Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : The Naked Truth - Big Kahuna a Myth -- Ignore unavailable to you. Want to Upgrade?

To: eddie r gammon who wrote (5410)	9/9/1998 8:29:00 AM
From: MythMan	Read Replies (2) \| Respond to of 86076

Article from current Newsweek <g> The market's chief bull takes on the downturn If the market is making you seasick, ask your druggist for a big bottle of Abby Joseph Cohen. Cohen is the Goldman Sachs strategist with the platinum record--and huge following--who's been issuing soothing bulletins since the market started sliding in August. Last week was no different. Sure, Russia's on the rocks. Sure, tech stocks have tanked. But Cohen's research team (she likes to talk in the first-person plural) believes that the fundamental things apply. Things like job growth, inflation and interest rates all point to a healthy economy. And lest you think Cohen is some congenital optimist, consider this: in 1990, she was one of Wall Street's biggest bears, even before the gulf war and recession sent stocks tumbling. NEWSWEEK's Jolie Solomon talked to Cohen. Excerpts: Solomon: No change in your forecast? Cohen: [You] shouldn't extrapolate from the upside [or] the downside. Our year-end target has been 9300. In April, when the Dow first approached that, we were asked, did we want to raise our target, and we said no. In July [9300 again], we said no. We're still [at] 9300. So we can't call this a bear market? [It's all] wrapped up in semantics. There's no official arbiter of what a bear market is. Has there been a decline in stock prices? Of course. Has it been accompanied by a major deterioration in the economy? No. Nor do I believe it will trigger a major deterioration. Russia doesn't scare you? Russia is an unpleasant surprise. But the cold, calculated numbers [tell the story]. The United States does less than 1 percent of its foreign trade with Russia. We worry about Japan and Asia. But that is already reflected in our work. Banks are reporting some scary figures. Banks are doing what we expect them to: stand up and say, "Here is the impact on us.'' Think how different [this] is from Japan. We have "tough love'' banking regulation. Once they disclose, it's over. It's not something that drags on. OK, one more bugaboo: doesn't the S&P 500 show that price/earnings ratios are out of whack? This is not your father's S&P. Standard & Poor's actively manages this index; that's not an oxymoron. The companies [taken out of] the index tend to be lower growth, the ones going in, faster growth. So of course the p/e will rise... And you have to look at the circumstances. In previous periods of very mild-mannered inflation, [an S&P index with] a 20-times multiple was not high. So you're not even nervous? Like every mortal, we want to be sure we're not missing something. What we have done this week is to carefully review all [our data]. We've been poring over economic reports, company statements. It's an intellectual challenge. Others on Wall Street seem anxious. [It's] lower-Manhattan tunnel vision. I dare say that those people who work in the financial markets feel the pain more acutely. [But at Goldman's research department] we have the luxury of not responding to short-term market action. Difference of opinion is often a difference in time horizon. So the average investor has it right? Sit tight? Think of 1996. There was a notable sell-off, but the typical individual looked around and said, "I still have my job. My neighbor still has his job.'' At heart, this is what ultimately drives consumers and companies. All the people who were hoping for a 10 percent correction so that they could get in? Here's your opportunity.