The market may be in better shape than Wall Street thinks.
The Leuthold Group's Jim Paulsen believes investor angst over the coronavirus pandemic is overdone.
He predicts stocks will return to all-time highs sooner than it takes for the economy to recover.
"Fear is on steroids," the firm's chief investment strategist told CNBC's "Trading Nation" on Wednesday. "In the past where you had high levels of fear, that was typically a very good time to buy the stock market."
He lists widespread anxiety over losing life savings and jobs as classic characteristics of a recession. Not only are these elements present in the current downturn, there's a third element: Fear of losing your life or a loved one.
"The Federal Reserve and the Treasury are scared, as well. So, they're devoting unprecedented, massive policy support for risk assets," said Paulsen. "The combination of massive policy support and high levels of fear tell me that asset prices are probably undervalued."
On Wednesday, the major indexes tumbled after Federal Reserve Chair Jerome Powell warned the economy faces significant downside risks and uncertainty as the nation battles the virus.
But according to the longtime bull, the economy does not have to fire on all cylinders for the market to stage a comeback.
In a recent research note, Paulsen indicated stocks could still bounce even if the economy can't completely reopen.
"Should even a partial restart of the economy take place, the magnitude and diversity of current economic policies could be far more powerful in boosting economic growth and the stock market than appreciated," he wrote.
Paulsen acknowledges a tough road is ahead, especially for the travel and leisure portions of the economy. However, he predicts it won't sabotage the overall market.
"After the '08 [financial] crisis, there are still parts of the economy we don't have back. We don't have housing back anywhere close to what it was," Paulsen said. "The unemployment rate took forever to get back down to where it was in 2007. Yet that didn't stop the stock market from rising."