Jim Paulsen: Don't expect gains in 2016

"I think we're going to have another flat year in the stock market," Wells Capital Management's Jim Paulsen told CNBC's "Squawk Box." "We had a pause this year in the stock market, but it wasn't a refreshing pause. We didn't do anything constructive. We didn't bring down valuations, we didn't really gut-check investment sentiment. We had a correction, but it was so brief that you reinforced the buy-on-the-dip mentality."

Both the S&P 500 and the Dow Jones industrial average are down more than 2.5 percent for 2015, while the Nasdaq composite is up about 4 percent.

"It's a challenging environment and I think we're going to have another year of flatness," Paulsen said. "That could come out in a sharp drop in the market again where we come to lower multiples more supportable with rising interest rates."

The Federal Reserve last Wednesday raised interest rates for the first time in nearly a decade. Investors initially interpreted the rate hike as positive, with the Dow gaining more than 200 points. However, fear quickly crept into the markets, with equities posting back-to-back down sessions on Thursday and Friday.

"The Fed is raising rates in a very sluggish, mediocre, global economy," Lindsey Group chief market analyst Peter Boockvar told "Squawk Box" in another interview. "At the same time, asset prices over the past six years have gotten very expensive."