Seeking Alpha

Stocks are undervalued at current levels, and more and more investors are realizing that, coming...

Stocks are undervalued at current levels, and more and more investors are realizing that, coming off the sidelines and back into the stock market, observes Abby Joseph Cohen. Using one particular metric, the S&P 500 is pricing in a 7% decline in corporate profits for each of the next five years. "That’s possible," Cohen says, "but it’s not likely."
Comments (29)
  • wmbeam02
    , contributor
    Comments (9) | Send Message
     
    GS wouldn't need someone to sell their positions to, would they?!?
    7 Mar 2012, 08:12 PM Reply Like
  • mike mohr
    , contributor
    Comments (452) | Send Message
     
    Goldman is getting antsy, needs the money to cover the losses
    7 Mar 2012, 08:22 PM Reply Like
  • Chris Bersaw
    , contributor
    Comments (629) | Send Message
     
    It looks like the smart money needs to sell, sure I'll buy stocks when they are 20 percent lower :)
    7 Mar 2012, 08:32 PM Reply Like
  • klarsolo
    , contributor
    Comments (707) | Send Message
     
    No you won't, because when they are 20 % lower then you'll want to wait another 20 %, because the scary news will make you hesitate. They won't just casually sink 20 % without scary news.
    7 Mar 2012, 10:51 PM Reply Like
  • Chris Bersaw
    , contributor
    Comments (629) | Send Message
     
    It would largely depend on who is selling and why they are selling. The assumption is a normal market correction 10 to 15%, 20% is even better but these are not exactly normal markets. In this environment, 20% lower is acceptable but it can drop another 40% from that initial 20% decline so it won't make sense to buy it after the 20% decline in which I would be waiting at that point to see how much lower it can go at which I will nail it close to the actual bottom buying with both hands!!
    8 Mar 2012, 01:22 AM Reply Like
  • 1980XLS-2.0
    , contributor
    Comments (525) | Send Message
     
    Need to fatten up the pigs, before sending them to slaughter.
    7 Mar 2012, 08:35 PM Reply Like
  • coddy0
    , contributor
    Comments (1182) | Send Message
     
    Abby is bearish call
    7 Mar 2012, 08:36 PM Reply Like
  • Hedgephone
    , contributor
    Comments (1363) | Send Message
     
    Coming off of the sidelines? Oh, you mean sell low and buy high? Somehow that seems like a dicey strategy! There's one born every minute
    7 Mar 2012, 08:39 PM Reply Like
  • bdarken
    , contributor
    Comments (499) | Send Message
     
    Zactly.
    Who's coming off the sideline?
    The fed?
    Yeesh.
    7 Mar 2012, 09:49 PM Reply Like
  • gmihran
    , contributor
    Comments (60) | Send Message
     
    Over the last 15 years, if an individual investor did exactly the OPPOSITE to what GS was recommending through AJC, he would have made money 80% of the time over the following quarter.

     

    So who's the smart(er) money now? :)
    7 Mar 2012, 08:45 PM Reply Like
  • Hitesh Patel
    , contributor
    Comments (314) | Send Message
     
    Can anyone find a report in any time period where permabull cohen was bearish...even slightly
    7 Mar 2012, 08:46 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9964) | Send Message
     
    Exactly. Never heard Cohen ever do anything but pump equities. Too bad she wasn't paid based on actual performance relative to her market calls. She would have a lot less money than she does today.
    7 Mar 2012, 11:25 PM Reply Like
  • alpharox
    , contributor
    Comments (380) | Send Message
     
    Strange, all the reports I've seen recently seemed to be quoting net outflows.

     

    Leave it to GS to pump and dump as always.
    7 Mar 2012, 08:51 PM Reply Like
  • Nolesince87
    , contributor
    Comments (262) | Send Message
     
    Oh sideline money definitely wants in--as soon as the Dow is trading at where it should be, around 5000.

     

    Until then, Wall Street will have to rape itself to death.
    7 Mar 2012, 08:56 PM Reply Like
  • mgcolin
    , contributor
    Comments (118) | Send Message
     
    I agree with the comments here and on cnbc.com -- this is a very bearish development. Individuals have figured out that with fed manipulated zero interest rates and money printing, this is far from a normal economy. With looming tax increases, Europe far from stable, equities are too risky, especially after a 25% run since October.
    7 Mar 2012, 09:04 PM Reply Like
  • Bainjer
    , contributor
    Comments (60) | Send Message
     
    Amen to all these comments!
    7 Mar 2012, 09:08 PM Reply Like
  • 2PP
    , contributor
    Comments (353) | Send Message
     
    I just love these stories trying to convince a fool and his money to part. If you aren't in already you're too late. I've already taken profits and have gone 40% cash. I am holding it until there is a 20% - 25% pullback and I believe it's coming within a month or two.
    7 Mar 2012, 09:12 PM Reply Like
  • torahislife
    , contributor
    Comments (400) | Send Message
     
    If there was ever a bear flag! (I aint talkin about California)
    7 Mar 2012, 09:27 PM Reply Like
  • Archman Investor
    , contributor
    Comments (2914) | Send Message
     
    For a second I thought that this was an Abby Joseph comment from when the S & P 500 was around 700 back in 2009. LOL.

     

    Isn't it amazing? Average Americans never learn. They never buy the crashes. They wait until some dope like Abby J Cohen tells them to buy.

     

    Would I keep re-investing my dividends here? Of course.
    Would I go all in if I have been out of the market since '09?
    No way. Maybe a bit at a time and buy even more on market dips but to follow the she-male AJC...no way.
    7 Mar 2012, 09:27 PM Reply Like
  • Larry Smith
    , contributor
    Comments (2744) | Send Message
     
    Cohen is one of many people from Wall Street I pay no attention to.
    7 Mar 2012, 09:43 PM Reply Like
  • Archman Investor
    , contributor
    Comments (2914) | Send Message
     
    That is quite true Larry.
    After she led investors off the cliff in 2000 Goldman demoted her to market strategist. Now the title was not a demotion, but what happened was she was no longer allowed to give "her opinion".
    Since 2000 every opinion she gives, or stock selection is based on the "analysts at Goldman" or the "work done by her team at Goldman".

     

    She has been completely irrelevant since 2000 and the only person who takes her seriously is that other joke Maria Bartiromo.
    7 Mar 2012, 10:00 PM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1802) | Send Message
     
    Here's what she said in the article:

     

    "There have been better U.S. economic data and a growing sense that "there is money on the sidelines that is coming into the markets right now and I think many institutional investors are either coming back in or at least preparing themselves to come back into the U.S. equity market," Cohen said."

     

    Forget using something pesky like numbers and facts to support your position when you can resort to psychic phenomena like the "growing sense" mentioned above.

     

    Meanwhile back at the ranch, according to ICI:

     

    http://bit.ly/y6fggg
    "Equity funds had estimated outflows of $2.84 billion for the week, compared to estimated inflows of $782 million in the previous week. Domestic equity funds had estimated outflows of $3.06 billion, while estimated inflows to foreign equity funds were $226 million."

     

    Domestic equity funds have lost about $66 billion in outflows since the October low.

     

    I am not commenting on whether this is good or bad, rather I am just commenting on the fact that either she is a liar or an idiot or ironically enough she could be both :)
    7 Mar 2012, 10:02 PM Reply Like
  • Archman Investor
    , contributor
    Comments (2914) | Send Message
     
    "I am not commenting on whether this is good or bad, rather I am just commenting on the fact that either she is a liar or an idiot or ironically enough she could be both :)"

     

    Me personally...i'm kinda thinking both on this one.
    7 Mar 2012, 10:06 PM Reply Like
  • klarsolo
    , contributor
    Comments (707) | Send Message
     
    For a sentiment check, count how many comments here disagree with her. That's all you need to know about where we will be going.
    7 Mar 2012, 10:53 PM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1802) | Send Message
     
    Sigh. There are better, more mathematical approaches to measuring bullish and bearishness than counting the bears on SA.

     

    If you think being contrarian is a good strategy then look at the data that represents the state of consensus one way or the other.

     

    Put/Call ratio
    Investor's Intelligence bull/bear spread
    RSI
    AAII survey
    Commitment of Traders report
    Mutual Fund cash levels.
    etc.

     

    These all have track records and a consistent methodology so you can compare the present to the past periods and draw your own conclusions.

     

    Right now bullishness is high but not extreme so therefore markets could in fact go a lot higher from here. Extreme bearishnsess is a more useful indicator as you have surmised and right now the level of bearishness on the traditional levels is also low but not extreme which again suggests markets could go a lot higher.

     

    Good luck.
    8 Mar 2012, 02:02 PM Reply Like
  • SA reader
    , contributor
    Comments (176) | Send Message
     
    Why do people keep screaming that stocks are undervalued. They are not. Not on a short-term basis and certainly not on a long term basis where baby boomers will start to liquidate portfolios to live on. Stocks are currently overbought and are at the start of either 1) a normal 5% correction 2) a much deeper 20% plus if things don't improve fast in Europe.
    7 Mar 2012, 11:14 PM Reply Like
  • thechaser
    , contributor
    Comments (622) | Send Message
     
    SA shame on you for publishing such bullsh-t

     

    i always wonder whose behind putting up this site and now i know
    7 Mar 2012, 11:47 PM Reply Like
  • 867046
    , contributor
    Comments (398) | Send Message
     
    I think a more nuanced approach is that it depends on what companies make up what indexes. About half the world's people are in India and China. These two economies are still growing as of now at around 8%. The US can take some pride in the fact that it can grow at a 1 - 2% rate while Europe and Japan are flat. Very crudely the world GDP is expected to grow for the next few years at around 3%. As I have said repeatedly, we are in a one time build out of the rest of the planet.

     

    This being said, AJC is a little disingenuous using verbiage which is more in vogue with some sort of Buffet buy and hold wizard.
    8 Mar 2012, 12:40 AM Reply Like
  • Devlin McGregor
    , contributor
    Comments (118) | Send Message
     
    Likely inching closer to a top. We've already heard from Fink & Doll. Just waiting for Abby to chime in. Abby has been such a reliable contrary indicator over the years. I think her streak of ill-timed market calls is very much safe and in the bag.

     

    In the clip Abby is going on about money on the sidelines, 7% decline in corporate profits baked into the cake, but when I run her advice through the special Wall Street BS translator it sounds something like this:

     

    "A bomb is made to explode. That's it's meaning. It's purpose. Your life is empty because you spend it trying to stop the bomb from becoming. And for who? For what? You know what a bomb is, Jack, that doesn't explode? It's a cheap gold watch, buddy.

     

    You think I wouldn't have been prepared? Two years I spent on my market top calls (2000 & 2007). Two years I invested myself in it. You couldn't understand the kind of commitment I have. You ruined a permabull life's work and you think you can walk away? You got blinders on to the world! But I got your attention now, didn't I Jack?"

     

    I'll take the other side of that trade.

     

    Long:
    Ricky Waters
    Cheap Gold Watches
    Blinders to the World
    8 Mar 2012, 12:41 AM Reply Like
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