We're in the 'early innings' of a bull market, and any temporary correction will be just a buying opportunity, Leuthold strategy chief Jim Paulsen says

• Jim Paulsen said during a Leuthold Group webinar on Thursday that he believes stocks are in the early innings of a bull market.
• The chief investment strategist said investors should be prepared for more than one correction, but they won't be permanent and could be buying opportunities.
• Paulsen added that economic indicators are showing signs that an economic rebound is beginning, and this rebound will be good for stocks.

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Jim Paulsen said he believes that signs are pointing to an economic expansion and that US stocks are in the "early innings" of a bull market. While he said it will take a few years for the economy to fully recover, he told a Leuthold Group webinar on Thursday, "I am bullish."

The chief investment strategist also said this doesn't mean there won't be any corrections. "Expect corrections. We're definitely going to get more than one of those and they'll be scary when they occur, " Paulsen said.

These corrections won't be "end game" for the cycle, though, and Paulsen sees them as buying opportunities.

One signal of this new bull market is what Paulsen calls the "divot repair." Paulsen said that the pandemic has created the deepest recession the US has ever had, and this large divot in the economy has created a huge upside opportunity for the future of the stock market.

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"Stocks react not to levels, they react to change in activity and there's huge possibilities to have positive change in economic activity if only because things are so bad right now," the strategist said.

Paulsen also said that he doesn't believe the stock market and economy are as disconnected as the mainstream believes. Core retail sales are back to all-time record highs, and PMI numbers, housing starts, and auto sales have begun to retrace, he said. Paulsen believes the economy has a lot of room to bounce back and "this bounce certainty is affecting stock prices."

The strategist said investors should continue to own growth stocks, like technology, but should also add broader market plays through small-cap stocks and cyclicals. The strategist echoed what he said previously on CNBC, which is that many cyclical stocks outperformed the overall S&P 500 since its March 23 low. Some indexes, like the Value Line equal-weighted index and small-cap index, haven't done that much worse than the tech sector of the S&P 500, Paulsen added.

A risk to his bullish view could be a mutation of the coronavirus, which would cause it to be significantly more lethal, Paulsen said. This could potentially lead to a depression, but he said he thinks a mutation is unlikely, and that the nation is learning how to coexist with the virus.

"I think we're much better prepared even if COVID continues well into next year," the strategist said.