NEW YORK (TheStreet) -- While the universal opinion says the dollar is going higher, Wells Capital Management Chief Investment Strategist Jim Paulsen believes it will go lower in the next year, he said in his interview on CNBC's "Power Lunch" Monday afternoon.
"The biggest thing to me is the dollar right now," he said.
Because the majority hold the opinion that the dollar will strengthen in the coming months, investors are pulling out of international and emerging markets, which is why those markets are getting "slammed" this week, Paulsen explained. It's also why materials and energy stocks aren't doing "as well as you might expect."
"I would take advantage of that," he said. Investors can do so by selling "a little bit" of financials, small caps and industrials and putting some of that money into the international and emerging markets, he recommended. "Because I think the big surprise over the next 12 months is that the dollar is going to come down and not up."
The dollar is in for a surprise turn around even though the Fed is expected to raise rates at its December meeting because inflationary expectations are "accelerating" and "we're getting to a point where the Fed is behind the curve," which would be a negative for the U.S. dollar, Paulsen explained.