Seeking Alpha

If you've been on the sidelines during the market's recent run, don't worry, there's more upside...

If you've been on the sidelines during the market's recent run, don't worry, there's more upside to come, says Goldman's Abbie Joseph Cohen. This rally's real, and the fundamentals are there to support it Cohen says. She pegs fair value for the S&P 500 at 1,575 — a 4% premium to yesterday's close. "There are other models, including the Fed model, that show fair value as high as 1,700 or 1,750."
Comments (72)
  • Oh oh, a blast from the past.
    1 Mar 2013, 07:40 PM Reply Like
  • "In 2001, she called for 1,650 S&P 500; it was 1,148. In 2002, she called for S&P 500 to end at 1,425; it was 880."


    She also called for 1675 at year-end 2008...roflmao!
    2 Mar 2013, 08:28 AM Reply Like
  • President Obama has guided the best stock marker returns in decades after the W. Bush recession of 2008-2009. Now the only problem is Republican congress wants another recession to make Democrats look bad for elections in 2014.
    1 Mar 2013, 07:45 PM Reply Like
  • Does Obama get credit for the debt too or just the good stats?
    1 Mar 2013, 07:57 PM Reply Like
  • Terry, I enjoy reading your comments. I just wish President Obama could have as much success guiding the economy as he has the stock market. Sometimes, I think he has pulled the wool over our eyes. He's helping the rich get richer while the poor are still poor. I hate to say it, but it looks to me that he is doing the bidding of Wall Street. You've got to hand it to him, He convinced us he was a socialist and would bring the greedy capitalists to their knees. What a brilliant bait and switch he pulled. It just goes to show, you can't trust politicians. I really thought He would buy me a house, pay for my groceries and support my children. There is no reason that in a country that has as many rich people as the U.S. that we can't make them support the rest of us. Life isn't fair and Obama sold us out.if the Democrats had control of all three branches of government, there would be no more suffering and we would all get along. Why can't everyone understand this?
    1 Mar 2013, 09:07 PM Reply Like
  • US has had debt for over 100 years, largest increase was under Reagan,Bush,Obama, but President Obama is wisely spending less on a worlds police force to cut 10's billions each month. W. Bush policies extended years after he left office, and record military spending.
    1 Mar 2013, 09:21 PM Reply Like
  • oh give me a break're lucky you're avatar is cute so I'll forgive you for your "blonde-speak"
    1 Mar 2013, 09:25 PM Reply Like
  • This is good. As the U.S. retreats from the world stage, Russia and China will be able to fill the void.
    1 Mar 2013, 10:27 PM Reply Like
  • Bush's 3 tax cuts took the economy from the Clinton surplus's to a deficit. Under Bush, government spending, including the cost of an unnecessary war that was supposed to finance itself from oil revenue, caused the US debt to double from the end of 2000 to the end of 2008. The Bush economic policies brought on the recession that Obama inherited. If you had studied Econ 101, you would know that the federal budget deficit automatically increases during a recession -- tax receipts go down and spending on items such as unemployment insurance and food stamps go up. And if you did Econ 102, you would realize that drastic cuts in government spending during a recession would cause the economy to go from recession to depression.


    Also, it may surprise you to learn that the federal deficit has been decreasing since 2009, the last year of the Bush budgets.

    1 Mar 2013, 11:48 PM Reply Like
  • I think terry meant to say Ben Bernanke
    2 Mar 2013, 02:15 AM Reply Like
  • Bush DOUBLED the DEBT - Look backward! think forward!
    2 Mar 2013, 03:30 AM Reply Like
  • That explains the $16.5 trillion debt to go with the $1 trillion annual deficit
    2 Mar 2013, 05:07 AM Reply Like
  • You always have your Dem buddies flock to your dubious observations.
    Lies are still lies even though your amigos like what there hear !


    First fact.. Obama did nothing. This is a Federal Reserve Ben B stock market.Even the claims about 750 million/ month job losses at the beginning was due to the SECRET Federal Reserve mega give away of trillions of dollars to almost every listed US company an thousands of companies:Governments and other private enterprises outside the US.


    Happily ! As Ben states now.. It is illegal to do it now as Congress stopped that !


    NOTE: that amount was actually greater than the TARP:Stimulus,QE 1-2-3 and Twist 1-2 & unending combined !


    So, the real reason the economy halted the free fall was the Fed and Obama's stimulus didn't actually get into the publics hands until the end of his 2nd year and most didn't get out until late in the third year about the time that vote buying was needed.


    99% of all Americans including SAers don't know that Obama signed an Executive Order stating that Stimulus funds had to go to companies that had union workers. That was why there were not shovel ready projects as Obama jokes about on youtube. (it's there 4 all to see - even now ). So, the only thing shovel ready was his hot air.


    Now here is the fact that the Fed's actions have actually done and along with the help of most all other Central Banks. There actions have helped hide the inflation and wealth destruction worldwide.


    The US dollars value or buying power has declined 15% since George W Bush's time. So comparing the DOW at 14,000 now in 2013 to the DOW in 2007/8 is like apples to oranges. For today's DOW to equal the latter DOW it need to be 16,000 plus. Fact !


    Obama is the modern day Nero ! As he fiddles and buys votes the quality of life in the USA declines fast.. Wait until 2014 when the meat of the HCA kick in. Folks might take to the streets.


    Glad I don't live in the USA anymore ..........Got my assets out just in time :>))
    2 Mar 2013, 05:28 AM Reply Like
  • The debt goes to Bush also - 2 wars, tax cut, prescription drugs, added umemployment spending due to 2 recessions.
    2 Mar 2013, 07:27 AM Reply Like
  • The USA 16.7 trillion buck debt is the surface joke ! $ 220 trillion bucks worth of unfunded liabilities dwarfs human imagination. Not just Bush or Obama.. It's Presidents back to the monster of all time FDR...


    The Republic was put on the path to destruction and kick in Wilson & LBJ and actually each guy since him.


    And, Bush's two wars ?! Over 2 trillion spent of them yes,but, where did those dollars go ? Oh.. 90%+ went to US defense corporations and other supporting suppliers. The war based economy that has been around since the Revolutionary war.


    Where would the slumping US economy be if those two trillion had not been spent.. No worries..The Fed prints trillions and the Treasury buys there own debt. Can you say Ponsi...


    Obama's plan to reduce the military and keep America within her shores will alter the economy an military power. China will be the worlds only super power as time goes by..
    Maybe the drones will fly over the US and kill the former capitalists.


    Then America will sing a different tune.. Then the Reserve will be dropped... 3rd world status will arrive and enjoy.
    CNN Money -- side bar
    2 Mar 2013, 08:50 AM Reply Like
  • Terri, I believe your high heals are starting to effect your judgement!
    2 Mar 2013, 10:47 AM Reply Like
  • Bush's tax cuts kept the country working.... you better look at your data again charlie.
    2 Mar 2013, 01:23 PM Reply Like
  • I'm not interested in defending Bush or Obama,but, a factoid that isn't mentioned ~ In Bush's last year the Treasury took in an all time record of dollars.Shows that cuts are what really works.


    So, those who won't or can't admit the US has a spending problem are addicted to Dem t/v talking points.


    Big Vlad Putin nailed the US situation when he said " The ignorant gave Obama a second term !"


    PS.. And yes, Bush spent like a drunken oil man too.. Conservative ~ Bush.. NOT
    2 Mar 2013, 01:28 PM Reply Like
  • Frosty I think those wars go to Obama as well - more service men died under him than Bush (by a factor of 2), and I'd give the housing crisis to the dems in congress for ignoring it when they told it was going to happen.


    I'd give Bush fault for the lowest unemployment, and the safest country. You have to feel sorry for the next pres who has to clean up Obama's mess.
    2 Mar 2013, 01:28 PM Reply Like
  • """Terri [sic], I believe your high heals [sic] are starting to effect your judgement!"""


    And your spelling!
    2 Mar 2013, 03:51 PM Reply Like
  • But then again, when do high heels not affect spelling?
    2 Mar 2013, 03:52 PM Reply Like
  • mike, I looked at the data.


    Here is what I saw. From the end of 1992 to the end of 2000 (Clinton years), the number of jobs increased by 23 million. From the end of 2000 to the end of 2008 (Bush years), the number of jobs increased by 1.8 million. In 2009, still under Bush budget, the number of jobs dropped by 5 million, so you could say that the net LOSS under Bush was 3.2 million jobs.


    OK, so you say that in 2001, we had the dot-com bust and we had 9/11 (on Bush's watch, by the way). Bush also cut taxes in 2001, but in 2002, we lost 532,000 jobs. In 2003, we gained 62,000 jobs, so Bush cut taxes again. Alan Greenspan obliged by keeping fed funds rates below 2% and below inflation for almost 3 years, from December 2011 to November 2012. Also, Greenspan did not try restrain sub-prime mortgages, believing that "the market would take care of any problems", and we got the housing bubble. In 2004, 2005, and 2006, we gained an aggregate of 6 million jobs, before the bust took place in 2008 and 2009.


    Is this what you mean when you say "Bush's tax cuts kept the country working"?


    Source of jobs data:
    (type in 2000 instead of 2003 to get data back to 2000)


    Also, have you seen this?


    Or this, from Forbes?
    4 Mar 2013, 03:01 PM Reply Like
  • @charliezap


    Please don't confuse them with facts.


    reality has a liberal bias.
    4 Mar 2013, 03:04 PM Reply Like
  • So you can thank Reagan for setting the policies for the Clinton era and thank Clinton for the Bush issues like 9/11?


    The way you used the facts to support you argument is imaginative, but done before. The fact is that most folks were alot happier when they working than they are now taking government handouts. And if the congress listened, the housing crisis could have been averted.


    You gonna blame Bush for bailing out the finance industry or you gonna give the credit to Obama?


    The fact that Obama is basically executing Bush's policies with more aggression in almost every aspect of his administration may cause you concern.... which is why it really doesn't matter.
    4 Mar 2013, 04:02 PM Reply Like
  • Ha!


    Is that you Rush Glenn Laura Hannity Orielly?
    4 Mar 2013, 04:29 PM Reply Like
  • """ So you can thank Reagan for setting the policies for the Clinton era and thank Clinton for the Bush issues like 9/11?"""


    George HW Bush came between Reagan and Clinton -- and GHWB raised taxes -- remember?


    """if the congress listened, the housing crisis could have been averted"""


    Listened to who? Bush talked about the "ownership society" and how it was good for everyone to own a house. Private industry -- Bear Stearns, Lehman, Goldman Sachs, Merrill, etc -- provided the capital for the sub-prime mortgages doled out by the likes of WaMu, Countrywide, and Golden State, while lobbying congress for deregulation. The sub-prime mortgage business was humming long before Fannie and Freddy jumped in.


    """You gonna blame Bush for bailing out the finance industry or you gonna give the credit to Obama?"""


    TARP was signed into law by U.S. President George W. Bush on October 3, 2008. That's a fact, however you want to spin it.


    Finally, I'm still waiting for you to provide facts that show how "Bush's tax cuts kept the country working."
    4 Mar 2013, 06:18 PM Reply Like
  • TARP was a winner after all was said and done. Too bad Paulson let GS boys totally change the plan to create a slush fund to divvy up between the banksters.


    Forget G.H.W. Bush or Clinton, concerning that massive housing colapse.. The crisis when you peel the onion back to the middle you see Barney ! Barney Frank ! He was single handedly the reason millions who couldn't afford houses bought.And, with Gov dollars as all those bad loans weres sold the the quazi Gov lenders. He pushed the House as chairman..


    For the last bunch of years he's been saying "who me " Not me ! I I I I fought against it.. After the dominoes started falling .. It mushroomed.. The Selling of packages of mortgages was a typical WS idea that seemed a no brainer when they came up with it. But, it was the underlying flaw that eventually surfaced.


    Too late.......


    I've been posting for a short while now and I see how easy a topic like the market is going higher can turn into a nasty political game of tag... Your guy did it TAG.. No yours did ! Tag your it !


    Fortunately, in this great ponsi scheme in your country only the Central Bank matters ! Ala the Fed.. And, when it comes to money it's Ben B who is the most powerful man in the world concerning Stock prices. Not Obama ! He is doing his best to make the US into a part of the EU....


    Buena suerte with dat !


    PS..Democrat / Republican.... The best resume of any US president in US history was GWH Bush.. He actually did a great job,but, Congress ( controlled by Dem's beat him politically) forced him to raise taxs against his pledge. Almost completely opposite of the situation now. Obama wants a single payer health care system and higher earners to pay 75%.. Bad old days.......
    5 Mar 2013, 04:17 AM Reply Like
  • Zap, you leave out important information regarding the housing collapse, such as CONgress, HUD, Bill Clinton...You have selective memory lapse and only blame the Repubcos and free enterprise...


    The typical leftwing distortion and misinformation crowd...
    6 Mar 2013, 10:30 AM Reply Like
  • charlie you are making my point .... I'm not going to push web links at you because you don't care and I really don't care.


    My point is that it doesn't matter lib or conservative the polices from admin to admin barely change at all. For example the libs got all upset over the Patriot Act and the dems made it stronger with drones on American soil, and killed a suspected American terrorist and their kid. Bush signs the Tarp and Obama signs on to about all of the Bush tax cuts....


    The timing of the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003 correlates to the data from the labor & statistics site almost perfectly. The other websites you have for data are opinion pieces from the NYT and Forbes (which admits a Left wing bias).


    Try to be objective charlie - we are talking money here - I don't think we care a whip about your politics
    6 Mar 2013, 11:26 PM Reply Like
  • Your not talking money here ! Your talking a worldwide game of monopoly in fiat ism !


    The US market along with the other major markets in EU ASIA an ME have collectively increased by 10+ trillion dollars since 2008. Sounds great,but, between the Fed an other Central banks there floating almost 8 trillion.


    So talking money ? If you call it that. What is the results ? 5 billion average everyday poor folks have seen there lives ratchet down.All while a tiny tiny % of market participants get the fiat wealth.


    Ben B Antionette.. let them eat cake NOT.. Let them eat what ever they can beg for !
    7 Mar 2013, 05:54 AM Reply Like
  • tomato tomotto :)
    8 Mar 2013, 06:57 PM Reply Like
  • interpretation: Goldman wants to sell you their shares, because they like you. really.
    1 Mar 2013, 07:51 PM Reply Like
  • I just can't trust anything Goldman Sachs is selling.
    Why didn't anyone ask her about DOW's "tax shelter" that Goldman organized? It only cost DOW $1B + a 20% fee. No word if GS is going to pay any of this for their part.
    "The best of the best on Wall Street" strike again.
    1 Mar 2013, 08:17 PM Reply Like
  • Hey, watch it, Deercreekvols...GS is just doing God's work <puke>
    1 Mar 2013, 08:27 PM Reply Like
  • You pump trillions into the economy no matter how inefficiently it's bound to go up. Don't the big banks have a vested interest in all that new fresh printed money, first dibs? Kind of like being at the top of the pyramid.
    1 Mar 2013, 08:28 PM Reply Like
  • Yeah and Ben mentioned he may keep the assets on his books, yes all 3 trillion dollars worth. I can already see the huge paper loss take hold when long term rate revert to their historical averages.
    2 Mar 2013, 02:35 AM Reply Like
  • She speaks the truth.


    Money supply is catching up to the population.
    1 Mar 2013, 08:40 PM Reply Like
  • "If you've been on the sidelines during the market's recent run, don't worry, there's more upside to come," says Goldman's Abbie Joseph Cohen. "It'll be great! There's free money and ponies and skittles and unicorns for everyone! All you have to do is rush in and buy everything on Goldman Sachs' buy list so we can unload ours! Woohoo! The champagne is free and so is the chicken in every pot!"


    There. Fixed it for you. Though to be honest, I think this still sounds way too gloomy to be something Abbie would say.
    1 Mar 2013, 08:44 PM Reply Like
  • Let's not get too carried away. Abby didn't see a cloud in the sky when Goldman was shorting mortgages in front of an economic collapse in 2007/08.
    1 Mar 2013, 08:58 PM Reply Like
  • Something tells me there was some empty suit Goldman rep in October 07 saying the same exact thing....famous last words?
    1 Mar 2013, 09:13 PM Reply Like
  • It's the Abby Cohen Kiss O'Death !
    1 Mar 2013, 09:18 PM Reply Like
  • im usually the optimist, but when i read that all i see is - "sell"
    1 Mar 2013, 09:26 PM Reply Like
  • Forget whether anybody says "buy" or "sell." Punditry kills.


    Pay attention to the corporate data and capital flows. They will tell an investor which way the wind is blowing.
    1 Mar 2013, 09:47 PM Reply Like
  • Been waiting for the top LOL. Pretty sure they said to buy before 2011 crash also
    1 Mar 2013, 09:57 PM Reply Like
  • "Come on in, the water's fine" said the gently grinning crocodile.
    1 Mar 2013, 09:58 PM Reply Like
  • Mark it down, then. The SPY will hit 1575 GUARANTEED! Not long after, maybe another 50 points or so, it will tank into the ABYSS. By the time you think about getting out, it will be too late.
    1 Mar 2013, 10:14 PM Reply Like
  • And then there is always the Seeking Alpha comment indicator. At the moment it is 23-1!
    1 Mar 2013, 10:21 PM Reply Like
  • What a ridiculous joke. Anybody who thinks that strategists have a clue about what's going to happen in the market should take a quick read of this article from December 2007:


    Spoiler alert: Tobias Levkovich and Abby Joseph Cohen both predicted the S&P 500 would finish at 1675 by year-end 2008.
    1 Mar 2013, 10:33 PM Reply Like
  • but for the subprime debacle it probably would have. That's where it is heading now.
    1 Mar 2013, 10:43 PM Reply Like
  • I thought Goldman Sachs had prohibited Joseph Cohen from making any more stock market predictions.


    --Chris Schons
    1 Mar 2013, 10:34 PM Reply Like
  • the Fed model?what does Abby Cohen mean by this? so does the Fed share this model to the public or they only share with GS and other investment bankers?
    1 Mar 2013, 10:56 PM Reply Like
  • here you go - clearly the Fed releases the intricate Fed Model to a cabal which includes Wikipedia


    The "Fed model" is a theory of equity valuation that has found broad application in the investment community. The model compares the stock market’s earnings yield (E/P) to the yield on long-term government bonds. In its strongest form the Fed model states that bond and stock market are in equilibrium, and fairly valued, when the one year forward looking earnings yield equals the 10-year Treasury note yield :


    I will bottom line it for you.


    Earnings yield is about 7% right now.
    Ten Year treasury is 2% - but I don't like that number. I prefer to add the CPI - while the Fed does QE to give me an "undistorted 10 year rate". So 2$ becomes 4%.


    7% is greater than 4%.


    Buy stocks.


    Keep buying them until the earnings yield move down to 5% or the 10 year hits 4% (after QE ends) at that point buy bonds.


    2 Mar 2013, 02:18 PM Reply Like
  • Earnings' yield? is that earnings' growth? What is the rationale of using earnings' yield (instead of dividend yield) vs 10 year treasury yield?


    I've seen comparisons between, say, SP 500 dividend yield which is around 2.2% compared to 10 year Treasury yield of 1.8%. So there is a bit room for equity rise as well.
    3 Mar 2013, 02:24 PM Reply Like
  • the fed model:



    1 Mar 2013, 11:08 PM Reply Like
  • lol Polly, helicopter Ben.
    1 Mar 2013, 11:21 PM Reply Like
  • Merrill's guidance is 1600 on the S&P, so from here there should be a correction/consolidation not too much upside at the moment @ 4-6%
    2 Mar 2013, 02:22 AM Reply Like
  • The stock, commodity and currency exchanges have been reduced to gambling dens whereby the more powerful traders with deep pockets move the markets to maximize their own profits at the expense of the remaining not so powerful players. The big boys have enormous money power to move the markets in the direction which results in maximum profits for themselves. They effectively use the media to lure the other players in the market to a position where they would incur maximum loss.


    While executing their regular business if they do end up making a loss, their friends, the elected politicians are always there to bail them out with tax payers funds and even if that is not sufficient they can always borrow more. The debts taken in the name of the country will have to be borne by the rest of the population in the form of higher taxes and austerity measures.


    Long Live Nexus of the rich and the politicians to loot the rest of the population till they wake up, understand the nexus and break it up.

    2 Mar 2013, 04:45 AM Reply Like
  • In December 2007 Abby Joseph Cohen predicted the S&P 500 index would reach 1,675 in 2008. The S&P 500 traded as low as 741.02 by November 2008.
    2 Mar 2013, 05:09 AM Reply Like
  • Abbie Joseph Cohen??? Listen to her if you want to end up on food stamps.
    2 Mar 2013, 07:18 AM Reply Like
  • "Stocks..." said Abby Cohen "...have reached a permanently high plateau"
    2 Mar 2013, 07:47 AM Reply Like
  • There is a huge line at the US Department of Treasury. A lot of people who think that the high stock market valuation is fake and a delusion engineered by the socialists in the US government are returning all their profits that they have accumulated since GWB left office.


    Limbaugh/Beck/Fox listeners are such conscientious patriots.


    Nevertheless Ms. Cohen is full of manure.
    2 Mar 2013, 10:14 AM Reply Like
  • She is not the only one..Giddy up!
    2 Mar 2013, 11:40 AM Reply Like
  • You all are missing the point. Abbie's back! The equity market's most reliable contrarian indicator of all time. Seriously. Check out her uber-bullish calls at past market tops over the past 20 years. This girl is like some crazy reverse oracle. Everything she ever predicts does not just fail to happen; the exact reverse happens!
    2 Mar 2013, 11:01 AM Reply Like
  • Markets don't rise because a Cohen (et al) predicts gains nor fall because a Rosenberg (et al) predicts a collapse. They behave, as they will, because of the underlying economic fundamentals and because of the pressures brought upon various classes of investments by interest rates the imbalances in the allocation of capital.


    Anybody forsaking the assessment of the data in favor of making investment decisions based upon investment "celebrities" might as well buy a ticket to Las Vegas. At least, they'll have more fun.
    2 Mar 2013, 01:45 PM Reply Like
  • Tack, don't forget the Fed.. Their steering dollars where they want them and printing 3 trillion an floating them around in the form of the "RESERVE" makes economic issues take a back seat. The "market" is near all time highs with the EU in a triple dip recession and Asian GDPs slumping off.. If we were in a nonFed world the averages would not be anywhere near where they are.


    Always your amigo *>)
    2 Mar 2013, 02:05 PM Reply Like
  • big:


    Yes, you're right, and the Fed is a very real part of the economic landscape, as well. They're just as real as any other phenomenon.


    Just remember, that (T)ransactions = (M)oney Supply x (V)elocity. The Fed isn't going to substantially reduce M until they see distinct signs that V is picking up.
    2 Mar 2013, 02:12 PM Reply Like
  • Tack, the problem is the velocity in barely above.. 1.3 ish and doing nothing
    2 Mar 2013, 05:46 PM Reply Like
  • big:


    That's why lots of M isn't causing inflation. When V picks up, M will be reduced by raising rates. T won't collapses; it will just be the product of a differently weighted multiplicand and multiplier.
    2 Mar 2013, 05:52 PM Reply Like
  • Tack, I love money. I love to study it's movements and roll around in new bills,but,I think the fact the Central Banks are at ware with the Fed has as much to do with keeping inflation in check as the new fangled way they calculate it. I know you for quite a while and I know you can calculate inflation using the pre 1980 method. Where would that number be. Not quite Volker,but, way above the Fed's target even with a GRPN coupon for 3 points...........


    You know that I live in Latin America and to see the local currency gain 20% on the dollar makes me wonder..I'm not complaning,but, the billions of saps are getting hurt.
    2 Mar 2013, 05:58 PM Reply Like
  • Buffet uses a version of the Fed model to find investments.
    He is buying now evidently. What a fool he is. Better do the opposite.
    Clearly - you all know better and are better connected. To be sure


    2 Mar 2013, 02:47 PM Reply Like
  • Goldman at its best wants you in to fleece you.
    BTW, whatever happened to SEC investigating Heinz insider trade?
    2 Mar 2013, 05:21 PM Reply Like
  • Mr Mohr, they are on Spring Break....
    3 Mar 2013, 09:39 AM Reply Like
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