Goldman strategist sees rising stocks

Goldman strategist sees rising stocks By August Cole, CBS.MarketWatch.com Last Update: 11:03 AM ET July 21, 2002

NEW YORK (CBS.MW) -- Goldman Sachs' top U.S. market strategist, a renowned bull, said Sunday that U.S. stocks are going to get back on their feet and head higher.

Abby Joseph Cohen said on CBS's "Face The Nation" that stock prices are set to go "higher, not lower." The comments were made on the heels of a week that saw the Dow Jones Industrial Average ($INDU: news, chart, profile) give up 7.6 percent and the Nasdaq Composite ($COMPQ: news, chart, profile) fall by 3.9 percent. See full story.

She also remarked that the tell-all period that has roiled Corporate America is nearing its end. "We're close" to the end of the corporate revelations, Cohen said.

To that end, she predicted, the upcoming Aug. 14 deadline for top company executives to verify their firms' books will be a positive for the markets.

Allen Sinai, chief global economist at Decision Economics and a guest on the Sunday-morning news program, commented that U.S. economic fundamentals and prospects are "the best in the world."

In April, Goldman's Cohen had said her 2002 target for the Dow ($INDU: news, chart, profile) was 11,300 and for the S&P 500 ($SPX: news, chart, profile) it was 1,300.

As of Friday, the Dow closed at 8,019. The Nasdaq closed at 1,219. The S&P 500 ended the day at 848.

Good points but I hope you are wrong....aside from the notable exceptions like AOL, WorldCom and Enron, most of the S&P is still reporting profits and indeed most are higher than for the same period last year. Are we to return to a market based on P/E in the 8-12 range like in the 70s? I don't know but with interest rates so low and debt rates paying hardly squat, I don't think we will. It would appear that many folks and institutions have simply gone to cash and are waiting. I know some have gone to gold based or bond indexed havens but that is not reflective of the average 401K investor or mutual fund manager. We now live in a world of very large hedge fund players who give an artificial momentum to a bear market(or a panic too for that matter) which simply did not exist 20 or 30 years ago. Also, inflation is virtually nil or item specific. I would agree that the P/Es of the 90s were foolish and the stock prices reflected expectations (or subscribers) more than reality. That we are correcting this after the Tech Bubble Burst is not suprising yet as I'm sure you know, Microsoft has weathered all of this better than most and yet their P/E is still quite high....around 50 I think. I still say that psychology and media frenzy over the few disgraced companies is aside from the unexpected nature of terrorism our greatest liability.

In any event, I'm hoping for a stable close by tommorow afternoon. It should be an interesting morning. Back when I was a daily investor, I learned that the market usually recovered when I panicked. This time I'm not so sure but I feel almost certain that as Churchill said "It's the end of the beginning" at least.

I'm not sure what you are referring to. Maybe the P/E assumption? I have no emotional attachment to "my" theory. If I have a wrong P/E assumption, I want to know about it ASAP because I have hard-earned cash at stake, just like everybody else does.

Hint. Interest rates are really down and the economy is improving, although slowly. Employment is rather strong.

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