Abby Joseph: US markets have no margin for error
Much of the markets' recent strength is down to the US Federal Reserve using monetary policy to backstop the equity market, says Abby Joseph Cohen, senior investment strategist at Goldman Sachs.
“There is no margin for error in either equities or fixed income” after the surprising resilience of the US market this year, Abby Joseph Cohen, the long-serving strategist at Goldman Sachs, tells Barron’s.
Cohen has been known for consistent bullishness on stocks during most of her four-decade career at the investment bank, but sounds more cautious today. Much of the recent strength is simply due to the Federal Reserve “using monetary policy … to backstop the equity market”, she suggests. Investors are willing to look past a difficult year in the hope of better times by the end of 2021, but “valuation models suggest that the good news is already priced into the S&P500”.
Goldman Sachs’s analysts have a 12-month target of 3,100 for the S&P 500, so the index is now “bouncing around fair value”. US stocks “performed dramatically better” than the rest of the world over the last few months, which is in part due to a higher weighting to technology, but Europe and Japan may do better over the next six to 12 months.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Cohen’s stock picks for the coming year include a firm that should grow strongly on the back of the Covid-19 crisis: Cintas, which provides services such as cleaning, sanitation and personal protective equipment. She also likes Daikin Industries and Trane Technologies, both of which operate in heating, ventilation and air conditioning. These should benefit from increased concerns about indoor air quality, as well as greater demand for cooling due to climate change.
-
Where can I get pension advice?A popular directory of pension advice professionals has closed, leaving those seeking help with their retirement unsure of where to go. We look at the options
-
The investing mistakes not to make: MoneyWeek TalksPodcast MoneyWeek's digital editor speaks to Andrew Craig, founder of Plain English Finance, about why passive investing isn't always the only option for good investors
-
Stock markets have a mountain to climb: opt for resilience, growth and valueOpinion Julian Wheeler, partner and US equity specialist, Shard Capital, highlights three US stocks where he would put his money
-
The steady rise of stablecoinsInnovations in cryptocurrency have created stablecoins, a new form of money. Trump is an enthusiastic supporter, but its benefits are not yet clear
-
SRT Marine Systems: A leader in marine technologySRT Marine Systems is thriving and has a bulging order book, says Dr Michael Tubbs
-
Goodwin: A superlative British manufacturer to buy nowVeteran engineering group Goodwin has created a new profit engine. But following its tremendous run, can investors still afford the shares?
-
A change in leadership: Is US stock market exceptionalism over?US stocks trailed the rest of the world in 2025. Is this a sign that a long-overdue shift is underway?
-
A reckoning is coming for unnecessary investment trustsInvestment trusts that don’t use their structural advantages will find it increasingly hard to survive, says Rupert Hargreaves
-
Metals and AI power emerging marketsThis year’s big emerging market winners have tended to offer exposure to one of 2025’s two winning trends – AI-focused tech and the global metals rally
-
8 of the best houses for sale with beautiful fireplacesThe best houses for sale with beautiful fireplaces – from a 15th-century cottage in Kent to a 17th-century palazzo in Oxfordshire
