It's time for investors to build out their cash and gold positions, said JPMorgan chief strategist Marko Kolanovic. Stocks have enjoyed a stellar run this year. The S & P 500 is standing near year-to-date highs, after notching its best week since March last week on hopes of a debt ceiling resolution. Meanwhile, the tech-heavy Nasdaq, which has outpaced the other two benchmarks, closed Monday at its highest level since August . However, the rally only highlights the risks for equity investors going forward, Kolanovic told clients in a Tuesday note. Not only are traders pricing in too much optimism around a debt ceiling deal, but they're also pricing in potential interest-rate cuts from the Federal Reserve later this year without giving enough weight to more hawkish commentary from central bankers. "This gap is likely to close at the expense of equities, as rate cuts will likely only transpire from a risk off event, and if rates stay higher they should weigh on equity multiples and economic activity," Kolanovic said. Given this, the chief strategist recommends investors take a more defensive stance in their portfolios, saying he favors cash and gold over energy, equities and credit. In his model portfolio, Kolanovic raised his cash weighting to 2% by trimming his equities and corporate bonds' allocation by one percentage point each. Meanwhile, in commodities, he added to his gold allocation by cutting two percentage points from his energy holdings, according to the note. "Even aside from the debt ceiling issue, we maintain that the risk-reward for equities is poor given elevated risk of recession, stretched valuations, high rates and tightening liquidity, and we favor cash over equities at the former's ~5% yields," Kolanovic wrote. "Within commodities, we rotate from energy (given recession risks and a potentially fading China growth impulse), to gold following its recent sell-off (on its safe-haven demand and as a debt ceiling hedge)," he added.