Tags: Cohen | priced in | valuations | stocks

Goldman’s Cohen: Risks Are Already Priced in to Stocks

By    |   Thursday, 25 April 2013 08:14 AM

Goldman Sachs upgraded its three-month outlook on stocks to “overweight” Wednesday, and Abby Joseph Cohen, senior U.S. investment strategist for the firm, offers a simple explanation.

“It’s all about fundamentals and valuation,” she tells CNBC. “We see various weaknesses in the global economy just like everybody else, but it’s a question of what’s priced in.

“A lot of the things that investors are worried about may already be priced in, and therein lies the opportunity for U.S. investors,” she adds.

Editor's Note:
See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

A major recession isn’t in the offing, Cohen says. “Given that assumption and some conservative profit estimates that we're making, we think that equities in many different markets around the world offer good possible outcomes.”

And bonds don’t look as attractive to Goldman analysts. "We are concerned that interest rates in many countries are near their lows for the cycle,” Cohen explains.

“We see potential risk, not right away, but over the next period of time, in fixed income, and much less risk in equities and a higher potential return in the stock market."

She says stock investors needn’t be concerned about the impact of the Federal Reserve pulling back on it quantitative easing. First, that’s not likely to happen for some time, Cohen predicts.

And second, “everyone already is talking about it,” she notes. “It’s not like it’s going to be a big surprise.”

One analyst who shares Goldman Sachs’ bullishness for U.S. stocks is Hank Smith, chief investment officer at Haverford Trust.

“I don’t think there is going to be a deep correction,” he told Yahoo. "If we do have a pullback, it won’t take away the case that we are in a long-term bull market. We are not in a cyclical bull that's part of a secular bear market.”

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

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Goldman Sachs upgraded its three-month outlook on stocks to “overweight” Wednesday, and Abby Joseph Cohen, senior U.S. investment strategist for the firm, offers a simple explanation.
Cohen,priced in,valuations,stocks
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2013-14-25
Thursday, 25 April 2013 08:14 AM
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