US Markets

Market will rally 15 percent or more in 2017, expert predicts

Market will be up 15% or better in 2017: Pro
Market will be up 15% or better in 2017: Pro

It should be a good time for the market next year, with equities moving up at least another 15 percent, investment expert Jerry Castellini told CNBC on Thursday.

He believes while there will be some bumpiness in the first few weeks of January, it will then be "off to the races" with recent headwinds like China and Europe going away and a massive move to rebalance portfolios.

"People are not positioned for a better economy, for better valuations and for an overall positive investment environment, and that's got to get started and it's got to get started soon," the chief investment officer of CastleArk Management said in an interview with CNBC's "Power Lunch."

Castellini is anticipating the Dow Jones industrial average will hit 20,000 in January and the will go over 2,500 next year. In fact, he sees the market's run going well into the next decade.

However, Doug Gordon, senior portfolio manager at Russell Investments, isn't banking on a 15 percent return in 2017.

"We're looking forward to a more challenged return environment, a lower return that puts an imperative on portfolios to find other sources to meet their long-term investment goals," he told "Power Lunch."

Gordon likes non-U.S. developed markets like Europe and Japan, which have accommodative monetary policies and will benefit from a stronger U.S. dollar.

He also has his eye on emerging markets, but because of concerns over the strong dollar, he would concentrate on individual nations, not the market as a whole.

Dow 20,000 unlikely again today
Dow 20,000 unlikely again today

Matt Maley, managing director at Miller Tabak, is also cautious heading into the new year. That's because the market is getting very extended on a technical basis and has valuations that are stretched, he said.

He believes the dollar is very "overbought" and "overloved," while the bond market is "overhated" and "overshorted."

"Some of the very crowded trades, like being short the bond market, being long the bank stocks, being long the Russell 2000, things like that, may be under some near-term pressure as we move into the new year and not just for a couple weeks, but maybe even for six weeks to two months," Maley said in an interview with "Power Lunch."

He thinks it's a good idea to hedge right now in the options market.

"Buying some puts or buying some calls in the bond market can be very inexpensive and a nice way to hold on to those positions over the long term but still protect yourself at the beginning of the year," he said.

Meanwhile, Castellini thinks any downside risk next year won't come from China, Europe or the Middle East. Instead, it will come from a place where people have not been focused, he said.

"That black swan, if one comes, is going to be ... either a terrorist act in the United States or some bank or financial situation, some type of meltdown that's unforeseeable today," Castellini said.

While those scenarios are always there, he believes its likely people have discounted that type of downside, he explained.

CNBC's Jennet Chin contributed to this report.