Cohen: No recession here
Wall Street's famed bull remains upbeat; sees S&P 500 at 1200-1250 in a year
October 21, 1998: 9:22 p.m. ET
Cohen invited to join GS elite - Oct. 20, 1998
Cohen raises Dow forecast - March 17, 1998
CNNfn Markets
Goldman Sachs
NEW YORK (CNNfn) - Unabashed and unbent in the face of dire market talk,
famed Wall Street stock bull Abby Joseph Cohen said Wednesday she
remained confident investors could expect "fairly notable gains" in the Dow Jones over the next 12 months as undervalued equities claw their way back to respectable levels.
"I would still buy at this point because I am making one principal
assumption: There is no recession on the horizon for the United States," Cohen told CNN's "Moneyline News Hour with Lou Dobbs."
"The economy will be growing more slowly, but it will be growing, new
jobs will be created and we think profits will increase as well," she
said.Though already lionized by a major national magazine as the "prophet of Wall Street," Cohen's remarks Wednesday carried an added whiff of authority following her elevation a day earlier by Goldman Sachs to full partner. Her ascension came as 56 other managing directors also were promoted to full partnerships.
Cohen has attracted kudos and critics on Wall Street for sticking with
her bullish forecasts even as markets buckled across the globe. Before
Wednesday she had set year-end targets of 9300 for the Dow Jones
industrial average, 1850 for the tech-heavy Nasdaq, and 1150 for the
Standard & Poor's listing of 500 widely traded stocks.
On Moneyline, Cohen asserted that due to "something of a rally over the past month," the stock market may not be as undervalued now as it was at the end of September, when Goldman Sachs suggested equities were as much as 15 percent below their fair value.
She predicted the Dow would be notably "higher" a year from now, without venturing any numbers, and that the S&P 500 would hover in the 1200 to 1250 range within the next 12 months.
Cohen said especially good bargains could be found in technology and
financial service stocks, many of which were pummeled in the recent
downturn. "Over the past several months," she said, "earnings of technology companies have already been very hard hit and, if anything, we think some of these companies are now likely to see a reacceleration in the coming months. We see that in semiconductors, we also see that in some of the larger companies in the PC and computer area."
Regional banks, whose exposure to battered international markets is
minimal to nil, also are attractive, Cohen said.
She warned, however, that sectors that rely on the global economy, such as commodities, may have a more difficult time weathering the current doldrums.
Energy stocks, she noted, may be a possible exception. "If crude prices are near their trough, earnings should start to flatten out and move up," Cohen said.
Cohen also voiced confidence in the ability of the Federal Reserve to
provide any extra fillip the economy may need to ride out the present
volatility.
"I think the Federal Reserve will do what it feels it needs to do," she said. "The interest rate cuts so far have been an important signal to the financial markets letting us know that the Fed is being very
watchful. And if there are signs that the economy perhaps is weaker than we are expecting, we do think the Fed has plenty of flexibility to step in again."
Abby Joseph Cohen
Goldman Sachs
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