For one, international markets should be “maximally overweighted” relative to U.S. stocks, Paulsen said.
“Most of issues are more pronounced here than they are abroad. Overseas markets are under-owned, undervalued, they have more accommodative policy officials, a number of good attributes,” he noted.
Paulsen would also raise a little cash, which would come in handy to scoop up opportunities during the next sell-off.
“If we do hit another air pocket and go below February lows, there’s going to be a lot of panic and you’ll have some dry powder available as people give away good assets.”
He would add a little gold for the same reason, since panic from a sell-off would send the precious metal higher.
A commodity exchange-traded fund would also be a good idea because full employment and a high gross domestic product number, perhaps at 5 percent, would be beneficial for commodities, he said.
Second-quarter economic growth numbers are due out Friday. Economists expect an expansion of 3.8 percent, while CNBC’s Rapid Update tracker projects GDP to rise 4.2 percent in the quarter.
When it comes to U.S. stocks, Paulsen would diversify his sector exposure and buy inflationary beneficiaries like industrials, energy and materials.
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