Chance of a recession by 2022 is 70 percent, according to this major investment firm

Investors should be on guard for a recession in the next five years by stockpiling cash for the day when stocks and bonds — as they always do — go on sale.

So says Pacific Management Investment Co., the bond mutual fund giant known as Pimco.

“Investors should use cyclical rallies to build cash to deploy when markets correct and risks are re-priced,” according to Pimco’s annual “secular outlook” report released Wednesday.

The asset firm, with $1.51 trillion under management, puts the risk of recession at 70 percent over the next half-decade.

In the short run, it predicts passage of President Trump’s proposed tax package that will be “light on reform” and tilted toward tax cuts.

Despite “a world of insecure stability,” the report, published for a 36th consecutive year, sees the survival of the euro currency. It bets that Italy stays in the euro zone and forecasts 2 percent growth and 2 percent inflation for the United States.

“All three key risks that we saw on the horizon — elevated and rising debt levels, monetary policy exhaustion and the ascent of populism — have either materialized or become more real,” the report said. “Who would have thought that the U.K. would vote for Brexit, Donald Trump would be elected president, Italy would vote ‘no’ on reform, and that markets would like it?”

The report is a product of the investment firm’s three-day forum in May that included Pimco investors, analysts, executives and speakers, including former treasury secretary Lawrence H. Summers, former Federal Reserve chairman Ben S. Bernanke and former European Central Bank president Jean-Claude Trichet.

Stocks and bonds are expensive due to “lots of good news” priced into markets, according to Pimco. Stocks have climbed to record highs over the past few months, fueled by expectations that Trump would promote pro-business policies and expectations. The market also benefited by strong first-quarter corporate earnings.