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.
![Abby Joseph Cohen © Cindy Ord/Getty Images for Yahoo](https://cdn.mos.cms.futurecdn.net/9KqkZHdVzTKUzjzHcnSTaD-415-80.jpg)
“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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
![https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg](https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748-320-80.jpg)
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.
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
-
UK mid-caps: an improving outlook
UK mid-caps have perked up and the rally may run further, but long-term investors should remain selective
By Cris Sholto Heaton Published
-
The tobacco industry is going smoke-free - how to profit from it
Tobacco companies have realised their traditional products are on the wane. But new opportunities have opened up – and should prove lucrative
By Rupert Hargreaves Published
-
Is it time to invest in creative industries?
Any industrial strategy should not overlook the creative industries, one of our top national assets
By David C. Stevenson Published
-
Is Mercia Asset Management set for success?
Mercia Asset Management helps the government fund smaller companies in Britain’s regions. Should you invest?
By Rupert Hargreaves Published
-
British stocks set for a boost
British stocks are due for a bounce as the UK looks more stable compared to many economies
By Alex Rankine Published
-
Ocado shares jump by a fifth
Ocado takes a turn for the better after attractive profit forecasts were announced
By Dr Matthew Partridge Published
-
The AI boom is on borrowed time
The hype around the AI boom could be on its way out – but why?
By Alex Rankine Published
-
Diploma: a blue-chip set for strong growth
Diploma, whose niche products include seals and fasteners, serves an array of growth markets. Should you invest?
By Dr Mike Tubbs Published