Geoff Wilson, who founded fund manager Wilson Asset Management, said he wants to see more evidence of "pain" among investors before his firm starts ploughing its cash back into the Australian stock market.
"I don’t think there’s enough pain at the moment," Mr Wilson said.
"I love the Baron Rothschild quote: 'Buy when the blood runs in the streets, even when if the blood is your own.' As an investor in the market, I don’t see blood."
Mr Wilson pointed out that bear markets in Australian shares have typically had 4.8 rallies of five per cent or more before their official end (ie, when the market regains its peak after a 20 per cent decline).
"We’re just on our third [rally now] – we’ve already had two," Mr Wilson said.
However, investors want to make sure that they are net buyers throughout a bear market, he added.
"When the market falls, I get excited. It’s not about how much money you lose in the bear market, it’s how quickly you can make the money back."
He added: "The reason I’m not incredibly bullish at the moment is because there’s not enough pain out there."
"When we’re more confident that things are really grim from a bear market perspective, then we’ll be trying to position our portfolio – maybe five or 10 per cent of it – to benefit," Mr Wilson said.
The first companies Wilson Asset Management will buy in will be the four majors banks and Macquarie, because they will be "the first leg out" of the bear market, he said.
"It will be the large financials, it will be the large liquid stocks [that will recover first]. And it’s only when the market is maturing, that it’s the smaller stocks," Mr Wilson added.