Why Doll and Wien underestimated stock strength

If you have cash, don't stay out of market: Wien

Two market veterans—who had been cautiously optimistic at the start of 2013—told CNBC on Wednesday they underestimated the impact the Federal Reserve and its $85 billion monthly quantitative easing bond purchases would have on the markets.

"I didn't factor in the enormous power that the monetary easing was going to have on the equity market," said Byron Wien, vice chairman at Blackstone Advisory Partners. Only a quarter of all that QE has gone into the real economy, he added.

In the same "Squawk Box" interview, Nuveen Asset Management Chief Equity Strategist Bob Doll noted, "Our view this year was, 'Muddle through economy [and] grind higher equity market.' A fairer assessment would have been, 'Muddle through economy and gallop higher equity market.'"

On Tuesday, the Dow Jones Industrial Average set its 43rd new high of the year, closing at 16,072. The Nasdq Composite Index powered higher to its first close above 4,000 in 13 years.

Year to date, the Dow industrials have gained nearly 23 percent as of Tuesday's close, while the Nasdaq has increased more than 33 percent.

With stocks hitting daily new highs, many market watchers are concerned that a correction may be coming.

But Doll said individual investors should not try to time the market. "Unless it's fundamentally based, I think [any correction] would be fairly quick, as we've seen in … the 4.5 percent [one] we had not too long ago and the 7.5 percent we had" around the initial tapering talk.

Wien said: "If you have a little bit of cash, you probably want to keep it and wait and see if the correction occurs. But if you have a lot of cash, I think you probably participate in this market. You don't stay out of the market waiting for the moment of truth."

Investors are hanging on every word out of the Fed on when it might start scaling back QE. Central bank policymakers are set to meet next in December.

"Everyone assumes that once the Fed tapers, the market is going to decline," Wien said. "But everyone knows tapering is coming. So maybe that gets discounted before it really happens."

Doll summed it up by saying when the Fed is supportive of an economic acceleration, it's "hard for me not to want to be in stocks."

By CNBC's Matthew J. Belvedere. Follow him on Twitter @Matt_SquawkCNBC.