international markets (both ex-U.S. developed and emerging stocks), small and mid-capitalization stocks and the more cyclical sectors of the stock market including materials, energy, industrials, financials and technology.”