Cheap money, one of the prime elements in the stock market boom of the last decade or almost any bull market, can’t last. It’s time to put more hard assets in the average portfolio.

That was the warning of 3Edge Asset Management managers in a news conference in Manhattan on Wednesday. They were optimistic on stocks in 2017, but earlier this year began cutting back, they said.

What could go wrong with the wonderful bull market predictions of many stock market observers over the last year or so?

The argument against a continued bull run is that the debt policies of governments and individuals have just about reached their effective limits. The equities markets are no longer as strong because it is unlikely that the cheap money policies that have sustained them for about a decade will continue, 3Edge officials said.

“It is a possibility that the economic cycle may again be moving towards a period when inflation, which has been very low for a long time, may begin to increase. This could mean we may increase our exposure to real assets including commodities and gold assets among others,” said DeFred Folts, chief investment strategist for 3Edge.

Firm officials also argued that advisors in the near term should go easy on equities and even think about bonds. The bond bull market of the last few decades is over, argued Stephen Cucchiaro, president and chief investment officer of the firm. He said possibly the same can be said of stocks.

“We are no longer looking at a positive outlook for equities. We are fairly defensively positioned right now,” he added.

What are the danger signs? What changed his mind on the outlook for stocks?

He said that, looking beyond the traditional P/E ratios, he found some disturbing signs in money markets at the beginning of the year.

“Yield curves, while still not inverted, were narrowed,” he said. “Credit spreads were no longer narrow but began to widen slightly.” Added to that were record amounts of private and public debt after a decade of easy money. These could force many governments into raising interest rates beyond where they might want because bond buyers will demand higher rates.

Another bad signal, Cucchiaro contended, is the approximately $200 trillion in financial products and $350 trillion in debt instruments tied to the three-month Libor index. What if rates, which most experts agree will continue to rise several times this year, suddenly spiked as they did in the stagflation crisis of the late 1970s and early 1980s?

“This would be a big deal if Libor starts accelerating; it would have a negative impact on corporations that have debt tied to Libor,” Cucchiaro said.

This, he said, argues for going softly with stocks.

“And when you consider all the economic and fundamental factors, you would give [equities] a neutral rating,” he said.

Cucchiaro said 3Edge has not moved totally out of stocks, but it has greatly reduced them in its typical portfolio over the last year.

His conservative portfolio, for example, was at 30 percent equities last year, but is now at 6 percent. In the moderate portfolio, the percentage of equities has dropped from 60 percent to 20 percent. In the firm’s aggressive portfolio—in which investors are assumed to have longer time horizons and can absorb short-term losses—stocks have gone from 80 percent to 35 percent, Cucchiaro said.

In fleeing from dangerous stocks, what should investors do?

The 3Edge team contended that, in taking a defensive investing position, advisors should use gold and cash. While stocks historically outperform gold, Cucchiaro said, there are 10- to 15-year periods in which gold wins because stocks are overvalued. The latter happened in 1929, 1969 and at the turn of the century, just before the tech stock blowup.

He didn’t predict another crash. But he said “this is not the time to be bold in equity markets.”