On CNBC's "Halftime Report," Yardeni, president of Yardeni Research, said "it was basically biotech and internet stocks" that saw a pullback in stocks that were "extremely highly valued."
Yardeni saw the sell-off as healthy for the market.
"I do think this internal correction actually increases the longevity of the secular bull market. The more we can internally correct this market, the more that high-priced stuff can become a little cheaper and the money doesn't leave the market but actually goes to some of the areas that have been left behind," he said. "This is a very broad bull market. It's a very democratic market. It doesn't leave too much behind."
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Yardeni added that the mistake bearish investors made was fighting the Federal Reserve's monetary policies.
"The bears, as you know, aren't growling as loudly as they used to. For the past five years, I've been listening to them very carefully and trying to figure out: What are they missing? And I think many of them made the mistake of just fighting the Fed, fighting the central banks," he said.
Yardeni noted that the likes of the Fed, the European Central Bank and the Bank of Japan have "trillions of their own currencies that they've been willing to spend to try to keep the economy growing and to avoid deflation, and a lot of that liquidity has gone into the financial markets and to asset prices generally, but certainly into stock prices. That's almost the first thing you learn in investment school is don't fight the central bank."
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Yardeni held on to his S&P 500 year-end price target above 2,000.
"This market's not cheap. I've been bullish for five years, but these things don't last forever," he said. "At this point, I think if we can just get stocks to increase at the same pace as earnings—and I think earnings will grow—I think we'll have a pretty decent year of maybe 10 percent increase for the S&P 500."
— By CNBC's Bruno J. Navarro. Follow him on Twitter @Bruno_J_Navarro.