Investing in safe havens may not be the wisest move to wait out a summer swoon, Jim Paulsen, chief investment strategist at Wells Capital Management, told CNBC.

Paulsen is underweight high-quality bonds, gold, dividend payers, consumer staples and utilities and large cap stocks.

“They could underperform significantly if confidence steadily rises,” Paulsen explained.

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During the past few recoveries, the third year was the year that confidence started to improve. At the end of this month, the U.S. is in year three of the recovery, according to Paulsen.

“That’s going to be a big theme,” he predicted. “Steadily rising confidence. And it will come when most investors are putting money in the market expecting another kind of environment altogether.”

Paulsen noted that the problems in Europe will not affect confidence.

"Europe is no longer a crisis status. A crisis is all about surprise and we are two and a half years into this," he said. "We are long past that type of status. It's more of a chronic problem."

Paulsen compared Europe with how Japan was in the early 1990s.

“Japan was the world’s second largest economy at the time and while Japan went into depression, the rest of the world enjoyed an economic boom," he stated. "Today, the rest of the world can go on without Europe.

"Europe is going to be with us forever, but our sensitivity to it is going to decay," he added.

As an example, Paulsen noted that the European Financial Conditions Index collapsed last year during the investor fears of Europe and then recovered through March.

"Even though we've had this reintensification of fears about Europe, that index hasn't given up any of its gains," he said.

"We've just gone through another panic period and you've bid up the price of all the safe havens — consumer staples, utilities, health care, dividend payers," he stated. "I think it's a good time to lighten up on those and look at these things that have been beat up."

Paulsen said he is overweight S&P Industrials, materials and commodities.

If we follow what has happened the past few years, with a spring swoon and late-year recovery, he explained, "we know what happens next. Investors are going to dump safe havens and move to cyclicality."

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