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Jim Paulsen: Don't expect gains in 2016

2016 may not be a very good year, strategists told CNBC on Monday.

"I think we're going to have another flat year in the stock market," Wells Capital Management's Jim Paulsen told CNBC's "Squawk Box." "We had a pause this year in the stock market, but it wasn't a refreshing pause. We didn't do anything constructive. We didn't bring down valuations, we didn't really gut-check investment sentiment. We had a correction, but it was so brief that you reinforced the buy-on-the-dip mentality."

Both the S&P 500 and the Dow Jones industrial average are down more than 2.5 percent for 2015, while the Nasdaq composite is up about 4 percent.

"It's a challenging environment and I think we're going to have another year of flatness," Paulsen said. "That could come out in a sharp drop in the market again where we come to lower multiples more supportable with rising interest rates."

The Federal Reserve last Wednesday raised interest rates for the first time in nearly a decade. Investors initially interpreted the rate hike as positive, with the Dow gaining more than 200 points. However, fear quickly crept into the markets, with equities posting back-to-back down sessions on Thursday and Friday.

"The Fed is raising rates in a very sluggish, mediocre, global economy," Lindsey Group chief market analyst Peter Boockvar told "Squawk Box" in another interview. "At the same time, asset prices over the past six years have gotten very expensive."

In the same interview, Steven Ricchiuto, chief U.S. economist at Mizuho Securities, also was down on 2016.

"What Janet Yellen told everyone the other day was that 'this is as good as it's going to get.' That's a problem because 'as good as it's going to get' has left us with an overvalued market," he said.

"We have very limited pricing power in corporate America, and she's basically telling you that we're not going to get a stronger growth environment coming out of this because they're going to cap it," he said. "The net result is it doesn't look particularly good for valuations."

U.S. equities have taken a substantial hit over the last six months, with the three major indexes falling over 3.75 percent. Stocks are also down more than 3 percent in the last month.

"I think what we've seen over the past couple of months is just a dress rehearsal for next year," Boockvar said.

Hans Olsen, global head of investment strategy at Stifel, also is pessimistic.

"The reaction we saw last week was a catch-up of a bunch of other things. Revenues have stalled, earnings have really struggled, the peak margins are coming in," he told "Squawk Box." "Throw in the beginning of policy normalization, and you've got some material headwinds going into 2016. At best, I think you're hoping for a total return on the order of sub 5 percent."