Swiss investment expert Marc Faber has secured his portfolio with a cash position of 20% ahead of an upcoming correction.
'Many indicators suggest that the economy is slowing down. I would not be surprised if the S&P 500 lost 20 to 30% over the next 18 to 24 months. If I were overweighted in equities, I would reduce my positioning and build up cash,' said Faber in an interview with Citywire Switzerland.
It was through selective sales that Faber, who is also known as 'Dr. Doom', built up his cash position.
He said: 'I expect markets to slow down. We were on a high in 2017 and the ratings, especially in the US, are very high. The markets will close more deeply at the end of the year than they are today.'
He also said that defensive sectors, such as consumer staples or utilities as well as interest-rate-sensitive stocks, are particularly attractive in terms of equities.
'The bond market is oversold, especially in the US, and could positively surprise investors and start a rally. This would then also benefit interest-sensitive securities,' said Faber.
He also said that there are deep-rooted problems in the financial industry. If interest rates rose significantly, he believes the markets would be heavily corrupted.
Faber, who lives in Thailand, also said he is sceptical about China, where he sees the potential for a credit bubble.