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Trump rally less important to retirement than fundamentals, Jim Paulsen says

Stocks have taken off since Election Day. With Inauguration Day less than two weeks away—and with the Dow Jones Industrial Average repeatedly failing at the 20,000 mark—can the "Trump Rally" continue?

Investors have moved from trading on expectations of future Federal Reserve policy to hopes of a more business-friendly environment, combined with the near certainty of tax reform. Most Wall Street watchers think the rally still has legs.

"I think some of the excitement of the market certainly had to do with the Trump presidency." Jim Paulsen, Chief Investment Strategist at Wells Capital Management, told CNBC's "On the Money" in an interview.

"I just think a number of things are coming together including the fact that we've kind of got a more pro-biz president promising less regulation, and maybe lower corporate taxes, adding to the excitement," Paulsen added.

Friday featured new record closes for both S&P 500 Index and the Nasdaq Composite, while the Dow is up nearly nine percent since the election. But market watchers are still waiting, and have been for more than two weeks, for the Dow to clear the milestone 20,000 mark. On Friday, the index fell just 0.37 points short.

Paulsen calls Dow 20K a "bit of a positive" and a "headline," but said he's focused on other data.

"I think the fundamentals that are going on are much more important than breaking the 20,000 barrier. Hopefully we'll do it soon and move on the next one," he said.

For investors, one looming question with the new administration is whether they should make changes to their retirement savings strategy.

"I don't know if I'd make big changes on the basis of a new administration, but I do think you might consider some changes based on where we are in this recovery," Paulsen told CNBC.

While crediting the Trump impact, Paulsen argued that "most of it had to do with really good improvement in the fundamentals here." He cited the increase in economic growth over 3 percent, improvement in manufacturing and "better growth abroad" as signs that "this recovery is broadening out and touching many different economies."

Yet moving forward, "the rest of this recovery is going to be more inflationary," with a more "upward trend of interest rates" and the Fed "tightening, not easing," Paulsen added. What does that mean for investors' money plans over the next four years?

For U.S. portfolios, Paulsen suggested "reducing your bond exposure a little bit and having more equities."

Since he believes the dollar will be weakening, not strengthening, he suggested it might be time forsome broader diversification.

Paulsen thinks in that dollar environment, foreign stocks could do well.

"I would maybe look in the equity market in international markets, emerging markets, as opposed to here," he said. "I might even look at adding some real assets to your portfolio for the balance of this recovery."

On the Money airs on CNBC Saturday at 5:30 am ET, or check listings for air times in local markets.