The U.S. recession is over and The Standard & Poor’s 500 Index may rise to between 1,250 and 1,300 by the end of this year, said on Bloomberg Radio, Abby Joseph Cohen, a senior investment strategist at Goldman Sachs Group Inc (GS).
According to Cohen, the S&P 500, which closed at 1,094.87 yesterday, would need to rise as much as 19% to reach the high end of Cohen’s prognostication.
Bloomberg: “We do think the market overall is likely undervalued,” Cohen, 57, said [to Bloomberg]. “The recession is over and has been over for several months. Not every sector recovers at the same pace. We’d be looking in some of those areas focusing on economic improvement.”
Cohen said technology shares and commodities producers are attractive because of the prospects for revenue growth and improved demand. The industries have both gained 77 percent since the S&P 500 dropped to a 12-year low on March 9, 2009.
The top-ranked strategist in Institutional Investor’s surveys in 1998 and 1999, Cohen stayed bullish on computer- related stocks for too long as the S&P 500 suffered a bear market from March 2000 to October 2002. She said in October 2000 that technology stocks would be a good investment in 2001. The S&P 500 Information Technology Index then tumbled 26 percent.”
It is certainly appealing to want to buy into the idea that since the second derivative of the economic stats is improving (using the word very conservatively) in some areas like job losses and home sales that we should agree with Mrs. Cohen’s prediction. However, let’s keep in mind that in 2008 Cohen — the top-ranked strategist in Institutional Investor’s surveys in 1998 and 1999 — was the second most-bullish Wall Street strategist at the start of that year ; when the S&P 500 nosedived nearly 40%, its worst annual loss in seven decades.[emphasis added]