NEW YORK (TheStreet) -- The anxiety running through the market is causing a cyclical correction that could last through the end of 2015. Fortunately, the coming year looks profitable once the storm passes, said Bill Greiner, chief investment strategist for Mariner Holdings.

In Greiner's view, global market valuations currently appear to be 5% to 10% lower than has been the case, on average, over the last 20-year period. That said, he is concerned over the very short term about overall market volatility and seasonal trading patterns which suggest further downside pressures may continue.

For investors looking to put money to work during this pullback, Greiner said U.S. small-caps are a good place to start due to the lack of international exposure. "We think over the next four quarters there is going to be adjustments to the downside in earnings flow and it's going to be with international companies," said Greiner, who is also bearish on emerging markets.

Greiner said investors looking for yield should avoid junk bonds and start picking away at master limited partnerships.
 
"We feel that this area has been washed out," said Greiner. "They may continue to see some downside pressure with oil prices going down further, but nonetheless we believe values are starting to poke their heads above the water there."
 
As for the current Federal Reserve conundrum over a potential interest rate hike, Greiner said he expects the Federal Reserve to "normalize" interest rate policy over the next 12 months, with at least a pair of rate increases totaling 50 to 75 basis points.
 
As for his fixed-income outlook, Greiner believes the world's bond markets are on the opposite side of the "secular" bull market bond prices have experienced since the early 1980's when inflation and interest rates were in double-digit territory. 

Over a long-term period, he said "real" Fed funds rates have averaged 60 basis points.  If inflation is systemically at the Fed's target of 2%, this means the "normalization" of interest rates may eventually move short term rates to 2.6% in the U.S.  Throw in a more "normalized" term structure to interest rates and Greiner said it is conceivable that the 10-year U.S. Treasury yield may eventually rise to 4% to 4.5%.

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