Goldman's Cohen Says Stocks Are `Good Value' Despite Recession

By Edgar Ortega

Oct. 28 (Bloomberg) -- U.S. stocks offer ``good value'' even though the economy is in a recession, Goldman Sachs Group Inc.'s Abby Joseph Cohen said.

``Relative to growth in the economy, share prices offer good value,'' Cohen, senior investment strategist at the New York- based firm, said at the Securities Industry and Financial Markets Association conference in New York.

Companies in the Standard & Poor's 500 Index trade for about 13 times next year's estimated earnings, compared with a historical average of 18 times, the 56-year-old strategist said. The fourth quarter of this year will be the worst during the contraction, according to Cohen.

``We do not think that there is a massive global recession out there,'' she said. ``We will start to see economic activity, particularly in the U.S, looking better in the second half of 2009'' because of government stimulus.

Cohen, who was the second-most bullish Wall Street strategist at the start of the year, was replaced by Goldman Sachs in March as the bank's chief forecaster for the U.S. stock market. She is known for her bullish predictions during the 1990s rally.

Her year-end forecast of 1,675 for the S&P 500 at the beginning of 2008 was second only to the prediction of 1,700 from Bear Stearns Cos.'s Jonathan Golub, HSBC Holdings Plc's Kevin Gardiner and UBS AG's David Bianco. The index sank to 848.92 yesterday, the lowest level since March 2003.

To contact the reporter on this story: Edgar Ortega in New York at ebarrales@bloomberg.net.