Director of equity research, Fusion IQ
We’re holding 40 percent bonds, 25 percent cash, and the balance equities. That’s a fairly defensive posture for us, and it reflects an increasing possibility of recession over the next 12 to 18 months. What will cause the next recession will be a slowdown in the post-credit crisis recovery, likely caused by self-induced austerity, the end of Fed accommodations, or even falling corporate profits. If that were to occur, history suggests that the S&P 500 could see a 25 percent to 35 percent correction. We continue to like health care, with three specific ways to gain exposure to it, ranging from conservative to aggressive: Health Care Select Sector SPDR is an ETF that holds large-cap health-care-related names. SPDR S&P Biotech ETF holds companies of all sizes that work on new molecules, genetics, etc. Finally, you can buy in-dividual stocks such as Johnson & Johnson, Merck, Celgene, and Sanofi-Aventis.