International investor Jim Rogers says the SEC allegations against Goldman Sachs could act as the catalyst to send markets downward regardless of the outcome of the charges.
"Markets are overdue for a correction," says Rogers, chairman of Rogers Holdings.
"When the markets are ready for a correction, something will come along ... the straw that breaks the camel's back," he told CNBC.
"Any market that goes up this much, this fast, this steadily without correction — it's not normal. When that sort of things happens, the market could be setting itself up for a 15 to 20 percent correction."
Rogers wasn't surprised by the SEC's actions, pointing out that these kinds of investigations usually take place after major financial meltdowns
"When the tide goes out, you see who's swimming naked,” Rogers said, quoting Warren Buffett. “I'm sure there will be many, many more skeletons to come."
Though Rogers believes this could well be the beginning of a correction, he doesn’t advise selling just yet. However, he says investors should start thinking about adding shorts to their portfolio, and suggested shorting indexes, bank stocks included.
As usual, Rogers strongly suggests buying gold. "Go back to 2008, you have AIG go broke, Lehman go broke,” he notes.
“There was a gigantic forced liquidation in commodities — not because of fundamentals, but because people were forced to sell ... it would be an opportunity."