A 10 to 15% stock market correction is virtually unavoidable, Blackstone's Byron Wien warns

The early days of 2018 may be pointing to another monster year for gains, but Wall Street legend Byron Wien believes the rally is in a danger zone.

Wien, vice chairman of Blackstone Private Wealth Solutions, is warning investors that a 10 to 15 percent stock market pullback is virtually unavoidable.

"Sentiment is bordering on the euphoric state. When investors think they can't get into trouble, they usually do," Wien said Wednesday on CNBC's "Trading Nation." "We're vulnerable to a correction."

Wien's comments came as stocks failed to extend their six-day win streak. The Dow, S&P 500 and Nasdaq all closed lower for the first time this year. Bond yields set another round of multiyear highs — which could indicate inflation could emerge as a headwind.

"The market needs to have some kind of correction. There are some excesses in it. So I fully expect it to happen," he said.

But Wien, who detects frothiness among technology stocks in particular, predicts the markets would recover quickly.

"The year will end higher than it started no matter what happens along the way," he said, adding that he'd "absolutely buy" stocks on a correction because underlying fundamentals remain strong.

Ultimately, he sees the S&P 500 in 2018 ending 9 percent higher than current levels as long as the 10-year Treasury yield stays below 3 percent.

For now, Wien is shifting his investment strategy to the overseas markets.

"India is still attractive. I think Japan is still attractive," Wien said.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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