Abby Joseph Cohen, managing director and co-chair of Goldman, Sachs Investment Policy Committee and a Cornell trustee fellow, speaks to a Schwartz Auditorium audience April 9. Denise Weldon/University Photography
The recent downturn in the stock market hasn't changed the bullish attitude of Cornell alumna Abby Joseph Cohen. The Goldman, Sachs managing director still insists that the stock market is the place for long-term investing. "After all," Cohen said, "we're investors, not traders."
Her comments came during the Lewis H. Durland Memorial Lecture April 9 before a standing-room-only crowd in Rockefeller Hall's Schwartz Auditorium. Cohen, who earned her bachelor's degree in economics from Cornell in 1973, is managing director and co-chair of Goldman, Sachs Investment Policy Committee and an influential voice on Wall Street. She also is a Cornell trustee fellow and a member of the University Investment Committee and the President's Council of Cornell Women.
"The year 1997 will return the market to a more normal characterization of volatility," Cohen predicted. "This year marks the return to picking stocks the old-fashioned way. We are now back to the environment where you have to do your work; in 1995 and 1996 it was better to be lucky."
In her lecture, titled "The Fabulous U.S. Economy and the Corresponding Bull Market," Cohen made a case for why the market will remain bullish. The federal budget deficit is down to the lowest level of any industrialized nation, companies are more careful in managing costs and investments, and consumers are saving more and taking on less debt, she said, noting that these predictors point to a healthy market.
Cohen, who is quoted regularly in the nation's business press, answered questions from the audience for more than 30 minutes. She delivered her economic insights to her attentive listeners in a clear, straightforward manner free of hyperbole and industry jargon.
The recent hike in the prime interest rate by the Federal Reserve Board, Cohen said, should have taken no one by surprise. "Even my fifth-grader came home from school and asked, 'Did the Fed tighten?'" she said.
Cohen used the analogy of a flu shot to describe how investors reacted to the interest rate hike. "The stock market said 'ouch,' we had a fever and our arm doesn't feel too well," she said. "The Fed has administered the flu shot and inoculated us from a weak economy in the long run." And she predicted another small hike in interest rates in the near future.
Cohen's opinions are not taken lightly. In his introduction of the Durland lecturer, Cornell President Hunter Rawlings told the story of a time when a rumor was circulating on Wall Street that Cohen was backing off her usually bullish stance. The rumor sent midday stock prices plunging. Cohen was pulled out of a meeting to deny the rumor, after which stock prices rose, Rawlings said.
Cohen did not disappoint audience members who were hoping to hear some stock tips. She suggested the good buys were in technology, financial services, transportation and retail stocks.
The Durland Lecture, the most prestigious speaking event sponsored by Cornell's Johnson Graduate School of Management each year, is named for former Cornell treasurer Lewis Durland.