“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
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.
-
Paying the grandkids’ school fees could generate a shock IHT billPrivate school fees have soared as a result of the government’s VAT policy, meaning more grandparents are helping out – but what are the tax implications?
-
Number of savings deals hits record high – as interest rates slump to two-year lowSavers have more choice than ever when it comes to choosing a savings account or cash ISA. But, the interest rates on offer continue to fall. What’s next for the savings market?
-
How Warren Buffett built his fortuneAnalysis Warren Buffett is considered by many to be the best investor of all time. We examine how much Buffett is worth and how he made his fortune.
-
The US is in one of the greatest bubbles in financial historyCover Story Jeremy Grantham, who has a history of getting big calls right, fears slumps in several wildly overpriced markets (including UK property). He tells Merryn Somerset Webb what investors should do now
-
Why investment forecasting is futileOpinion Every year events prove that forecasting is futile and 2020 was no exception, says Bill Miller, chairman and chief investment officer of Miller Value Partners.
-
Bill Ackman: beware of short-term market volatility
Opinion Bill Ackman, founder of the Pershing Square hedge fund, is upbeat on prospects for markets in 2021, but is worried about short-term volatility as coronavirus takes its toll.
-
Mark Mobius: Lockdowns are a losing game
Opinion An easing up of lockdown efforts is likely to mean ”economic recovery at the end of this year and the beginning of next year”, says Mark Mobius, co-founder of Mobius Capital Partners.
-
Will Danoff: buy firms that are doing well right now
Opinion Forget future earnings, says Will Danoff, portfolio manager at Fidelity. What matters is now.
-
Anatole Kaletsky: I was wrong to be bearish on stocks
Opinion There are “three clear reasons” for equity markets to keep climbing, says Anatole Kaletsky, chief economist at Gavekal.
-
James Montier: valuations are way too high
Opinion The market is completely discounting the risk to the economy and operating as if there is nothing to worry about, pricing in a V-shaped recovery, says James Montier, investment strategist at GMO.
