Jim Paulsen Sees Correction Exceeding 10%, Sees Cyclicals, Small and Mid Caps Outperforming Large Caps and Tech

December 1, 2021 6:34 AM EST

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Jim Paulsen, a long-term market bull, believes markets will correct lower as we are “way overdue for a correction, and we’re going to get one,” he told CNBC.

Paulsen sees a 10% to 15% pullback as Fed prepares to accelerate tapering as inflation seems to be here to stay.

“I would be trying to diversify away from the S&P 500, which I think might take the brunt of it. I would spend more time on repositioning my portfolio — maybe taking advantage of how well tech and growth has done here in the last few months. Moving a little out of that,” he added.

While moving out of the tech and large caps, Paulsen expects small and mid-cap stocks, cyclicals, and international markets to outperform going forward.

“Look at the carnage in small caps and cyclicals. If you’ve been looking to buy that, I’d take advantage of the fear that’s out there now to maybe do that.”

His comments come after the S&P 500 closed nearly 2% lower to now trade 4% off the record highs.

S&P 500 futures are already up 1.1% in pre-open Wednesday.

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