Wharton's Jeremy Siegel: A market correction could be just what investors need

Key Points
  • "Too many" momentum traders pushed the stock market to dizzying heights, Siegel said Monday on CNBC.
  • A correction of 10 percent could be in the cards and wouldn't be a terrible thing for investors, he added.
Friday's sell-off keeps investors honest: Jeremy Siegel

The market pullback doesn't signal a bear market, but possibly a correction coming that will chase out the speculators, according to Wharton School finance professor Jeremy Siegel.

"We just had too many momentum players," Siegel said Monday on CNBC's "Squawk on the Street." "The rally just got a little overexcited."

Higher interest rates will continue to be a challenge for the stock market this year, he added, but strong corporate profits will be a positive. Even if the market did fall 10 percent, what would be a "correction," in trader parlance, that wouldn't be a terrible thing for investors, Siegel said.

The added 32 percent from the November election through Thursday, so even a 10 percent decline "isn't a disaster."

Last week, Siegel told CNBC that investors got too bullish and "overdid" it, pushing the Dow Jones industrial average above 26,600 last month before the sell-off. In morning trading in New York on Monday the Dow shed about 83 points after falling 665 on Friday.

Siegel said Monday that the markets are fully valued. "I'd like a little correction to keep people honest," he said. But as he sees it there's "no bear market in 2018."