Interest-rate volatility could be a real stinger for U.S. stocks, and investors may be ill-prepared to handle potentially steep declines, according to a wealth advisor. U.S. stocks could see 30 to 40 percent slide over time, according to Rainer Michael Preiss, executive director at Taurus Wealth Advisors. He did not specify a timeline for such a correction to happen. Preiss argued on CNBC's "Capital Connection" on Tuesday that his view is not pessimistic. "I would rather use the word realistic," he said. "Don't forget that we are (at a) late stage cycle. Everybody has been conditioned to buy the debt. That was the right strategy; it was a bit like the analogy, the narrative, that equities are cheap because bonds are even more mis-priced."

US Treasurys on a tear

He explained that there are signs of potential re-adjustment in the fixed income markets that over time would likely lead to a higher cost of capital. An environment where there is both monetary and fiscal stimulus could be inflationary, he said, adding that a 3 percent yield on the 10-year U.S. Treasury note is considered "the line in the sand" for more re-pricing in the global financial market. Preiss added that investors are nervous that further increase in bond yields could lead to correction in equities and in corporate debt.