Bloomberg.com reports that Abby Joseph Cohen, a Goldman Sachs strategist, predicts the Standard & Poor’s 500 Index will rise 14 percent by the end of next year.
Cohen, 55, says the S&P 500 will climb to a record 1,675, extending the longest stretch of annual gains since the 1980s. She joins strategists at Citigroup Inc., Bear Stearns Cos. and Strategas Research Partners LLC in forecasting the benchmark will at least reach that level in 2008.
“U.S. stocks will offer moderate gains and will dramatically outperform bonds over a 12-month horizon,” New York-based Cohen wrote in a report today. “Recession will likely be avoided, due to strength in exports and capital spending by corporations and governments, and thanks to a vigilant and flexible Federal Reserve.”
How appropriate for a site called “Drinking Is Believing.” She does, however, provide some supporting arguments for her prediction:
Pressure on earnings stemming from more then $60 billion in losses from subprime loans may be offset by a weaker dollar, strong U.S. labor productivity and healthy corporate balance sheets, the strategist wrote.
Looking at what’s going on with the markets, it’s difficult to see how things will get better any time soon, however the market isn’t always motivated by factual data. Human emotion is the driving force.
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