Equity prices can rise, despite decelerating profit growth and moderately rising interest rates, if investors expect economic expansion to continue. In previous such cases, stocks outperformed bonds, often notably.
More Quotes from Abby Cohen:
After September 11, 2001, we assumed that the equity risk premium demanded by investors would be above the historical average, but did not anticipate the current extreme reading which is near the highs of the past three decades.Abby Cohen
I think what we had today was a disconnect between the stock market and the economy. The U.S. economy looks great...corporate profits are good...inflation and interest rates will be friendly for longer.
Abby Cohen
Little of a fundamental nature, specific to the U.S. economy or corporate performance, has changed in recent weeks.
Abby Cohen
For the first time in a decade, our model portfolio is no longer recommending an overweighed position in technology.
Abby Cohen
Corporations in the United States continue to generate good profits. Stock prices are below where they might be based upon the fundamentals for 2005.
Abby Cohen
It is too soon to know how the situation in Iraq will unfold in the coming months, and the extent to which the new government can indeed control the country. But, for the present, investors seem relieved that the direction is not toward an increased level of U.S. involvement.
Abby Cohen
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