Former CEO of Citi Wealth Management

Recently, the possibility of an economic slowdown has worried traders and economists alike.

This month, the World Bank lowered its forecast for global economic growth. The Dow Jones (^DJI) fell 810 points, or 2.4%, on Tuesday in part on fears of a pullback. Deutsche Bank raised the possibility of a “major recession” as a result of the Federal Reserve raising interest rates and diminishing assets in a recent note.

In a new interview, Wall Street investment and investment veteran Sally Krauchek takes those concerns a step further, saying a recession is inevitable. While acknowledging that the timeline and nature of the economic downturn remain uncertain, Krawcheck urged investors to diversify their holdings in order to weather tough economic times.

“Sure, a recession is on the way,” says Krauchek, co-founder and CEO of an investment platform for women called Ellevest. “I don’t know when. Nobody knows when. Inflation will rise at some point [and] In another time “.

As the United States grapples with its worst bout of inflation in four decades, the Federal Reserve has signaled a strong series of price increases that may tame cost increases, but may also dampen economic growth.

Last Thursday, Federal Reserve Chairman Jerome Powell expressed his openness to a 50 basis point rate hike in May, noting the potential benefits of “front-loading” central bank policy moves.

David Volkerts-Landau, head of research at Deutsche Bank, warned in his note on Tuesday that the start of tight monetary policy “will push the economy into a major recession by late next year.”

To be sure, some observers dismissed fears of a recession. Canaccord strategist Tony Dwyer told CNBC last month that concern about a recession based on a reversal in parts of the Treasury yield curve is exaggerated.

Because “the market often goes wrong,” said Krauchek, who previously led the wealth management divisions of both Merrill Lynch and Citi, traders should diversify their portfolios as a hedge against a host of outcomes.

“A diversified portfolio is what matters because the number of active managers who call these things right, as you and I know, is a fraction of a single digit,” she says.

A TV screen on the floor of the New York Stock Exchange, Wednesday, March 16, 2022, shows the Federal Reserve’s rate decision. (Associated Press/Richard Drew)

Krawcheck began her career on Wall Street as a junior analyst at the Solomon Brothers in the late 1980s. Since then, it has experienced many downturns in its more than three decades of work in the financial industry, most notably the Great Recession of 2008, when she took a front row seat as CEO of Citi Wealth Management.

Speaking to Yahoo Finance, Krawcheck said attempts to play the market in the short term often lead investors astray.

“We tell our women, ‘Investing should be kind of boring,'” she says, ‘It shouldn’t be all about making calls.

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